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VOL. 128 | NO. 125 | Thursday, June 27, 2013

Property Tax Hike Highlights New City Budget

By Bill Dries

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Memphis City Council members raised the city property tax rate Tuesday, June 26, by 4 cents above the recertified tax rate and put the rest of a turbulent budget season to rest.

Memphis City Council member Janis Fullilove and Memphis Mayor A C Wharton Jr. conferred Tuesday, June 25, before the council closed its budget season by approving a property tax increase. (Daily News/Bill Dries)

The approval of the $3.40 property tax rate and city operating and capital budgets came in a council session that ended at 12:30 a.m. Wednesday morning.

“We got a budget. Let it show that the budget is on time,” Memphis Mayor A C Wharton Jr. said as the meeting ended. “If you look at what had happened in the past 60 days and look at where we are now, it’s almost a miracle.”

The tax rate approved is less than the $3.51 rate Wharton proposed, which was an increase to $3.36 just to get the same amount of revenue the city got from the existing $3.11 rate taking into account property value lost in the 2013 reappraisal.

Wharton proposed a 15-cent tax hike beyond that to replenish city reserve funds and pay more on the city’s bond debt – two important conditions outlined by Tennessee Comptroller Justin Wilson.

Wilson’s letter and report critical of city financial practices on both fronts was a critical factor in the council’s drive to complete its budget season by July 1. Beyond the July 1 date was the possibility, however remote, that Wilson might use his powers to get the city to the fiscal bottom line he recommended.

Wilson’s letter scrambled the budget process from what had been a discussion between Wharton and the council about setting the tax rate at a recertified rate for what Wharton billed as a “continuation” budget or keeping the rate as close to $3.11 as possible and cutting existing city programs to fit.

The $3.40 rate ended the current council set of property tax rollbacks dating back to 2008 when most on the council first took office.

“The bottom line is we’ve got a budget whether I like it or not,” Wharton said. “I will say it is closer to the budget I had proposed, which reflects reality. … The important thing is not the number, it’s the substance. We now have a plan to deal with the major issue that many cities and counties are not dealing with.”

That was a reference to the debt service and reserve fund concerns Wilson’s report accentuated.

In the budget approved Tuesday, the council gave all city employees a 4.6 percent pay raise, restoring a pay cut all city workers took two years ago. It also approved a plan by council member Harold Collins that pared down plans to lay off 100 city employees to now lay off 50 as well as cutting 2.5 percent from the Memphis Police Department budget.

Collins used some of the money cut to restore funding for community centers and parks and similar neighborhood city services as well as street repaving.

He also argued the impact on the city’s economy would be too much if the city lays off 100 workers as the consolidated school district also lays off 300 at the end of this week.

He urged the council to be “creative.” “I don’t believe being creative and having courage is laying off people,” he said.

Council member Shea Flinn accused Collins of “waiting for Tinkerbell.”

“This is a math problem,” he added.

“Did you major in theater?” Collins countered.

Acting council Chairman Jim Strickland tried to keep the back and forth to a minimum.

Council member Bill Morrison had a plan to eliminate the 100 layoffs but instead take 105 funded but vacant city positions, most in public safety. But when city Finance Director Brian Collins said it translated to a $3.39 property tax rate, Morrison withdrew it.

The number wasn’t what Morrison and other council members had thought it would be as they tried to work out a compromise during a recess in the council session in which council members caucused in apparent violation of the state’s open meetings law.

The number was so unexpected that someone on the body reacted with a curse word across their open microphone.

Collins was one of several council members who argued the police department could cut its budget – the only one of the city divisions to increase its budget over several years – without affecting police Director Toney Armstrong’s ability to put more police officers on the street.

The council left in place plans to drop 300 city employees through attrition, a head count reduction that is crucial to the city’s ability to make a $23 million increase in debt payments in a future fiscal year.

The employees probably would leave city government over several fiscal years with an estimated $9 million “attrition premium” for City Hall in each of the two fiscal years following the one that begins July 1.

PROPERTY SALES 98 172 17,556
MORTGAGES 101 194 20,229
BUILDING PERMITS 223 349 36,295
BANKRUPTCIES 52 115 11,279