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VOL. 133 | NO. 114 | Thursday, June 7, 2018

Few Ripples to End City Hall’s Budget Season

By Bill Dries

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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 to the budget proposed by Memphis Mayor Jim Strickland for the fiscal year that begins July 1.

Worth Morgan

The only attempt to amend the budget 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 about capital spending. “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’s 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.

Reid Hedgepeth

At first, Morgan was hesitant to propose the amendment, saying he didn’t see any “appetite” on the council to make the change. When he did, 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, which is being phased out by the state.

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,” Strickland said. “We really only had $10 million more in revenue to work with as compared to the county, which had $28 million more in revenue.”

Those references were to respective windfalls in revenue city and county governments got from property tax rates raised after the 2017 countywide property reappraisal.

The city and county calculations, which were approved by the state, overestimated the number of appeals of property values, thus creating the windfall. The adjustment of the city property tax rate from $3.27 to $3.19 in the new fiscal year reflects a rate that includes a 1-cent reduction beyond eliminating the windfall.

“Unfortunately, we could not offer 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.

Edmund Ford Jr.

“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 the contentious council budget deliberations prior to Strickland’s tenure as mayor. Many times 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 centers,” 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.”

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 78 78 13,921
MORTGAGES 93 93 16,098
FORECLOSURE NOTICES 0 0 2,202
BUILDING PERMITS 242 242 28,995
BANKRUPTCIES 59 59 8,985
BUSINESS LICENSES 29 29 4,730
UTILITY CONNECTIONS 37 37 5,570
MARRIAGE LICENSES 37 37 3,019

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