Thursday, April 30, 2009

Taxes á la carte?

Where the city's money comes from and where it goes.

Posted By on Thu, Apr 30, 2009 at 4:00 AM

His possible 2010 congressional race, as Mayor Herenton knew it would be, is the distraction. The proposed budget, as Herenton knew it would be, is the hard part, here and now.

To City Council members, reporters, and good citizens, duty calls, and we must analyze this thing, incomplete though it is.

Where the money comes from: The operating budget for 2008-2009 is $637 million. The biggest chunk of that ($264 million) comes from property taxes. The next biggest contributor ($98 million) is the local sales tax, followed by state sales tax ($51 million) and fees from such things as ambulance service ($16 million), the airport ($3.6 million), golf carts ($1.3 million), and those pesky library fines ($1 million).

Where the money goes: The biggest expense is police ($216 million) and firefighting ($103 million), followed by debt service ($74 million), libraries ($19 million), and legal expenses ($18 million). Schools are separate; more on that to come.

Where are the mayor's proposed cuts? Herenton said he made cuts in libraries, parks, golf courses, and community centers. But those things are small change in the budget. If the city totally erased park operations, libraries, golf courses, recreation, museums, and the zoo from the operating budget, the total savings would be $48 million, or about 8 percent. Critics of the mayor often suggest that he should cut expenses in his own office, but that line item is only $1.4 million. To get big savings, you have to cut big expenses.

The police department is off-limits. Memphis earned a new label last week as the second most violent city in America, and FedEx CEO Fred Smith told the council last week that public safety is government's first duty.

The fire department got some scrutiny from the council a few years ago. Ex-councilman Jack Sammons and other members suggested there were too many fire stations. But that issue seems to have faded on the current council, which has nine new members.

That gets us to the Memphis City Schools, which has a budget of $948 million. Less than 10 percent of that comes from a council appropriation. Last year, the council cut its funding by $57 million, reasoning that the county should pick it up. That enabled the council to cut the property tax rate to the current $3.25.

"Fully funding the schools" is a confusing message. The size of the system has been reported as 103,000 students (Kriner Cash), 107,314 students (Tennessee Report Card), or more than 110,000 students (Irving Hamer, Cash's deputy). Herenton has been saying for years that several underused schools should be closed, and Smith recommended "a very tough approach to right-sizing" the system. But Herenton didn't renew the call last week. Instead, he told the council not to "play games." And he said the council should give $82 million to MCS, half-empty schools and all. If the council does that it will mean higher property taxes for Memphians, especially if their 2009 appraisals went up. City property taxes are calculated by multiplying assessed value by the tax rate — and two bigger numbers equals higher tax bills.

But Allan Wade, attorney for the council, spelled out a couple of other options last week in a letter to members.

The do-nothing option: Chancellor Kenny Armstrong said there was no definitive authority on the city-funding question and stayed his own ruling pending appeal.

"The budget as presented to you does not include funding for the Memphis City Schools," Wade said. "The council may if it chooses fund MCS from any source it deems prudent."

The do-something option: If a court rules the council must restore the $57 million for MCS for 2008-2009, the council could do that by a separate school property tax levy of 52 cents.

To keep the current tax rate of $3.25, Wade sent the council two proposed tax rate ordinances for the 2009-2010 fiscal year. One was for $3.06 on each $100 of assessed value; the other was for an additional 19 cents per $100 of assessed value for MCS.

Two tax bills, Wade said, "would promote more accountability from those who make the spending decisions for MCS to the public that pays the taxes. Further, there would be more awareness from the taxpaying public ... as to the true and possible double-tax burden being borne by city taxpayers."

Thursday, April 23, 2009

Where the Jobs Are

More than 38,000 of them are in city, county, schools, and MLGW.

Posted By on Thu, Apr 23, 2009 at 4:00 AM

My part works.

That's what Mayor Willie Herenton told the Memphis City Council in so many words in his annual budget address on Tuesday.

The particulars of the speech (which came after our deadline) included no layoffs, a 3 percent pay increase for city employees, and no increase in the property tax. And a nice surplus in the reserve or "rainy day" fund to boot.

Not bad at a time when most private employers in Memphis, including flagship employer FedEx, are laying people off, cutting pay, and eliminating retirement contributions. Not even a symbolic layoff in city employment, which has grown from 6,570 in 1999 to 7,774 in 2008.

Of course, the council has yet to weigh in on the budget. The Memphis City Schools budget and the amount of contribution from the city have not been set. The Shelby County government and schools budgets have also not been set. And nobody knows how much chipping away there will be in the 2009 reappraisal due to appeals, foreclosures, and no-pays.

All of those things go into determining the final tax rate for the city and county, and if you live in the city of Memphis, you pay both.

But Herenton's part works, so we are told.

The second overriding message of the budget was this: In the recession, government is where the jobs are — and the health benefits and the pensions, too.

City of Memphis and Shelby County governments have overtaken FedEx as the largest combined employers in greater Memphis. Using numbers supplied by websites, communications employees, board members, and annual reports, more than 38,000 people have government jobs.

The 7,774 people who work for the city of Memphis includes 2,385 police officers and 1,721 fire department employees. Contrary to popular belief, police employment is not at an all-time high. There were 2,402 cops in 2001, according to the city's 2008 annual report.

Memphis City Schools has several thousand employees, although the exact number is something of a mystery. Superintendent Kriner Cash's communications office says an open records request must be filed to get that information. MCS reportedly took a year to respond to a records request from The Commercial Appeal on cell phones, so I declined the offer.

The MCS website says there are "more than 6,000 teachers" but doesn't give a total number. School board member Martavius Jones says there are 16,600 employees, including 7,500 teachers. The starting salary for a teacher with a bachelor's degree is $39,456, according to the website.

Memphis Light, Gas & Water has 2,723 employees, according to spokeswoman Gale Jones Carson.

Shelby County mayor A C Wharton says there are approximately 6,000 county employees, only 800 of whom are under his control.

The Shelby County school system has approximately 5,200 employees, including 3,200 teachers, according to spokesman Mike Tebbe. Starting salary in the county for a teacher with a bachelor's degree is $39,468.

Add 'em all up, and you get 38,297 jobs.

Coincidentally, FedEx CEO Fred Smith was invited to speak to the Memphis City Council Tuesday afternoon (again, after our deadline). FedEx has approximately 30,000 employees in the Memphis area. Five hundred of them were laid off earlier this month.

It is somewhat unusual for local CEOs to speak to the council on general topics. Smith said he was responding to a long-standing invitation from Chairman Myron Lowery.

Smith said he will tell the council "government has got to understand that wealth and well-being come from the private sector, so you have got to have a good environment for business." He said government's four top priorities should be safety, education, cost efficiency, and economic development and quality of life.

"Absent a safe and secure environment, all other goals are irrelevant," he said.

Tuesday, April 21, 2009

Herenton Presents Budget to Packed Council Chambers

No tax increases, no layoffs

Posted By on Tue, Apr 21, 2009 at 6:11 PM

As expected, Mayor Willie Herenton presented the City Council Tuesday with a no-tax-increase budget, but he got some sharp questioning about school funding that sets the stage for future battles.

City Councilman Jim Strickland got Herenton to admit that the budget he presented is based on the same tax rate as last year, when the council cut the contribution to schools by $56 million. If a court orders the city to put that back, the council, not the mayor, will be on the hot seat.

"Then that's your challenge, not mine," Herenton said. The City Council chambers was full, with many teachers wearing red shirts in solidarity.

Herenton said he managed to present a budget with an $89 million surplus and three-percent raises for employees -- none of whom will be laid off -- because "we just leaned on the division directors" to make cuts.

The only specific cuts he mentioned were in library hours, parks, community centers, and golf courses. He said the city got some federal grant funds to hire extra police officers, but he did not indicate whether stimulus funds are a key part of the budget.

He said a buyout plan for city employees will not be offered again this fiscal year. The proposed operating budget is $617 million. The mayor said local sales tax collections are down 3 percent and state collections are down 6 percent.

Fred Smith Has "Conversation" with Memphis City Council

FedEx chief talks about the economy, the city's strengths, and taxes.

Posted By on Tue, Apr 21, 2009 at 5:15 PM

FedEx CEO Fred Smith offered the Memphis City Council a vision Tuesday that includes public safety, playing up Memphis’ strengths, and a cautious approach to consolidation.

Speaking at the invitation of Chairman Myron Lowery, Smith met for an hour with the council in executive session and gave his opinions on a wide range of subjects. It was the first time Smith has met personally with the council since the expansion of the Liberty Bowl and the building of the Pyramid in the late 1980s.

Saying America is going through the worst economic challenge of his lifetime, Smith said “I’m pretty optimistic longer term and reasonably optimistic in the nearer term” because businesses will have to start replenishing their inventories later this year.

That was the starting point for his first piece of advice.

“The source of all wealth and material well being comes from the private sector,” he said, and government can only provide citizen safety, efficiency, public education, and economic opportunity.

He suggested Memphis “pick your spots” and play up health care, biomedical research, tourism, higher education, and transportation and logistics. He said the city school system probably has too many schools for the number of students it has, but he said several times that he was making no recommendations and realizes the council has to take the political heat. Asked if he ever considered going into politics, he said “never.”

On consolidation of city and county government, he seemed to favor a single mayor but separate school systems and other operating divisions, much like FedEx has separate operating divisions.

“In business, you can centralize into mass inefficiency” and lose your feeling for the market, he said.

He praised the Memphis Zoo, to which he has personally contributed several million dollars, and Shelby Farms as “world-class” amenities.

He is staunchly opposed to raising taxes. “I don’t think Memphis needs more taxes. What Memphis needs is more economic activity.”

Council members were respectful but not awed. When Smith noted that Nashville has benefited from a surge in economic activity, councilwoman Barbara Swearengen War pointed out that Nashville also has consolidated government.

Thursday, April 16, 2009

House of Games

Bullsh*t, Liar's Poker, I Doubt It, and other games.

Posted By on Thu, Apr 16, 2009 at 4:00 AM

The familiar card game known as Bullshit is enjoying a sudden revival in Memphis-area gaming establishments.

Bullshit, and variations such as Liar's Poker and I Doubt It, is a simple, suspenseful game played with a deck of cards or a stack of dollar bills — or in the case of the federal government, with trillions of dollar bills, but we'll get to that in a minute.

The strategy relies on the ability to bluff or spot a bluffer, in which case the player calls "bullshit" and the declarer must show his or her hand.

Continue reading »

Wednesday, April 15, 2009

Letter Claims Allen Stanford at Odds with “Evil” Davis

Mother of Stanford's Fiancee Claims Sir Allen is Innocent Man

Posted By on Wed, Apr 15, 2009 at 9:02 PM

A letter being circulated among former Stanford Financial employees and purportedly written by the mother of Allen Stanford's fiancee pins the blame for the financial tycoon's problems on his former college roommate, James Davis.

The Flyer and other media organizations received copies of the letter Wednesday through former Stanford employees. It was written Monday by a person identifying themself as Kathy Stoelker, mother of Andrea Stoelker. The Flyer emailed "Kathy Stoelker" asking for an interview or some proof of identity and received another email and a telephone call from Kathy Stoelker in northern Virginia.

"I did write the letter and I am Andrea Stoelker's mother," she said. "She is Allen's fiancee and also the chief operating officer for the Sticky Wicket, the Pavilion, and the Antigua Athletic Club.

"I would be happy to send you a copy of her birth certificate to verify that I am her mother -- unfortunately, that too has been seized by the receiver."

In the letter circulating among former Stanford employees in Memphis and other cities, Stoelker, 58 years old, claims Stanford “was at my house during the 'reported' manhunt ... I can assure you there was no manhunt except by the media."

Stoelker said she wrote the letter to let former employees know that Stanford "intends to fight but he has been advised by attorneys to be silent." She said his attorneys were aware of her letter.

The letter says "there is no Ponzi scheme," as the Securities Exchange Commission alleged.

"This will be verified in the days ahead. Allen's guilt is that of trusting Jim Davis to run the Financial Services Division. This awareness has been devastating to Allen as their friendship began when they were in college and he truly trusted this 'evil' man."

In the telephone interview, Stoelker said she characterized Davis as "evil" in quotation marks because former employees called him that in emails sent to her.

Davis, a native of Baldwyn, Mississippi, worked in the Crescent Center in East Memphis. He and Stanford have been named in federal civil complaints but not criminal complaints. Their associate, Laura Pendergest Holt, has been charged criminally.

The Fairgrounds: Big, Complicated, and Leaderless

Senior Editor John Branston takes a hard look at the fairgrounds project.

Posted By on Wed, Apr 15, 2009 at 12:09 PM

The redevelopment of the Mid-South Fairgrounds is a hard project to complete -- or even get started -- but the lack of progress is fairly easy to analyze after Tuesday's three-hour City Council meeting at the Children's Museum of Memphis. In no particular order, here are a dozen reasons this is such a toughie:

It's big and has lots of parts. There's Liberty Bowl Memorial Stadium, the Coliseum, the proposed Kroc Center, Fairview Junior High School, the remnants of the Mid-South Fair, the Children's Museum, the abandoned Libertyland amusement park, acres of parking lots, and a proposed retail and sports complex. Any one of those is a potential magnet for controversy. Taken all together, a stalemate was inevitable.

No clear leadership. Robert Lipscomb, head of the city's division of Housing and Community Development, was more or less in charge of Tuesday's meeting, along with City Council chairman Myron Lowery. There was a mayor at the meeting, but it was former mayor Dick Hackett, now head of the Children's Museum, and he kept his counsel to himself as he has for 18 years. Mayor Willie Herenton was not there. Nor was proposed Fair Ground developer Henry Turley.

Clash of the titans. That would be Lipscomb, the foremost government developer, and Turley, the foremost downtown private developer. Each needs the blessing of Herenton, who seems conflicted. For better or worse, this is one of the reasons why special "authorities" were created to oversee -- and make final decisions -- about The Pyramid, the riverfront, and FedExForum.

There is no big dog with clout. The history of the last 30 years in Memphis shows that signature sports and entertainment projects involving public dollars got done because somebody rich and influential wanted them to get done. That would include John Tigrett and Fred Smith on The Pyramid, Dean and Kristi Jernigan on AutoZone Park, Jack Belz on Peabody Place, and Pitt Hyde and Fred Smith on FedEx Forum. And even then those were difficult projects that might not make it or didn't last.

Confusing financing. The concept of a Tourism Development Zone is not that hard to grasp when the centerpiece is a convention center, a place such as Tunica, an entertainment district such as Beale Street, or a one-of-a-kind place like Graceland that attracts thousands of out-of-towners. Some of the dollars they spend in Memphis are then directed toward TDZ public projects. It is not at all clear whether there would be much tourism draw in a sports complex at the fairgrounds. The state tax rebate might come from "our" money, not "other people's" money.

A plethora of operatives and insiders. Operatives are people with government experience, know-how, and a vested interest in a particular project. There's nothing wrong with any of that. It's how things get done. But in the absence of clear leadership and big dogs, the second-level players take over. Excluding council members, there were five people with a combined 100 years experience in city and county government at Tuesday's meeting -- Hackett, Lipscomb, former county mayoral aide Tom Jones, former councilman and architect Tom Marshall, and attorney and Herenton confidant Charles Carpenter.

A council looking for guidance and answers. The 10 members of the council (out of 13) who attended the meeting were attentive, inquisitive, and respectful as could be. The majority of the council members are rookies; only Lowery, Barbara Swearengen Ware, Joe Brown, and Wanda Halbert have much experience as legislators.

The Herenton factor. Mayor Herenton realizes that his presence can be polarizing on some issues, so he lays low as much as he can. But, as some of them said at the meeting, the council, the neighbors in Cooper-Young and the Belt Line, and the other players need to know where he stands.

The ADA issue. The Americans With Disabilities Act mandates compliance with federal laws on wheelchair accessibility in public facilities. Some money will apparently have to be spent on the stadium, but whether that means $3 million or $40 million, and how much of that is ADA related, is not clear because the administration has at times used ADA as cover for other stadium expenses such as locker rooms and the press box.

The vision thing. Fair Ground's vision is an inclusive place where Memphians and visitors will enjoy sports and recreation in a wholesome environment. The problem is that Memphians self-segregate for all sorts of reasons, and there are many nice places for soccer, baseball, and fitness in and around greater Memphis.

The Target issue. A Target store or other retail store is the big money-maker in this deal. But Target has several stores in the Memphis area, and the economy is lousy now. Projections were lowered at Tuesday’s meeting, as they should have been.

Who goes where? Fairview Junior High, according to Marshall and Lipscomb, will be refurbished as a showcase public school at the corner of Central and East Parkway. The Kroc Center either goes due south of it or to the old amusement park site. The majority of the sentiment at Tuesday's meeting was to keep the Coliseum. Target's fate is anyone’s guess.

So what happens next? If the answer is "nothing," then it wouldn't be the first time. But there is some cause for optimism. The Kroc Center has millions of dollars in hand and should be ready to nudge everyone else forward. Turley and Lipscomb are both talented, experienced, and can take criticism without blowing their cool. Attendance at the Liberty Bowl has nowhere to go but up, and modest improvements could drive that. Finally, I think Turley and company are on to something with the emphasis on participant sports, from oddball to mainstream, to bring people together. There's a world of people of all ages who would rather run, swim, skate, throw a Frisbee, or chase a ball than watch pros or collegians do that. It’s nice to see them get some attention.

That's my two cents worth. What’s yours?

Monday, April 13, 2009

Fairgrounds Project Faces Cuts

Council to examine new economic realities.

Posted By on Mon, Apr 13, 2009 at 12:36 PM

The proposed redevelopment of the Mid-South Fairgrounds is going to be scaled back, the chairman of the Memphis City Council said Monday.

Councilman Myron Lowery said he was briefed on the outlook by Housing and Community Development Director Robert Lipscomb in advance of a meeting scheduled for Tuesday evening at the Memphis Children's Museum next to the fairgrounds.

"Robert has told me market conditions have changed so this will no longer be a $100 million development," Lowery said.

Developer Henry Turley's proposed Fair Ground development relies on tax credits for part of the financing. His concept is a youth sports center that includes the separately funded Kroc Center. The Kroc Center is $3.9 million short of its goal of raising $25 million in private funds.

Council members have asked for details of the project at previous meetings. Lowery said all of the main players have been invited to Tuesday's meeting, which begins at 5:30 p.m.

Read the Flyer's cover story on the Fair Ground project for more details.

Saturday, April 11, 2009

Corker in Middle of Michigan-Tennessee Fight

Tennessee Senator Bob Corker is taking a little heat from the Michigan media for his support of the General Motors plant in Spring Hill, Tennessee, which may be targeted for closing.

Posted By on Sat, Apr 11, 2009 at 6:29 PM

Corker, who will be in Memphis April 14th to meet with business groups, has been one of GM's sharpest critics while managing to also be one of Spring Hill's biggest defenders.

In an interview with the Flyer in January, the Republican senator from Chattanooga said "I think Spring Hill is one of those assets that, even if GM were to go bankrupt, it would survive and thrive."

GM used to make Saturns in Spring Hill, the fastest growing community in Tennessee, but now makes the Chevy Traverse, a heavily advertised model that lists for about $27,000 and is GM's best-selling midsize crossover. The Spring Hill plant, 30 miles south of Nashville, employs 3,000 people. A plant in Lansing, Michigan makes three other vehicles on the same platform. So a battle for survival between those two plants is shaping up.

A story in the Detroit Free Press Friday said "there's every reason to believe General Motors Corps' Spring Hill plant could be on the chopping block, whether politics plays a role in the decision or not.”

The story also says, "Add to that the fact that larger trucks, SUVs and CUVs like the Traverse could take a hit if Obama's auto team demands a more aggressive move to fuel-efficient sedans."

Corker, however, thinks Spring Hill should survive. He wrote a column for the Tennessean last Sunday which said, "If the administration uses factors like efficiency, flexibility and the quality of the workers, our modern, adaptable GM plant in Spring Hill should do very well."

The plant was shut down in January and part of February.

Corker, the former mayor of Chattanooga, also helped land a future Volkswagen plant to a site near Chattanooga.

In another Free Press story Friday, under the headline "Look who wants to protect a GM plant," the newspaper says Corker "is fighting like a Michigan Democrat to keep a General Motors plant open in his home state."

As the Free Press writes, "Corker's concern is that decisions on plant closings -- as GM cuts deeper to meet the Obama administration's mandate for more government help -- will be based more on politics than what’s best for the company."

The larger battle is between Tennessee and other southern states and Michigan and Midwestern states for the future of car manufacturing. If GM survives in its present form, the Lansing plant could have an edge over Spring Hill because it is closer to suppliers.

Thursday, April 9, 2009

Bullsh*t and Herenton's House of Games

The familiar card game known as Bullsh*t is enjoying a sudden revival in Memphis-area gaming establishments.

Posted By on Thu, Apr 9, 2009 at 4:41 PM

Bullshit (and variations such as Liar's Poker and I Doubt It) is a simple, suspenseful game played with a deck of cards or a stack of dollar bills. Or in the case of the federal government, with trillions of dollar bills, but we’ll get to that in a minute.

The strategy relies on the ability to bluff or spot a bluffer, in which case the player calls "bullshit" and the declarer must show his or her hand.

In the variant played at Herenton's House of Games, proprietor Willie Herenton has opened a game of Liar's Poker by boldly declaring that he is holding three aces in his new budget -- a three-percent raise for city employees, no layoffs, and no property tax increase. After he formally presents the hand later this month, it will pass to the Memphis City Council, which can either accept it or call "bullshit" if enough members think the mayor is really holding a busted hand.

Continue reading »

The MCS Scramble

Parents line up and camp out for spots in favored city schools.

Posted By on Thu, Apr 9, 2009 at 4:00 AM

When the going gets tough, the tough get in line early.

Memphis City Schools announced that sign-ups for open enrollment would start at 6:30 a.m. Tuesday. But Renee Farrell wasn't taking any chances. She and a friend arrived at the school board offices at 11 o'clock Monday night, an hour when many Memphians were watching North Carolina celebrate its win over Michigan State in the NCAA championship game.

Farrell, who lives in the Ross Elementary School attendance zone, has one child in Richland Elementary School and wants to make sure a younger sibling gets in too.

"I'm optimistic," she said after filling out her papers seven hours later. "As long as they don't go to a lottery rule."

Loyce Shelley arrived at the school board at 11:30 p.m. Monday and got number 21. She slept outside in a lawn chair.

Continue reading »

Wednesday, April 1, 2009

I-69: Project Circle Jerk

Mexican drug lords and Motown car guys applaud TDOT.

Posted By on Wed, Apr 1, 2009 at 4:00 AM

Citing long-term benefits to their troubled business models, drug lords in Mexico and former car executives in Detroit praised road builders in Tennessee and Mississippi for expediting Interstate 269 around Memphis.

The Tennessee Department of Transportation (TDOT) announced this week that it is speeding up construction of the interstate loop dubbed "the future Interstate 269 Corridor." Total cost of "Project Circle Jerk," as it is known to insiders, is an estimated $145 million.

Continue reading »

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