Two hours before they were scheduled to hear from the mayor this afternoon about the upcoming year's budget, City Council members heard about the economy from another source — FedEx founder Fred Smith.
Smith was invited to the council's executive committee meeting to talk about the city, the economy, and the future.
“I think the economy has begun to bounce along the bottom,” he said. “I don’t see it materially going south like we’ve seen in the last several quarters.”
Smith said he hopes the economy will rebound in the fall with the beginning of an inventory replenishment cycle.
He also told the council there were four categories he thought local government needed to focus on: public safety, education, government efficiency, and economic development.
He called public safety the most essential, followed by education.
“The public school system in Memphis is like a lot of legacy businesses,” Smith said. “We’ve got a lot of physical [properties] that may have been appropriate in the past, but it probably needs an attempt at right sizing it.”
Council members asked Smith for his advice on a number of issues, including consolidation, police residency requirements, and revenue sources.
As leader of one of the world’s largest companies, with a number of different divisions, Smith said he wasn’t sure it was a good thing to consolidate local government.
“There’s a lot of overlap between our city and county governments,” he said. “I don’t necessarily think all the systems need to be put together. In business, you can centralize massive inefficiencies. You get too far from your customers or your constituents and that can work against you.”
He also told council members that FedEx once considered putting residency restrictions in place for its pilots, but decided against it. At the time, the company had a goal to employ the most minority and female pilots of any carrier — a goal Smith noted they met — but with residency restrictions, they "degraded the pilot applicant pool."
"We just decided it would be counter productive to put those restrictions in place," he said.
In a mini macro-economics lesson, or what he called "hard-headed economics here," Smith told the council that he thought the way to increase the city's tax revenue wasn't to increase the tax rate or impose an income tax, but to make the city more attractive to private industry.
"I don't think Memphis needs more taxation," Smith said. "I think Memphis needs more economic activity."