VOL. 133 | NO. 113 | Wednesday, June 6, 2018
City Council Approves $685M City Budget, Takes City Tax Rate to $3.19
By Bill Dries
The Memphis City Council gave final approval Tuesday, June 5, to a $685 million city operating budget, an $87 million capital budget and a $3.19 city property tax rate.
The votes ended City Hall’s budget season with few changes by the council to the budget proposed by Memphis Mayor Jim Strickland for the fiscal year that begins July 1.
The only attempt to amend the budget at the council session was a bid by council member Worth Morgan to move the purchase of 50 new police patrols cars from the capital improvements program – or CIP -- budget largely funded by long and short-term debt to the operating budget and instead use $1.65 million in sales tax revenue to pay for the cars.
“It’s the big long-term projects whose benefits outweigh the interest that accumulates on the debt we take out,” Morgan said of what capital spending should be about. “That’s not the case with police vehicles and a few other of the CIP projects that are in this budget. So until we have at least a plan in place to transition these expenses from CIP to our operating budget, it going to be difficult for me to be voting on this CIP budget.”
Morgan contended the city is likely to get more sales tax revenue in the fiscal year that ends June 30 than it projected at the start of the fiscal year.
At first Morgan was hesitant to proposed the amendment saying he didn’t see any “appetite” on the council to make the change.
When Morgan did make the amendment, it was ridiculed by other council members.
“What if you are not as bright as our entire finance division?” asked council member Reid Hedgepeth.
Other council members said if the sales tax revenue didn’t pan out, the alternative would be a property tax hike.
“I’m kind of taken aback that councilman Morgan is willing to gamble,” said council member Bill Morrison, who said he would not be “raising taxes to cover his gambling.”
Morgan argued the extra sales tax revenue was a sure thing based on several years of data including the most recent projection of $13 million above initial projections at this time last year. But city chief financial officer Shirley Ford said the city is also dealing with the loss of revenue to the tune of $3.8 million from the state’s Hall income tax on investments and dividends that is being phased out.
And she pointed out the patrol cars would be financed with short-term debt – paid off when the cars are taken out of service.
“This is not complicated,” Morgan told council members. “I understand the hesitation. But the language about raising taxes is outrageous.”
The amendment was voted down with only council member Martavius Jones joining Morgan in voting for it.
Morgan was the only no vote against the operating budget.
Strickland described the budgets as “austere.”
“Our pension is not fully funded and the state cut the Hall income tax which cut our revenue. We really only had $10 million more in revenue to work with as compared to the county which had $28 million more in revenue,” he said referring to the windfall in revenue city and county governments got from property tax rates raised after the 2017 countywide property reappraisal with the goal of producing the same amount of revenue.
The city and county calculations, which were approved by the state, overestimated the number of appeals of property values creating the windfall and the adjustment of the city property tax rate from $3.27 to $3.19 in the new fiscal year – a rate that includes a one-cent reduction beyond eliminating the revenue windfall.
“Unfortunately we could not offers raises to our employees,” Strickland said. “We’ve done that in each of the first two budgets we’ve had. My goal is hopefully we can do that next year.”
The budget does include funding to bring all full-time city employees to a wage of $15.50 an hour that council members approved.
The council moved Tuesday toward forming a task force to study a similar pay raise for part-time city employees. Strickland said his administration is willing to talk about the move but also said it would cost the city $3.5 million a year.
Strickland said later that the council’s decision to cut $1.5 million from the city information services division was the only change to his budget proposal in council committee sessions that was outside the room his administration traditionally leaves in the budget for some changes by the council.
“I think you’ll see us approach the council during the year with maybe some requests for budget alterations to be able to cover some of the critical things that IS does,” he said. later, “I think most any city division can take cuts but $1.5 million was significant.”
Budget committee chairman Edmund Ford Jr., who proposed the $15.50 an hour minimum pay, was among those opposed to changes in the budget at the council session. Ford said he didn’t want to return to council budget deliberations prior to Strickland’s tenure as mayor in which the council worked late into the night voting up or down sets of budget amendments just before the final votes and just ahead of the new fiscal year’s start or past the July 1 start.
“There’s no property tax increase, but we do have $2.8 million in capital dollars going to parks, libraries and community center,” he said. “We’ll also have another $1.6 million in capital dollars to purchase more SkyCop cameras. We’ll have services not affected negatively.”
In other action Tuesday, the council rejected on third and final reading a referendum question for the Nov. 6 election ballot that, if approved by city voters, would have required council approval of city contracts.
The measure by Jones died on third and final reading for lack of a second.
The power of the mayor to make contracts without council approval is one of the central features of the charter that created the mayor-council form of government 50 years ago. The power to enter into contracts is one of several features that makes the structure of city government a “strong mayor” form of government.
After several delays earlier this year, the council also gave final approval Tuesday to two de-annexation ordinances that will de-annex the city part of Eads and uninhabited flood plain land in southwest Memphis unless a majority of residents in each area specifically petition to remain in the city.
The council approved the city’s purchase of land next to Rodney Baber Park in Frayser for $68,000 as part of a larger federal resiliency grant program to create a Wolf River Greenway area in the expanded park area by the Wolf River.
In planning and development items, the council approved the amended planned development for the One Beale project that calls for seven and nine-story buildings on the larger site that now incorporates land east of Wagner Place in its first phase. And the council approved transferring ownership of Wagner Place north of Pontotoc Avenue to the developers. The public would still be able to use the street. The transfer is because the hotel development on the east side of Wagner and Beale will include an overhang that encroaches on Wagner.
The council also set June 19 public hearings and votes on a trailer parking area on East Holmes Road near Tchulahoma for the Amazon fulfillment center; a new and used tire store at 975 N. Germantown Parkway and an appeal of a Land Use Control Board decision on a development at Princeton Avenue and East Erwin Drive. The council set an August hearing and vote on a proposed construction landfill at Shelby Oaks Drive east of Summer Avenue.