VOL. 128 | NO. 118 | Tuesday, June 18, 2013
City Council Again Tackles Budget, Tax Rate
By Bill Dries
Some Memphis City Council members say they are prepared for a long day Tuesday, June 18, at City Hall as they continue down the arduous path to a tax rate and budget for the coming fiscal year.
“Let’s just be ready to spend the night,” said council member Harold Collins last week. He commented as council-mediated discussions between the administration of Memphis Mayor A C Wharton Jr. and municipal union leaders on possible cuts in employee benefits got nowhere quickly and ended after less than an hour.
Others predict the best the council might do is settle a few points but not get to the final votes on an operating budget and tax rate until a special meeting June 25.
On the council’s Tuesday agenda are seven resolutions and ordinances up for final votes on the city’s budget and tax rate. They were all delayed when the council met two weeks ago.
The council meets at 3:30 p.m. at City Hall, 125 N. Main St.
It’s been a month since the path to the fiscal year that begins July 1 changed dramatically with a report from the Tennessee Comptroller’s office critical of city financial practices. Wharton then proposed a 15-cent property tax hike above the 25 cents added to the current $3.11 rate just to produce the same amount of revenue taking into account the property value lost in the 2013 property reappraisal.
Some Memphis City Council members are prepared to stay late Tuesday as the council tries to end its budget season by setting a property tax rate and an operating budget. Other council members point to a special June 25 meeting already scheduled.
(Daily News File/Lance Murphey)
Among the budget items on Tuesday’s agenda is a resolution that would issue $135 million in refunding bonds in a restructuring of city debt.
It is the same action the city took, with council approval, in 2010, that pushed the debt into future years and prompted the May letter and report from Tennessee Comptroller Justin P. Wilson.
The report is critical of city financial practices including the debt restructuring known as “scoop and toss.”
“The city’s debt is being restructured to provide debt relief in fiscal years 2014 to 2024 by shifting debt service for those fiscal years to fiscal year 2025,” Wilson wrote in a letter to Wharton last month.
Wilson added that if the city undertakes the second restructuring it should be the last time it does so.
“I think that one of the themes that is going to be recurring is what’s the right size and what’s the right level of services.”
City of Memphis chief administrative officer
“In order to avoid further financial stress, after the issuance of the series 2013 refunding bonds, the city’s use of ‘scoop and toss’ refundings should be discontinued and a clear solution to the city’s excess expenditures exceeding available revenues should be implemented,” Wilson wrote in the May 20 letter.
Wilson is clear that the city’s priority should be paying down its debt and funding pension and similar obligations and liabilities on the books.
Council frustration grew when city chief financial officer and Housing and Community Development director Robert Lipscomb told council members 10 days later that a long-range five-year city financial plan the council has pushed for wasn’t ready.
Lipscomb said it hadn’t been properly vetted. And he pitched a capital improvement project to have the Memphis Police Department move its headquarters out of the Criminal Justice Center to the old police building on Adams Avenue and Second Street.
He also said the administration is seeking legal opinions of a shift of an estimated $30 million in capital revenue the city hopes to get from a Midtown tourism development zone to go toward operating expenses. The revenue was to go to finance a reconfiguration of the Mid-South Fairgrounds as a public recreation area.
No one in the administration has talked about either option since the end of May. This month the emphasis has been on dramatic cuts in city employee and retiree benefits, including laying off or buying out 400 city workers. And even city police and firefighters would not be immune.
“I think that one of the themes that is going to be recurring is what’s the right size and what’s the right level of services,” City Chief Administrative Officer George Little said. “Fire has already gone through that frankly. … Fire has actually reduced their complement, sort of a controlled descent by 118 positions. We’re just going to have to work our way through this.”
But some on the council think the administration should do more than offer options and advocate for a specific plan.
The administration’s outline of what cuts in employee and retiree benefits would look like has always come with the caveat that it is at the request of council members.
“We really had hoped to bring these comprehensive personnel items forward after discussions as part of the fiscal year 2015 budget,” Little said last week. “I just hope that whatever we do, we don’t do it in a hasty way. … There are options that are available for council.”