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VOL. 128 | NO. 105 | Thursday, May 30, 2013

Mayor, Council Talk Budget Reset

By Bill Dries

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This wasn’t what the Memphis City Council had in mind when its budget committee set Thursday, May 30, as its wrap-up session on the city budget.


Such sessions are usually the time when the budget committee takes final votes on whether it agrees with parts of the administration’s budget proposal and council members begin to roll out their own proposals and substitutions.

What is expected to happen Thursday is likely a budget adjustment by Memphis Mayor A C Wharton Jr. And there will be a presentation of another budget option.

It comes in the wake of last week’s report from the office of Tennessee Comptroller Justin P. Wilson that expressed concern over transfers among city divisions out of different pockets of city funding over several years.

The trigger for the critical report was the city’s moves toward a second bond refunding plan in four years that pushed the city’s debt out into future fiscal years.

“In order to comply with state law, the city must develop a clear solution to current expenditures exceeding revenues other than postponing debt and tax burdens to future years,” Wilson wrote in his cover letter. “At a minimum, the plan should address the reserve fund balance, the revenue loss due to declining property values and the substantial liabilities due in the near future.”

Wharton described the city’s finances as “challenged” as a result of the report and the adjustments the council made in response.

“There are genuine concerns, exacerbated of course by the drop in the appraised value of property,” Wharton said at a Wednesday, May 29, taping of the WKNO-TV program “Behind The Headlines.” “We took a $30 million hit. … This is our way of dealing with it head on.”

The council, in response to news of the report last week, moved approximately $54 million in the form of interfund loans to funds depleted by deficits and advances to other funds.

The moves also included the use of $11 million in city reserves for three funds in particular.

Council members also requested an alternate budget proposal from the city that is based on keeping the city property tax rate at $3.11. That would include the $30 million hit in property tax revenue the city took from the 2013 property reappraisal.

“You want to pursue austerity where you can. But you can’t just close down growth opportunities in the city,” Wharton said on the program, which airs Friday at 7 p.m. “We live and die by the property tax. If we don’t invest in the infrastructure and the real estate of the city, where else do we grow? It is a balancing act.”

Wharton originally proposed a $3.39 tax rate including a 28-cent rate increase as the recertified tax rate that produces the same amount of revenue for City Hall as $3.11 did before the reappraisal. Since then, the recertified rate calculations have cut 3 cents from that 28-cent rate increase for a $3.36 total property tax rate.

“It will still be a revenue neutral budget. It basically will keep us flat,” Wharton said. “We’ll be able to keep the same level of employees, begin restoring the 4.6 percent (pay cut of several years ago). But it will not bring any new money in terms of net to the city. It will be revenue neutral.”

Some on the council and administration are already at odds.

The administration proposed a 2.3 percent pay raise for all city employees to take effect in January, halfway through the fiscal year.

But a council impasse committee has recommended a 4.6 percent pay raise for police officers effective with the July 1 start of the new fiscal year.

Council member Kemp Conrad is also expected to push his plan to further privatize city sanitation services.

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