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VOL. 129 | NO. 65 | Thursday, April 3, 2014

Council Displeased With Budget Ideas

By Bill Dries

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This isn’t going to be pretty. Two weeks before Memphis Mayor A C Wharton Jr. takes a budget proposal to the Memphis City Council, council members reacted angrily to how Wharton’s administration set the stage for its definitive recommendations.

Council chairman Jim Strickland, left, and council member Reid Hedgepeth, right, were sharply critical Tuesday of the Wharton administration’s review of possible savings to devote toward the city’s unfunded pension liability in the coming budget year.

(Daily News File/Lance Murphey)

And several on the council continued to push for more immediate and decisive action by the mayor.

The council began getting tense early in the council day of committee sessions Tuesday, April 1, as they heard former University of Memphis professor Richard Janikowski, the city’s consultant on public safety changes, say the city needs to beef up the police ranks and that any efficiencies there would take years to create savings.

“You cannot allow the department staffing complement to fall any further,” Janikowski said. “And you should actually be planning how you infuse officers back into the department until you can bring into place efficiencies.”

Police and fire services are the majority of city government’s workforce and the city budget.

City chief administrative officer George Little said any changes to the police and fire departments that might change memoranda of understanding with the police and fire unions are also off the table for now because of ongoing federal court litigation.

The unions sued the city two years ago over a 4.6 percent pay cut all city employees took.

Wharton was not present for the grilling that followed, with 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 they believe contradicts Wharton’s earlier claim that the city could divert $80 million from its existing operations 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.

Little said the administration doesn’t completely accept the efficiencies total in the PFM report and he said the property tax hike amounted to 4 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.

“It just depends on how you look at it,” Little said later of Hedgepeth’s claim. “I can’t promise what future councils will do. … He may be realizing that the council may not have the will to toe the line on the kinds of cuts that would have to be made or resist the urge to raise taxes.”

But Hedgepeth’s point is that the efficiencies “aren’t there.”

“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 administration 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.

“There are other savings,” Little said. “There are tough choices to be made. … Over the next five years in a very orderly and deliberate way we will work through that.”

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