The initials PFM have become a recurring theme in Memphis and Shelby County governments. Public Financial Management has been involved in projects ranging from the Sports Authority to the city of Bartlett. Last week, PFM played a critical role in Mayor Willie Herenton’s five-year fiscal presentation.
The Great Financial Hope? During the presentation to council members, PFM managing director Marlin Mosby billed the company as the only one in the nation providing comprehensive management and financial services. While the mayor and council members have challenged this statement, Mosby refuses to back down, saying other firms only offer “pieces” of their financial services.
Bragging rights aside, the company has earned a reputation for streamlining municipal operations. Locally, PFM is perhaps most noted for a similar study of Shelby County government last year. That $550,000 study proposed cutting the county workforce, among other things, to close a $200 million fiscal gap. The firm’s client list also includes the cities of Germantown, Nashville, Knoxville, Chattanooga, the state of Tennessee, and Rhodes College.
Cost for the city’s five-year plan would be about $600,000, but PFM has tied its compensation to a minimum savings of $50 million from the city’s budget. Although the council has not approved the plan, the city already owes PFM for its preliminary services.
Five-year Fix? PFM projected the city’s five-year cumulative gap between revenues and expenditures at $485 million. While dire, this predicament is nothing new to lawmakers who have battled for other types of revenue sources such as payroll transfer and increased sales taxes.
But the alternative revenue options failed — not because of overburdened taxpayers tired of tax increases — but because of the presentation deliveries.
“The new property-tax increase did exactly what it was designed to do: balance this year’s [budget] gap. It does not go beyond that,” Mosby says. “The [alternative revenue sources] were rejected because they were presented in a vacuum. If you present to the public, ‘Hey, we want another tax,’ the answer is no. What we have proposed is to look at the whole thing as a package.”
PFM’s package, composed in conjunction with Mayor Herenton, includes a mix of alternative revenues, better collections, and budget cuts. Preliminary plans include sharing city/county services and rekindling plans to streamline MLGW operations without merging the utility with the city.
