Month: May 2013

Stock up on the energy drinks. The upcoming City Council session on the budget next week looks like a marathon, with scary numbers like a 50 percent increase in property taxes and/or 3,250 layoffs of city employees being tossed out.

The City Council’s Budget Committee met with Mayor A C Wharton Thursday in a dress rehearsal for Super Tuesday. Wharton and CAO George Little presented four for-illustration-purposes-only scenarios ranging from a property tax rate of the current $3.11 per $100 of assessed value with 3,250 layoffs to a scare-the-pants-off-you $4.83 with no layoffs and hefty payments for future debt service and pension obligations. In between were the mayor’s favored $3.36 rate with no layoffs and $3.11 with 1,420 layoffs.

The final rate is likely to be something north of $3.36 and south of $4 when the council gets through hacking away at it. The council and administration have been engaging in a dance of “who will make the tough cuts.” Councilman Kemp Conrad, a budget hawk from way back who has said for years that the council and administration are “kicking the can down the road” to ruin, called the $4.83 rate — which he does not support — an “honest budget” because it owns up to long-term obligations as well as wish-list budgets from various city divisions. From the administration side, Little presented, in the finest of fine print, a list of 21 possible cuts and savings.

“This is the package,” he said when pressed by members about whether the administration is willing to take ownership of them.

The items in the package include such goodies as elimination of medical benefits for the dependents of retirees, a defined contribution retirement plan instead of a defined benefit plan for city employees, reductions in paid leave, elimination of the proposed 4.6 pay increase for city employees, and a freeze on cost-of-living adjustments in employee benefits.

Cutting 3,250 jobs would eliminate nearly half of the city’s workforce, impose extreme cuts in every type of city services,, restore the 4.6 percent pay cut for employees who don’t lose their jobs, and cut the property tax rate from Wharton’s recommended $3.36 to $3.11. At least some of the increase is due to a decline in the aggregate property valuation in Memphis. When that goes down, the tax rate has to go up to compensate.

Boosting the property tax rate to $4.83 (on top of the Shelby County rate of a proposed $4.32) would give Memphis a sky-high combined rate that would make the most dedicated Memphians think seriously about leaving town. The “upside” would be no layoffs of employees, no cuts in services, restoration of the 4.6 percent pay cut, and payment of about $170 million to future debt service and reserves, pensions, and post-employment benefits.

The bargaining begins , or ends, Tuesday. The state comptroller has served notice that Memphis may not balance its budget via smoke and mirrors, also known as pushing around debt.

“I don’t think we will have a budget on Tuesday,” said Councilman Shea Flinn.