VOL. 129 | NO. 64 | Wednesday, April 02, 2014
Council Unhappy With Budget Plans So Far
By Bill Dries
The administration of Memphis Mayor A C Wharton Jr. got a rough reception at the Tuesday, April 1, Memphis City Council session as it set the stage for Wharton’s budget proposal to come in two weeks.
Wharton was not present for the grilling with city Chief Administrative Officer George Little taking much of it during the council’s Tuesday executive session.
Little outlined possible options Wharton may recommend in two weeks. Some come from a report by the city’s financial consultant, Public Finance Management.
Several council members quickly cut to a bottom line that they believe contradicts Wharton’s earlier claim that the city could find $80 million from its existing operations to divert to fully fund the city’s annual contribution toward its pension liability over five fiscal years.
“We raised taxes this previous year approximately 25 cents. If we have $80 million in efficiencies, why did we raise taxes this previous year?” asked council member Reid Hedgepeth, who just last month challenged Wharton and his administration to begin identifying areas to cut in the city’s budget immediately.
Little said the administration doesn’t completely accept the efficiencies total in the PFM report and he said the property tax hike amounted to four cents after the rate was adjusted up to create the same amount of revenue after the 2013 property reappraisal in which assessed values went down.
But Hedgepeth continued to raise the question of a tax hike.
“I think that telling the taxpayers in this city that they are not going to have a tax increase over five years and we are going to do it through efficiencies is a lie,” Hedgepeth said. “There is no way possible that’s going to happen. I don’t think you can do it without looking at taxes a little bit. What’s going to happen is we are going to cut a little this year. We’re going to cut a little bit next year. We’re going to have an election and we are going to have a massive tax hike.”
Council chairman Jim Strickland followed Hedgepeth by saying the administration doesn’t have the will to make the necessary changes in city operations including cuts in public safety.
“The Wharton administraition simply does not have the will to implement these efficiencies,” Strickland said. “They give us a list here of $20 million in efficiencies when just a couple of months ago they said they were full fledged with $80 million in efficiencies. … If we have an $80 million hole in the budget and there’s only $40 million in efficiencies where’s the other $40 million going to come from?”
Strickland and Hedgepeth both favor a two-year ramp up to a $100 million annual required contribution instead of the five-year ramp up Wharton favors.
“You know as well as I do, and the mayor knows also, to say we are going to have a five year plan – after elections, we are not going to cut one thing,” Hedgepeth told Little, saying the resulting tax hike could be 40 to 50 cents.
Council member Shea Flinn said the only identifiable savings he sees for the city is $20 million in OPEB -- other post employment benefits – reforms.
Little countered that Wharton’s five-year ramp up is in single year amounts of roughly $15 million to reach the $100 million annual required contribution. He added that other savings would be identified over the other four fiscal years.
The session followed a morning session focused on a look at public safety spending in the police and fire departments with the administration’s consultant, former University of Memphis professor Richard Janikowski, recommending the city build the police force from its current 2,200 complement of uniformed officers to 2,400 and keep it there with any savings from civilianization and other measures within the department not coming online for another two to three years.
The rancorous committee discussions spilled over into other unrelated items on the council’s agenda later Tuesday that involved financial decisions.
The council approved a resolution abolishing the city’s weights and measures department of eight city employees effective with the July 1 start of the new fiscal year for a savings to the city Strickland estimated at approximately $375,000. The workers who are eligible for retirement would be given a severance of 10 weeks of pay and state government would take over the duties of weights and measures, duties the state now performs in every other Tennessee city.
The council delayed a resolution for $250,000 in city funding toward a $1.2 million construction of a home for the Memphis Music Hall of Fame at Second and Beale as part of the move of the Hard Rock Café to the Lansky Building on the northwest corner of the intersection. The Memphis Rock and Soul Museum, which would operate the Hall of Fame and now oversees the induction ceremonies and a website for the hall of fame, is raising private funding for the bulk of the cost.
The funding resolution which is tentatively tied to the city coming up with another $250,000 in a later fiscal year was delayed by the council for 30 days.
Strickland delayed any action on his resolution to move city streets to a 20-year repaving cycle to the May council budget hearings and votes to coincide with the presentation and council debate on the Public Works division budget.
In other action, a bid to bring back to life $1.5 million in city funding for a renovation of the Southbrook Mall in Whitehaven was delayed and sent back to committee Tuesday for more discussion.
Owners of the property told council members they want city funding for roof and heating and air conditioning repairs to the mall. Wharton proposed an overhaul of the mall earlier this year as a “town center” in which city government would relocate some government offices. But the owners of the mall who have formed a nonprofit group told council members they don’t want that kind of renovation.
The $1.5 million in city funding approved by the council last year was with conditions –mainly a legal opinion on whether the funding would constitute an illegal use of public funding for a private use. City attorneys as well as bond counsel told the council in writing in October that the mall renovations are a private use for which the federal funding could not be used without endangering the larger amount of federal funding for streetscape improvements along Elvis Presley Boulevard.
Little distributed a copy of the letter from October again and several council members said they had never seen the letter before. The letter was widely distributed to council members and the media in October.
Council member Lee Harris’s plan to establish a “schools litigation fund” to set aside money incrementally that the city owes Shelby County Schools for $57 million in funding cuts made by the council in 2008 was rewritten with a different outcome.
The council instead approved Tuesday a substitute resolution that affirms the council is pursuing a legal counterclaim against the school system for capital funding of $89 million it claims the city is owed.
Council member Wanda Halbert proposed the alternate resolution after council attorney Allan Wade said Harris’s plan would undermine the city’s legal strategy.
Meanwhile, Strickland confirmed that the city and Shelby County Schools leaders have agreed to pursue an “official mediation process with a third party mediator” to resolve both claims.
Harris had better luck on third and final reading of his ordinance to amend the city’s prevailing wage ordinance for city contracts. The ordinance was approved setting a lower threshold for the prevailing wage to city contracts starting at $50,000. The original limit had been $500,000. Approval came after several council members questioned what the financial impact would be on the city.
And the council approved on third and final reading a much amended version of council member Myron Lowery’s ordinance that originally required individual water meters in all new apartment complexes.
The compromise that passed instead requires individual water meters for all new condominiums and apartment complexes converted to condos. It also sets up a receivership through General Sessions Environmental Court when an apartment complex owner becomes one month delinquent in paying the water bill. The delinquent water bill would become a city code enforcement issue and the receivership would be geared toward avoiding a water cutoff for residents.
In planning matters, the council approved a planned development funeral services business owned by Shelby County Commissioner Justin Ford at 1440 East Shelby Drive, east of Faronia Road. Council member Edmund Ford Jr., a cousin of Justin Ford, recused himself from the vote.