VOL. 128 | NO. 10 | Tuesday, January 15, 2013
Conrad, Flinn Pitch Cost-Saving Measures for City
By Bill Dries
Memphis City Council member Kemp Conrad wants to explore selling city assets, including Memphis Light, Gas and Water Division, and using the proceeds to establish a trust fund for early childhood education and other “wrap around” social services.
Conrad talked about “monetizing city assets” on the WKNO-TV program “Behind the Headlines,” hosted by Eric Barnes, publisher of The Daily News.
The program, which also featured fellow council member Shea Flinn, can be seen at The Daily News Online, www.memphisdailynews.com.
Asked specifically about MLGW, Conrad said his idea is “selling it. Taking that money. Putting it in a trust. It would kick off an annuity – hopefully $100 million per year in perpetuity to invest in this.
“What most other cities have done, they’ve taken that money and they’ve just kicked the can and have plugged their budget gaps,” Conrad said. “We have a chance to be smart about it. It may not work. But we need to see the analysis and then we can make a good decision on it.”
He acknowledged one obstacle could be the utility’s unfunded pension and health care benefit liabilities.
Former Memphis Mayor Willie Herenton proposed the sale of MLGW in 1998 and later dropped the idea. Memphis voters approved a charter amendment in 2008 that requires approval of such a sale by Memphis voters in a city referendum.
Meanwhile, Flinn and council budget committee chairman Jim Strickland have revived the move to a city referendum on a half-cent city sales tax hike that was trumped last year by the failed bid for a half-cent countywide sales tax hike.
The sales tax increase would generate an estimated $47 million in revenue. Of that, $27 million a year would be used to fund early childhood education in Memphis, including pre-kindergarten, through an early childhood commission appointed by the mayor and confirmed by the council.
“For the first year or so, it would only take about $23 million,” Flinn said. “The (federal) Race to the Top money is going to run out in 2014. We know this. And that includes about 30 of the current pre-kindergarten classes. We are building in funding for that.”
The remaining $20 million would be used to drop the city property tax rate by 20 cents.
“We’ve ridden the property tax rate way beyond the horse being dead,” Flinn said.
Conrad likes the early childhood part of the proposal but disagrees fundamentally with Flinn and Strickland on how to reduce the city property tax rate.
Conrad’s view is the property tax rate could be lowered by making city government smaller.
“I think before we spend any more money on our fat boy government, we need to reform it,” he said. “We can say we’re going to reduce your property tax rate by $20 million … but the reality is we already have about a $40 million structural imbalance.”
Flinn argues the tax rollback is not a one-time solution to a recurring problem.
“We’re lowering the property tax rate,” he replied. “We’re taking one recurring revenue stream and replacing it with another recurring revenue stream.”
Flinn also said his proposal does not exclude the kind of savings and efficiencies Conrad has advocated over several budget seasons.
The sales tax referendum resolution will be discussed again in Jan. 22 committee sessions with a vote by the full council possibly at its first meeting in February.
Flinn and Conrad commented on it as Memphis Mayor A C Wharton Jr. gave the first in a series of speeches last week on the state of the city. The speech at the Memphis Kiwanis Club included a wish list of city capital projects like a new convention center, the Heritage Trail development project south of FedExForum and a Fairgrounds renovation.
“Maybe I’m just not visionary enough. But I don’t think that is going to make us a city of choice,” Conrad said. “I think people think that if we do these projects we are going to feel better. It’s kind of like Memphis is a beautiful old mansion and it’s got so much potential. But the core and foundation are rotting from the inside.”
“They are not misplaced. It’s always a balancing test,” Flinn countered. “A city has got to swim or die. You can’t stand still. Other cities just aren’t doing that. You have to be able to pat your stomach and rub your head at the same time.”