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VOL. 128 | NO. 128 | Tuesday, July 02, 2013

Strickland, Conrad Warn of Budget Pitfalls

By Bill Dries

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When most of the 13 people on the Memphis City Council began their service in 2008, the city’s property tax rate was $3.43 and rolling back that rate was a priority of a voting majority on the body.

That changed last month when the council approved a property tax rate of $3.40 that includes a four-cent tax hike.

And there were a lot of factors that played into the decision.

STRICKLAND

“For the first five years we were on the council, we all sort of agreed that we need to reduce taxes, and we have,” council budget committee chairman Jim Strickland said on the WKNO-TV program “Behind The Headlines.” “But frankly, we did that because we were rolling back the schools (funding) and that gave us the opportunity to do that. This was the first year where we didn’t have that and we had to face our budget as is and make tough decisions.”

The program, hosted by Eric Barnes, publisher of The Daily News, can be seen on The Daily News Video, video.memphisdailynews.com.

CONRAD

Council member Kemp Conrad, meanwhile, warned the city’s long term financial problems, highlighted in a letter and report from Tennessee Comptroller Justin Wilson, aren’t over.

“I bet in the next 30 to 90 days that will be the next shoe to drop and they are going to come back to us and tell us you’ve got to change your pension plan,” Conrad said. “Either make the changes y’all made last (fiscal) year for current employees … or go to some kind of hybrid defined contribution plan like the state has recently done.”

The property tax rollback began with the council’s controversial decision in 2008 to cut the city’s funding to Memphis City Schools. The school system contested the funding cut and won the court case.

The city continued to fund the school system in future fiscal years. But that obligation by the city ended June 30 when the fiscal year ended and Memphis City Schools went out of business in the schools merger.

The problem, according to Strickland was council members made preliminary cuts to go below even the existing $3.11 rate in budget deliberations this year. But then funding was restored in the final council vote last week or reallocated to other line items.

Strickland took the position the council should restore enough funding from the cuts to keep the tax rate at $3.11.

“Instead we didn’t raise it just a little bit, we raised so much that it outstripped the cuts we made,” he said.

Conrad and Strickland voted against the budget and tax rate. The operating budget included cuts proposed in Strickland’s budget plan as well as the plan of council chairman Edmund Ford Jr. It also undid some of the earlier cuts in both plans.

The voting majority on the council rallied around a change led by council member Harold Collins.

Collins argued the council’s responsibilities to the issues raised by the comptroller should be balanced against the impact further cuts in services and layoffs would have on the local economy. He cited an environment where 2,000 employees in the two school systems were expected to lose their jobs in the schools merger. A hundred of those layoffs were the same week the council met.

“This is absolutely crazy,” Collins said during the council debate. “You can’t invest in your city for 4 cents? You ought to be ashamed of yourself.”

Other council members said the cuts to services are prompting Memphians to leave the city for the county outside Memphis and beyond.

That’s another change from the earlier days of the current council majority when the most vocal argument was that a rising city property tax rate was causing the exodus.

Collins, during the first term, argued for a goal of getting the tax rate below $3 eventually. His argument last week was to keep the tax rate low but balance that with an emphasis on restoring services cut and in particular cutting the only division budget in city government that has grown in recent years – the Memphis Police Department.

There was agreement on that and other parts of Collins’ formula if not its philosophy and if not reflected in the council votes on the tax rate and the budget.

“If we continually raise taxes, we will continually lose population, and to me that is not sustainable,” Strickland said.

There was also agreement on both sides of the votes last week that Memphis Mayor A C Wharton Jr. and his administration could have played a more visible role and advocated for a particular course of action – any action – more forcefully.

“They have to lead on some of these things,” Conrad said. “They came in three business days on the Thursday before we were supposed to vote on the budget with a raft of proposals out of the five-year plan that we asked them for. They said, ‘We are advocating for these.’ And then we came back the next week and they weren’t.”

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 52 136 5,209
MORTGAGES 79 182 6,891
FORECLOSURE NOTICES 13 50 1,606
BUILDING PERMITS 328 328 12,307
BANKRUPTCIES 70 175 5,475
BUSINESS LICENSES 30 58 2,119
UTILITY CONNECTIONS 85 182 7,240
MARRIAGE LICENSES 19 43 1,501

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