VOL. 128 | NO. 138 | Wednesday, July 17, 2013
Memphis Tax Rate Sparks Revenue Debate
By Bill Dries
The city should have some extra money when the end of the next fiscal year comes on June 30, according to Memphis City Council member Harold Collins.
Collins on Tuesday, July 16, questioned whether the $3.40 city property tax rate the council approved last month is 5 cents higher than was necessary to fund the city’s operating budget and make payments toward its reserve fund and debt service over the next two fiscal years.
By his estimate, a $3.35 property tax rate should have accomplished that.
But Memphis Mayor A C Wharton Jr. and city finance director Brian Collins said the $3.35 rate would have left the city $6 million in the red at the end of the current fiscal year.
“I did not offer up the $3.40 figure,” said Brian Collins, pointing out that council members asked at the June meeting where the tax rate was approved if that tax rate would cover the city’s fiscal needs. “It looked to us then and it still looks to me now … that the rate of $3.40 will cover that debt for both years. It will create a surplus, but the surplus is not going to go to anything but the reserves and then that will be dedicated to debt service.”
That also includes making up for lower than expected savings from a bond restructuring the council approved, which was originally estimated to save the city $9 million. Wharton said on the WKNO-TV program “Behind The Headlines” last week that national economic conditions and policy out of Washington have cut into the savings from the restructuring to such a degree that the city might delay the restructuring through refunding bonds.
Brian Collins told the council that the key to the last 5 cents on the tax rate is in the 2.5 percent cut the council required of the Memphis Police Department. He said that will likely come from putting off police promotions testing and police recruit classes.
“Those expenses were going to come back and be in the budget of 2015,” he told the council. “We couldn’t go on forever without doing promotional testing and bringing on more classes through the academy. That $6 million is going to come back.”
Harold Collins said that is “premature,” citing Police Director Toney Armstrong’s comment Monday that he might consider some precinct closings as a last resort to make the percentage amount.
“The director seems to think he’s going to meet that $6 million mark by closing precincts and not deferring promotional classes,” Harold Collins said. “That’s what everybody in the city seems to be thinking. Now you are saying he may meet it by deferring promotional classes. I haven’t heard that from the mayor or the director.”
Collins and Armstrong talked several times during budget hearings about Armstrong’s early goal of having two recruit classes make it through the police training academy in the fiscal year. Harold Collins questioned at the time whether that was possible because of past experience with one academy class a year.
After the committee session, he remained unconvinced by the administration’s accounting for the 5-cent tax hike.
“We found out we didn’t need the 5 cents extra because the 2.5 percent extra reduction in police would have taken care of that,” he said. “The (administration) says the 2.5 percent in police is recurring. I don’t believe that. I believe that there is $6 million in a $237 million budget that you can find to cut somewhere. It’s up to them to decide where they want to cut. That’s why you get this hoopla of closing precincts.”
But Collins added that he probably won’t attempt to amend the tax rate.
“At least everybody now knows the number could have been $3.35 and not $3.40,” he said. “The administration gets to determine what they do with that extra money.”