TSD Memphis

Thu04242014

Greater Metro

Trio of Council budget plans on table as decision time nears

This year's version of the annual wrangling between the mayor's office and the Memphis City Council over the city's budget for the next fiscal year is expected to eventually give way to a final vote on the budget on Tuesday (June 5).

Council members Harold Collins, Edmund Ford Jr. and Jim Strickland each have their own versions of a proposed budget for the fiscal year that begins July 1. This week (May 29), they presented those alternatives to the council's finance committee, veering away from the budget proposal Mayor AC Wharton Jr. presented in April.

The mayor's proposal made the case for a 47-cent property tax increase, which appears dead in the water. Wharton already has moved to finesse any obvious controversy out of the matter.

"I'm not going to debate over the tax rate," Wharton told reporters before the finance committee convened. "Let's take care of the kids, keep the core services of government and I'll be satisfied. I'm not going to get tripped up over what the tax rate is."

Besides scuttling Wharton's proposed tax increase, each of the three council member proposals address hot-button concerns over threatened support for libraries and community centers, with Strickland presenting the idea of turning over management of several community centers to non-profit organizations.

A key element in the discussion is the tax rate needed to operate the city on a sound financial basis. The present tax rate of $3.19 is expected to drop to $3.01 after funding for the city schools is dropped from the budget.

Collins: Plan a sound future

In the budget proposal that District 3 Councilman Harold Collins offers, several items have piqued interest, with his recommendation of how to use the city's reserve coffers to pay off the last official debt to the Memphis City Schools drawing close scrutiny.

Collins says his proposal to withdraw $19.5 million from the city's reserve will not be detrimental to the city's bond rating.

"That is a misconception," he said. "If we were to draw on the reserve fund, it would still leave 8.6 percent available to us. That will leave us with 60-plus million in reserve, which will not affect the bond rating. What the bond raters want to know is if the city is able to draw on resources if needed, and that would give us an accessible amount if needed."

Over the past five years, the council has reduced the property tax rate from $3.43 to $3.19, he said, as an illustration of the city's fiscal strength. His proposal would further reduce the tax rate to $3.11 to be achieved after the funding for schools is removed as part of the budget, another possible indicator that Memphis is still a great placement possibility for businesses.

"When we finish with the obligation to the schools, we need to repair the city's transportation infrastructure," Collins said. "I believe that if we are after active improvement of the roads and the highways, people will support a bond issuance."

Collins's Whitehaven district contains two of the city's major economic engines, Elvis Presley Blvd., (which he successfully secured $47 million in refurbishment funding) and the airport, which is being studied as one the world's key potential centers in the next age of worldwide urban transport and shipping known as an aerotropolis.

The core factor that makes him upbeat that Memphis can create a new paradigm for a successful urban metropolis is "that our core industries are still based within the city limits. Even with the PILOT (payment in lieu of taxes) programs, they still provide employment, growth and some tax revenue, so anyone not optimistic about the city's future is flat mistaken."

As a special assistant in the district attorney's office, Collins heads the county's juvenile and truancy programs. He said the city cannot afford to close libraries.

"Summertime is when kids are ripe for trouble, and the libraries and community centers are a deterrent to it, no question about it," he said. "That access must be kept available."

Ford: Preserve the city's value

City Council Vice Chairman Edmund Ford Jr. (D-6) said his budget alternative reflects his main concern – to protect the city's homeowners while preserving access to key community support structures for future generations.

"My proposal does not increase taxes, protects our bond rating by not dipping into the reserve fund, gives kids access to educational and recreational resources over the summer and allows the most savings," he said.

Ford said he crunched the numbers with the goal of preserving the city's value, while maintaining real service in areas he felt were crucial to uphold, especially for inner city concerns.

"My budget reduces the tax rate from $3.01 to $2.98. It's the only one offering a reduction, and it's the first real reduction offered since 1993," he said.

"Look at Nashville, they have a similar rating, but they are having difficulties in accessing investment funds because of fewer reserves. We must enforce the 10 percent reserve threshold unless absolutely necessary for emergencies."

An algebra teacher at Central High School, Ford joins others who adamantly support libraries in every community.

"Here we are facing a time in our lives where we are telling kids and trying to get the message across that education is more important than ever. What kind of message in reality are we sending to kids by closing down libraries, the only institution of learning many kids have available to them over the summer?"

The same thing with community centers, which his proposal recommends remain open on Saturdays.

"We must make sure all youth have places where they can engage in positive things. If the community center is not open, let them go to the libraries and educate themselves over the summer, but we have to maintain positive outlets for our upcoming generations at all costs. The only thing the city does that is more important is emergency services."

Ford also creates budgeting that keeps the city's golf courses open year round, but more critical, he said, is the need to get at a core problem in many inner city neighborhoods: holding property owners, especially predatory types, accountable for deterioration in many neighborhoods.

"What real good does it do having a $3 million budget to fight blight if we don't have the means to enforce the rules? And the summer time is when blight and its effects are at its peak," he said.

Strickland: Facing the facts

District 5 City Councilman Jim Strickland cut right to the chase of his concerns during a visit to The New Tri-State Defender last week.

"The census shows that we have a shrinking population base, about a half percent a year," he said in an interview with TSD President/Publisher Bernal E. Smith II. "And I don't think that can be attributed to white flight, or black flight, it should really be defined as middle class flight and I believe it's caused by the property tax rate.

"Compared with what they pay in Nashville, which is consolidated, we pay nearly 75 percent more in taxes than they do. It hurts us in business and it hurts us in population growth," he said. "People in business say people vote with their taillights and that's what we are facing here. If we hadn't annexed as we have, we would have a net loss since 2000."

Strickland does not want to increase property taxes. "If we could move (reserve funding) down to 5 percent, we could use $35 to $40 million to pay off the schools and then just work on the city budget."

There are basically two issues to address, the city's budget and the school's budget, said Strickland. "The mayor has said he can run the city effectively on the $3.01 tax rate and that's where we must remain, if at all possible. Everything above that is for the schools," he said.

"What I recommend is that we ought to pay this final obligation with one-time funding, instead of the 47-cent tax increase the mayor requested. Even if it was earmarked for one-time use, I don't believe it would ever go away."

Strickland feels the best funding mix, "Would pay for it with one-time funding; $9 million from the sale of the defense depot, combine it with $20 million from a fund set aside to pay for employee health benefits in the future. That's actually an original idea from the mayor. What I have added on my own is the recommendation to dip deeper into the reserves," he said.

"I researched and found that most cities and states keep about a 5 percent reserve, so if we could utilize between $30 and $40 million dollars and maintain a 5 percent reserve. The reserve threshold is set by the mayor and approved by the council. We can change it if we need to."

As for keeping the community centers open, Strickland has proposed allowing non-profits to take over several throughout the city. However, blowback during the last budget session may have been a strong indicator that his suggestion may not make the final cut.

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