Friday, June 21, 2013

Deal Appears to be Nearing on City Tax Rate in $3.30-to-$3.40 Range

On-again, off-again restoration of employee pay cuts likely to be approved on Tuesday.

Posted By on Fri, Jun 21, 2013 at 12:13 PM

Council Lee Harris vote could be key next Tuesday.
  • JB
  • Council Lee Harris' vote could be key next Tuesday.
After two weeks of dealing with an implied threat of intervention from state Comptroller Justin Wilson that later became explicit, City of Memphis officials appear to have come out from under the gun, though a final resolution of the city’s budget for fiscal 2013-14 is yet to be achieved.

But here’s a What-If for you: Given that Wilson, in an interview this week with the Flyer, made a point of citing state law as a basis for his possible intervention in the city’s budget travails, what would happen if the Council, whose members face reelection bids in a couple of years, should allow the Comptroller to do just that, assuming all the onus for a tax increase?

One Council member, asked about that prospect, said, “There have been a lot of jokes about that, but it’s not going to happen.” Instead, he said, it is likely that the Council will reach agreement, when it reconvenes budget discussions on Tuesday, on a tax rate somewhere between $3.30 and $3.40 — in the neighborhood of Mayor A C Wharton’s originally proposed tax rate of $3.36 and up from the present rate of $3.11.

The final tax-rate figure is likely to be based on some restoration of the 2011 employee pay cuts that were temporarily excised again on Tuesday of this week. It will also allow for necessary adjustments in the city’s health insurance programs.

Meanwhile, the Comptroller’s office seems to be brandishing both a carrot and stick in its dealings with Memphis. On Monday, apropos the City Council’s then seemingly stymied budget negotiations, Wilson, citing Section 9-21-403 from the annotated Tennessee code, told the Flyer, “…[T]here’s absolutely no question that I’ve got to approve the budget. If the budget doesn’t balance, I can bring it into balance. There’s no question I can raise taxes…. It’s the last thing in the world I want to do….But just look at that statute. The authority is powerful!”

But on Tuesday, as the Council conducted a come-to-Jesus budget session that gave tentative approval to some $30 million in new cuts, including potential layoffs and abandonment (temporarily at least) of previous plans to restore 2011 reductions in employees’ salaries, the Council and Mayor A C Wharton received a letter from Sandra Thompson, the Comptroller’s director of state and local finance stating that “the City appears to have complied with the Comptroller’s directives.”

Perhaps the operative metaphor should be one of good cop/bad cop.

Wilson’s explicit threat of Monday was in the wake of two letters addressed to city officials. One was to Wharton advising against a debt refinancing plan by Wharton, reminiscent of one employed by the mayor in 2009-10, that Wilson referred to as “scoop and toss” in that it would load too much debt repayment into future years. Another letter, addressed to Council chairman Edmond Ford Jr at Ford’s request, advised that, if the City could not successfully conclude a workable budget within acceptable financial guidelines, “someone else may end up doing this.”

Even as he made Monday’s more explicit reference to potential state action, however, Wilson was at pains to suggest that he thought the Council was moving in the right direction.

Even should the employee salaries be amended upward again next Tuesday, when Councilman Lee Harris, on vacation this week, returns, a tax rate in the range of $3.30 to $3.40 would seem to accommodate the expense and balance the budget, easing the Comptroller’s concerns. (The voters’ concerns, of course, are a different matter.)

Meanwhile, Shelby County’s fiscal plans, apparently on course after the County Commission earlier this month approved County Mayor’s budget and a tax rate of $4.38, increased by 32 cents, hit a snag on the tax rate’s required second reading this week.

With one member, Democrat Melvin Burgess, absent, the tax rate failed to get the required seven votes on the 13-member body. Another Democratic member thought previously to favor the new tax rate, Commissioner Sidney Chism, voted no on second reading. Both Burgess and Chism are targets of an ethics complaint by Commissioner Terry Roland, a Millington Republican who has asked the state Attorney General for an opinion on the two Democrats’ eligibility to vote on the tax rate.

Roland hinges his complaint on the facts that Chism operates a day care center that receives county “wraparound” funds and that Burgess is an employee of the new Unified School System that is directly funded by county government. On the tax rate’s first reading, Burgess declared he would not submit to “bullying” and voted for both the tax rate and Luttrell’s budget, which required only one round of approval for passage. Burgess is still expected to vote for the $4.38 tax rate on July 8, when the Commission has a final vote.

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