Tag: budget

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MATA CEO Talks Funding, Frustrations, and the Future

CREDIT: Facebook/MATA

Facebook/MATA

The city’s proposed budget for the upcoming fiscal year allocates $10 million less to the Memphis Area Transit Authority (MATA) than this year’s.

In Memphis Mayor Jim Strickland’s proposed budget, which he presented to the Memphis City Council last week, MATA would get a little under $19.2 million in fiscal year 2021, down from this year’s amount of $29.2 million.

However, Gary Rosenfeld, CEO of MATA, said he does not anticipate this affecting the agency’s ability to provide services over the next year, largely due to a substantial stimulus package from the federal government.

Under the federal CARES Act, MATA is slated to receive approximately $35.7 million in aid. Rosenfeld said the guidelines for spending CARES Act funds for transit is fairly liberal.

“This money is available and we will charge whatever we can legitimately charge to these accounts,” he said. “We should not see any type of degradation of service because of the city’s financial situation. We should be okay as long as we move cautiously and make sure every expenditure we want to use the stimulus package for is legitimate based on the rules and regulations.”

Rosenfeld said MATA has spent a “considerable amount of money” in response to the coronavirus, on expenditures such as PPE, cleaning, and hazard pay for employees.

These expenses can potentially be offset by CARES Act funds, he said: “We don’t anticipate a negative impact on this fiscal year.”

Service will continue, but there likely won’t be enough funds to make significant improvements in the upcoming year, based on the city’s budget. MATA was also on track to receive a $10 million investment from Shelby County next year.

Since September, Shelby County Mayor Lee Harris, backed by a number of county commissioners and community members, has been leading the charge to generate dedicated funding for MATA.

Harris’ proposal to generate the funds would have implemented an annual fee of $145 for a household’s third vehicle. Early this year two county commissioners presented an alternate plan that would have increased the countywide motor vehicle tax, also known as the wheel tax, by $20 for every vehicle owner.

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But in the midst of a pandemic and economic uncertainty, both plans have been thwarted. Now, Harris is proposing to increase the wheel tax by $16.50 but to supplement the county’s budget.

“Given the financial situation of the city and the county as a result of the COVID-19 pandemic, I don’t think the county is going to move forward with that plan, at least not for this next fiscal year,” Rosenfeld said.

MATA was planning to use the additional funds to make major improvements along the agency’s core routes that would have increased service frequency.

With these improvements, Rosenfeld said 80 percent of riders would have been able to get from point A to point B in less than an hour. “Well that’s going to be on hold for a bit, and that’s unfortunate. As we plan to bring routes back on line in the future, we will be looking to make changes to bring our routes in line with the transit vision plan. Any opportunity we get to move in that direction, we will certainly be doing that.”

On Board

Rosenfeld said the level of service MATA is able to provide is being affected by the pandemic, but the agency is doing its best to meet passengers’ needs. 

Per city guidelines, which heed the advice by the Centers for Disease Control and Prevention, only 10 passengers are allowed on MATA buses at a time.

“There’s still social distancing issues, and that puts a limit on the resources available to provide service to the community,” Rosenfeld said. “We’re having to run three or four buses to provide the same level of service that one or two buses did before. That’s also additional costs.”

Rosenfeld said he believes MATA has been “fairly successful” at filling the gaps with extra buses to shorten wait times and maintain continuity of service.

Typically carrying about 22,000 passengers in a given day, MATA has had between 7,000 and 8,000 passengers a day since the pandemic began. Rosenfeld said these numbers are similar to other transit agencies across the country since COVID-19 has caused ridership to decrease: “So from a statistical standpoint, we’re doing good.”

Still he knows service hasn’t been “100 percent accurate” and is aware that customers are frustrated.

“Have we received complaints from the public that they don’t like the route network in its current form?” Rosenfeld said. “Certainly, we have. We share that frustration with customers in the fact that we have had to limit our core network. We also fully understand that it’s frustrating to have a bus pass when there are ten people on a bus already and you can’t get on.

[pullquote-2]“However, the safety of passengers and employees is of greater concern to us. We’re making these decisions with their safety in mind. It may not necessarily be with their convenience in mind, but it certainly is with their safety.”

Rosenfeld also urges employers to recognize some of the inconveniences that transit riders are facing now and be understanding.

Preparing for the Future

From fare boxes to reopening its transit centers, Rosenfeld said MATA has a lot to consider as it returns to “normal.”

“When we resume fare collection, what is that going to look like?” Rosenfeld said. “The fare box will still be something that everybody is touching and it’ll be taking money that’s dirty. So we’re reviewing what that will look like. What technology is available to enable us to be able to collect fare safely.”

MATA is also looking at how to change the seating configuration on its buses so that passengers can practice proper social distancing, while also considering what type of barriers can be installed on board to protect bus operators.

“We’re looking at all of these things and trying to gain as much information as possible,” Rosenfeld said. “I’d be foolish to say I know what tomorrow is going to bring. There’s a lot of information out there. Rules keep changing. We do a lot of work to find out the guidance has changed and now the end zone is in a different place.”

Rosenfeld said this is one reason why MATA has to take a cautious approach, especially when it comes to how to allocate the CARES funds.

“If we invest it too quickly, we might find that we are overspending on one thing and not spending enough on something else,” he said.

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Council Recap: Budget Passes Without Delay, Beale Street Cover Stays

The Memphis City Council passed the 2020 fiscal budget Tuesday after little discussion.

A large portion of the budget is dedicated to public safety, as the council voted to give both Memphis Police Department officers and Memphis Fire Department personnel a 4 percent pay increase — up 1 percent from what Memphis Mayor Jim Strickland proposed in April.

The 4 percent raise will cost an additional $2 million, according to the city’s chief operating officer, Doug McGowen.

Before the vote, representatives with the Memphis Police Association (MPA) urged the council to pass a budget including a 5 percent raise, which the council had agreed upon during an impasse hearing late last month.

Deborah Godwin with the MPA told the council she was there to make sure the council included that 5 percent raise in the budget it passed Tuesday.

According to Godwin, the city’s impasse ordinance requires the council to pass a budget with the amount agreed upon during the impasse.

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However, council attorney Allan Wade said the council’s role is to solve the dispute between the unions and the administration. But, any decision the council makes during an impasse, isn’t binding.

John Covington, chief negotiator for MPA told the council that 5 percent is an important number.

“Any kind of raise is welcomed,” Covington said. “Police officers can never be paid enough. That 5 percent number was important, though, because it sends a message about recruitment, as well as morale.”

Covington said police pay is an important part of creating a “safe and prosperous community.”

Michael Williams, president of MPA echoed those sentiments, adding that he wants to “trust the system to actually work.”

“We still want to trust the council to do what’s right,” Williams said. “You always ask us to trust the system, trust the process. You guys heard our proposal, heard the city’s proposal, and adopted our proposal.”


Without discussion, the council voted unanimously in favor of the amended budget.

The newly passed budget also includes a 1 percent pay raise for all city employees and no property tax rate increase, which remains at $3.19.

The council also voted Tuesday to keep the $5 cover charge to enter Beale Street in place until the end of September.

The fee was put in place after a pair of shootings and stampedes took place one weekend in May. Now it will be in place on Friday and Saturday nights, except on nights when conditions aren’t conducive to large crowds.

Conrad said the $5 fees will go toward implementing security measures on the street, such as installing more SkyCops. About $600,000 is needed.

Before the vote, Councilman Martavious Jones said he will not support the cover charge without seeing data showing that there is a cause-and-effect relationship between having a fee in place and the number of incidents that occur on the street.

Jones maintained that having the fee in place over Memorial Day weekend did not deter crowds from rushing the street and causing disturbances.

But, Jennifer Oswalt, president of the Downtown Memphis Commission, said the fee has “proven effective” and that there is evidence that the $5 fee is substantial enough to decrease the crowd just enough to reduce the likelihood of a stampede that results in a serious injury.

“It doesn’t reduce it such that no one comes to Beale Street,” Oswalt said. “It’s not as effective as a $10 fee at reducing crowds, but it’s enough to keep the number of exits slightly below that dangerous level.”

Oswalt said that if there continue to be incidents while the fee is in place, then “we can discuss it again.”

Memphis Police Department Director Michael Rallings said the fee is a “reasonable response” to recent incidents occurring over Memorial Day weekend, and that his “obligation is to keep people safe.”

“If that helps keep people safe, then I think we should support that,” Rallings said. “We know there is no 100-percent solution that works anywhere, but if we see something that works, we should do it. … But I’m going to defer to the wisdom of the council to make a decision that helps to ensure the safety of our visitors, our officers, and business individuals.”

Rallings said Beale Street is an “open bar.” “If you run an open bar for 17,000 to 20,000 people, there are some issues you may run into. And I think the Beale Street security fee helps that.”

Councilwoman Patrice Robinson said she is “really struggling with paying a fee to participate on a city street in Memphis.

“But I do understand that we have a lot of people on the street and our police officers need additional support,” Robinson said, garnering applause from members of the audience.

Robinson said she believes the fee is not needed for safety, but as a way to raise money for additional security infrastructure on the street.

“If we don’t have $600,000 in our budget, I think this is a way to garner those dollars, but I would not go around saying that this is a way to keep down anything on Beale Street.”

Councilwoman Jamita Swearengen agreed, saying it’s a “big cop out” not to say the fee is needed to fund the tools required to keep Beale Street safe.

Swearengen also said when the fee has been in place, there were no checks and balances in place to keep the program consistent: “We haven’t heard of how the money will be collected, who’s going to house the money, how the money will be transferred to the Memphis City Council.”

Wrapping up the discussion, Council Chair Kemp Conrad, supporting the fee, said he trusts Rallings “implicitly, when it comes to public safety.”

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“If you haven’t been down there to see it and talk to the police officers and ask them what they need to do their jobs to keep themselves safe, to keep Memphians safe, and to keep visitors to Beale Street safe, then I’d say you haven’t done your due diligence to vote on this item and certainly not to vote ‘no’ on an emotional basis when people’s lives and safety are included.”

The council voted 8 to 4 vote in favor of the fee. Council members Conrad, Worth Morgan, Ford Canale, Sherman Greer, Frank Colvett Jr., Reid Hedgepeth, Cheyenne Johnson, and Gerrie Currie voted in favor. Council members Joe Brown, Robinson, Swearengen, and Jones voted against the measure.

The entrance fee is one of the 24 recommendations made by the crowd control consultant, Event Risk Management Solutions, last year. Council chair Conrad said all 24 of those recommendations have been implemented.

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Morgan Got Some Answers on Election Money But Not All

Budget season is now underway at Memphis City Hall.

Memphis City Council member Worth Morgan did not hold the city council’s portion of the budget during talks yesterday but said if “significant progress” is not made on a review of the funds spent for an council-led “education campaign” last year, he’ll revive the issue.

Five council members approved spending about $40,000 on a “public information campaign” on three referenda to “explain their potential benefits” of them and “counter some of the misinformation presented.” The campaign was to answer what council members described as a flood of phone calls to their office from the public about the referenda. (Get more details about the campaign in the linked stories below.)

Morgan

Three council members — Ford Canale, Kemp Conrad, and Worth Morgan — voted against the campaign. At the time, Morgan promised that ”every dollar spent by the chairman on this informational campaign will be tracked, accounted for, and made easily available to the public.”

He said last week, he’d be in favor of holding the council’s portion of the budget this year until he had more answers. He got some answers, he said, and did not hold a vote on the council’s budget during a budget committee meeting Monday. However, he said he’d bring the issue up again later if “significant progress” was not made to clarify his questions.

Here’s what Morgan said during that budget committee meeting Monday:

“There’d been some discussion dealing with me about this city council budget until we had a full accounting of how some of the money was spent last year, specifically the public referenda campaign.

“We didn’t quite have the answers yet. But there’s been some sincere movement forward on that issue. I’ve called Deidre Malone today. She was very responsive. But we weren’t able to connect. We traded voice mails; trying to shine some light.

“Now I have the financial disclosure statements from the city council referendum committee, from the Diversity Memphis (political action committee — PAC), as well as invoices from the Carter Malone Group and the city of Memphis.
[pullquote-1]”So, I have a lot more information than we did before. And I’m happy to share it. It’s just some of the information in the numbers that don’t match up on how things were spent. So, we’re still trying to track down exactly what of that $40,000…how it was spent.

“I think that’s something that we promised to the people when we did the campaign, at least I did. I think most people agreed to it in executive committee.
[pullquote-2]”There was some discussion about…if we didn’t have those answers by today, would we delay this vote? I’m not interested in making that motion or holding [the budget]. But I just wanted to put that out there.

“If anybody has questions about those invoices or those disclosures, I’m happy to share them. We’re going to continue to be tracking it down.

“If we don’t make significant progress again in the next two weeks or four weeks, I think it might be a better place to have this discussion in the audit committee.”

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Strickland’s Proposal for Fire, Police Raises More Criticism


Memphis Mayor Jim Strickland’s proposal to give 3 percent pay increases to all commissioned Memphis Police Department (MPD) officers and Memphis Fire Department (MFD) personnel continues to receive pushback from unions representing the two agencies.

After the mayor announced the move last week, he was hit with criticism from both the fire and police unions, who said there was not enough discussion of the increases.

Strickland touted the proposal is his weekly newsletter on Friday.

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“It’s the right thing to do for the men and women who quite literally put their lives on the line every day,” Strickland said in his email. “I’m incredibly proud of what we’ve partnered with the city council to accomplish, thanks to improving revenues, fiscal discipline, and some private donors.”

Dan Springer, the deputy director of media affairs in Strickland’s office, said the proposed 3 percent increases aren’t related to the private donations mentioned by the mayor. Instead, Springer said it refers to the $6.1 million grant previously given to the Memphis and Shelby County Crime Commission (MSCC) for retention and recruitment.


Details surrounding private donations to the MSCC were recently at the center of a lawsuit filed earlier this year by Wendi Thomas, founder of MLK50: Justice Through Journalism, and the Marshall Project, a New York-based nonprofit news organization.

Less than a week after the suit was filed, the names of the 2018 donors were available on the MSCC’s website, according to MLK50. Some of the largest donors last year, giving more than $100,000, include AutoZone, First Tennessee Foundation, and Memphis Tomorrow.

The cost of raises for 1,632 fire department employees and 2,089 police officers would be about $9 million. That’s nearly all of the additional $10 million Strickland said is added to the budget each year.

“The pay increases we propose will eat up the vast majority of that — which I think sends a strong message of just how big of a priority public safety pay is,” Strickland said last week.

MPA

Michael Williams, president of the Memphis Police Association

Michael Williams, president of the Memphis Police Association (MPA), questions the motive behind the proposed pay increase, saying that officers are “being used as political pawns.”

“We knew that we would not get a raise last year,” Williams told the Flyer. “But because this is an election year, we are being used as that golden nugget.”

Williams also said that 3 percent is not an adequate increase, but only a “gesture.”

“We have fallen too far behind and now we are playing catch-up,” Williams said. “It will not make a dent in what we really should be getting paid for the job that we do.”

Between 2010 and 2015, officers didn’t receive any raises. During that time from 2011 to 2013, officers instead had their pay cut by 4.6 percent.

Even after the 3 percent increase, Williams said MPD will remain one of the lowest-paid departments in Shelby County.

“We deserve to be brought up to equal pay of the highest-paid department in Shelby County for now,” Williams said. “That would be a great start and we feel is not asking too much.”

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Ursula Madden, chief communications officer for the city, responded to Williams’ claims saying that “it unfortunate that MPA views a 3 percent raise in this light.”

“If council approves this raise, this administration will have increased police officer pay between 8.75 percent and 10.75 percent since 2016,” Madden said. “Would the mayor like to do more? Absolutely. But, we have a finite amount of resources and this is the best we can do.”

After Strickland announced the increases last week, representatives of both the fire and police unions said the announcement was made without proper negotiations and that they hadn’t agreed to the 3 percent proposal.

MFA

Thomas Malone, president of Memphis Fire Fighters Association

Thomas Malone, president of the Memphis Fire Fighters Association (MFFA), said Strickland’s announcement of the pay increases came at the same time he and others from MFFA were meeting with city officials to discuss the increases: “No decisions had been made.”

Malone said he wasn’t bothered by the amount of the increase, but by the fact that there was no real negotiation period before the proposal was made public.

Malone met with city officials Wednesday morning to renegotiate the amount, proposing a 3.8 percent increase rather than the 3 percent set forth by the mayor.

Malone said the meeting was “uneventful” and that the group is at a standstill until the mayor presents his budget to the Memphis City Council next month.

“I think we made an offer that was very well thought out and data driven,” Malone said. “From our research it’s an amount that the city can afford. We are not trying to break the bank here.”

The mayor will present the 2020 fiscal year budget to the city council on April 16th. The council has until the end of May to discuss, alter, and pass the budget.

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Opinion

Wharton Says Memphis Is No Detroit

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Memphis Mayor A C Wharton said Friday it is not a time to “pile on” Detroit in the wake of its bankruptcy, but took pains to make a case that Memphis is a much healthier city.

Wharton called reporters to City Hall for a comparison-making session that he admitted was not unlike the athletic director who calls a press conference to announce support for the football coach — which is often the kiss of death. He said his first reaction was that the comparison “is so inept that I am not going to dignify it by responding,” but respond he did.

“They need to hear that we do recognize our challenges and are going to meet them head on,” he said. “They need to hear that from me.”

He produced a chart showing that the Memphis city pension plan is nearly 75 percent funded, with more than $2 billion in the bank. Memphis, he said, has roughly half as many city employees for close to the same population, and a budget approximately one fifth as large. Memphis has a more diverse economy. The “key difference” he said is “there is no denial in this city” that there are financial challenges even during the heat of council debate over the budget. As for the state comptroller’s letter, “we had started down that path even before that without any warning or threats that said we have to change some things in the pension situation.”

Wharton opened the session with some comments about Trayvon Martin.

“I have six sons and four grandsons and have been in courtrooms a good part of my life, so for me it wasn’t just can you comment on something on a tv screen,” he said.

He said he is “glad folks are going to rally” for a “noble cause, that is to ask for some redress.”

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Opinion

Kicking Cans and Cliches at City Hall

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“Kick the can” is the early leader for Cliche of the Year, edging out “tough choices” and running ahead of last year’s winner, “the new normal.”

When you hear those phrases you know it is budget-making time in Memphis, Nashville, and Washington. In Memphis, the process takes about a month and a half from starter’s gun to finish line. It’s still early, but not too early to handicap the field.

“Kick the can,” (KTK) and its cousin “kick the can down the road,” means that politicians make the same old arguments, cobble together a little of this and a little of that, and wind up putting off the “tough choices” until next year. Few will admit to being a can kicker. A can kicker is sort of a wimp. Kicking the can means refusing to make the tough choices (TC) or “bold strokes” (BS) that will make the future better for our children, who are “our most precious asset” (OMPA).

The opposite of KTK is “game changer.” Here are some game changers and the TCs that go along with them. Think of this early stage of the budget process as the bidding round in bridge or poker, before the ins are in and the outs are out and the cards are played. I bid this, you bid that, I counter, you counter, and so on.

Raise property taxes, either permanently or “one time” via a “special assessment.” The city of Memphis can raise a lot of money this way but would risk driving residents to less-taxing parts of Shelby County and the world. Councilman Shea Flinn and Mayor A C Wharton support a one-time assessment to pay off the city school system for an old debt. Flinn says it has little if any chance, even with the mayor’s support.

A payroll tax is an old saw that someone brings up every year. It was proposed by former councilman Janet Hooks several years ago and taken seriously enough to get bashed by the chamber of commerce and business leaders and trounced in a referendum. Council member Wanda Halbert brought it up this week.

Close cousins of the payroll tax, sometimes called a privilege tax, are toll roads and bridges. The idea is to tax somebody else, particularly people who work in Memphis but live somewhere else. You can bet trucking and logistics firms would love this.

Efficiency studies are popular with non-can-kickers who want to be seen as more practical than payroll taxers or toll roaders. There is usually an efficiency study handy on the shelf somewhere. Councilman Bill Boyd mentioned the most current one this week. The problem, as Wharton noted, is that there is no slap-your-forehead, why-didn’t-we-think-of-this-before idea in it. And Wharton, remember, has been a mayor for ten years.

The efficiency study’s cousin is innovation. Innovation is golden. You can’t be against innovation. You sound innovative just by saying the word. And it is a perfect opportunity to say “think outside the box,” (TOTB), winner of the 1999 Cliche of the Year Award. It is also a copout (1969 winner) and a crock of crap (COC) unless the person saying it has an actual innovative idea that can get seven votes on the council.

The all-time efficiency study is the consolidation campaign. We have been there and done that.

Reducing executive salaries, either in the police department (council member Janice Fullilove) or across the board, is a politically safe option. But it is neither brave nor a game changer. Anyone who bothers to read publicly available tax forms and proxy statements knows that local nonprofits, hospitals, and corporations pay ten times higher executive salaries than the city or county or the school boards.

Privatizing government functions is a conservative favorite, right up with there with “deep cuts” in pension benefits and number of employees. The jail used to be a privatization target but not any more, for some reason. The latest small-bore targets are downtown street parking and delinquent tax collections. What is not said is that strictly enforcing parking fines and adding meters everywhere would probably piss people off and make them less likely to come downtown as opposed to the ‘burbs, where parking is free. And both of these measures are borderline KTKs because they would give the city a one-time payment, ala a pawn shop transaction.

Privatizing the city sanitation department is flying just below the radar (1989 Winner) at the moment. Joe Brown detected it and called out Flinn yesterday, vowing to oppose it in the name of sanitation workers and women, whom he said would be disproportionately harmed. Sanitation workers calls up visions of Martin Luther King, I Am a Man signs, and 1968 and hectoring visits from Al Sharpton and Jesse Jackson. Privatization is even less likely than a tax increase.

Almost as sacred as sanitation workers are firemen. Firemen and policemen have a habit of showing up in large numbers at council meetings when they smell a rat. Both divisions are off the chopping table at the moment even though they account for well over half of the operating budget.

This is why KTK is always the fallback option. And as Wharton said, it is neither popular nor painless to cut 125 jobs, $23 million here and $10 million there, and everyone’s paid vacation days from 14 to 12. Plus, as an attorney he is constitutionally and philosophically opposed to defying three courts that have said the city must pay the school system. He has a possible deal with MCS to settle for $40 million because MCS doesn’t want to disable the engine that makes it go.

A one-time property tax assessment of 39 cents on the tax rate would put the past debt behind us but not relieve Memphians of their double taxation for schools. That issue is pending in the federal court, and Memphis is likely to be on the hook for $80 million a year for another two years at least.

Wharton can kick the can as well as any politician, but he’s not doing it this time. A one-time tax assessment and a menu of “shared sacrifice” like the one he proposed Tuesday are sensible and doable. We’ll see what cards the city council has left to play, and who does what, who bluffs and folds, and who kicks the can in the next six weeks.

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News

Council to Look at Cuts on the 12th

When the Memphis City Council comes back its first meeting on the 12th, it will be looking to make at least $10 million in mid-year budget cuts in order to fund a payment to the Memphis City Schools.

Memphis mayor A C Wharton will be bringing proposed cuts to the council, including consolidating services within city government and with county government, but he could not say how many jobs he thought might be effected or cut.

The council hasn’t voted on terms of the payment, but a proposal on the table includes taking $30 million from the city’s reserve fund, cutting $10 million, and giving the school system $10 million in debt forgiveness (for money the city says it’s owed by the schools).

It’s been said that this is a rainy day for local government, but it’s not a storm that couldn’t have been predicted.

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Editorial Opinion

The Merger

All’s well that ends well, as the old saw has it. Since the bombshell news of a proposed merger between Delta Air Lines and Northwest Airlines began to leak only on Monday, it’s premature to forecast how it will end. For one thing, the two airlines bring to this marriage of

convenience two different sets of pilots, with two different seniority systems and other benefits packages, and all that has to be reckoned with before the merger is final. Then there’s the matter of possible obstruction in Congress.

Even so, the state of the troubled airline industry is such that the merger is likely to go forward. It promises to provide a real measure of stability at a time when a troubled economy has been causing numerous smaller airlines to collapse, domino-style. Not only would the new mega-airline, to be called Delta Airlines, be a force to reckon with domestically, it would span several continents and become, ipso facto, the world’s largest global carrier. And Memphians, who had been exposed nonstop to warnings that Northwest could yank or diminish its local presence, have been assured by the prospective new management that the city will retain its hub status in the newly configured monolith.

However things develop from this point, and whatever the shape of things in the end, local airport officials are expressing optimism. And, if nothing else, a period of prolonged suspense seems to be over with. For the time being, and, hopefully, for quite a while to come, all does seem well.

Budgeting Change

As we had been warned would be the case, both major local governments — those of Memphis and Shelby County — are facing either downsized services or up-sized tax rates, and, quite likely, some combination of the two. Both Memphis mayor Willie Herenton and county mayor A C Wharton had given ample warning of the bad financial weather, and both, in moving to deal with it, have continued to push for city/county consolidation as the only real long-term solution. But, to invert a familiar phrase, that will be then, this is now, and stop-gap measures have to be found.

Even as Herenton was preparing to call for a major property-tax increase on Tuesday, members of the Shelby County Commission were looking for constructive alternatives to another increase for homeowners. Various proposals were floated by commissioners at an unprecedented emergency meeting on Saturday and in a regular budget committee meeting on Monday. Looking for virtue in necessity, the commission considered everything from massive layoffs of county personnel to another rise in the already dreaded property tax — a remedy rendered even more questionable than usual by the currently flummoxed housing market.

In the process, they revived a formerly discarded and now-retooled proposal for a privilege (read: payroll) tax that would both exempt low-income earners and allow for the general property tax to be lowered. It’s worth a try, though the state has to give its approval to this county initiative. The city will shortly have to start its own head-scratching. Lots of luck to the members of both bodies.

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Opinion

Auctioning Memphis

From South Memphis to Southwind, Memphis is losing value. Two people who ought to know say so. Both are professionals, and neither is an alarmist or a naysayer.

One of them is Shelby County asssessor Rita Clark, whose job is putting a dollar value on houses, buildings, and land for tax purposes. The other is auctioneer John Roebuck of Roebuck Auctions, one of the leading real estate auction firms in the South.

They calculate value differently. Clark and her staff use computer models, comparables, sales histories, and first-hand “windshield” inspections. Roebuck wields a microphone and a gavel and stands in front of a group of buyers and opens the bidding.

But they’ve come to the same conclusion: Real estate prices are declining, which reverses a long trend of increasing values.

“Memphis is a strange city that does not dip and rise like other parts of the country,” Roebuck said. “Right now, Memphis is down about as far as I can remember in 30 years.”

He said people are leaving the city, demand for housing is low, and there is a surplus of new homes and condos. Even the owners of some million-dollar homes are turning to auctions as a way to unload their property.

“Auctions get a bad rap,” Roebuck said. “An auction typically brings the true market value that day. Appraisals are just one man’s opinion.”

He expects to see “a substantial reduction” in home values in the next countywide reappraisal in 2009, leading to an overall decline in the tax base.

Clark doesn’t disagree with that evaluation.

“Absolutely,” she said, when asked if the tax base in Memphis could be shrinking, although she declined to put a number on it at this time. “We follow the market. We don’t predict the market.”

Clark will leave office next September after serving 10 years. In the 1998, 2001, and 2005 reappraisals, the total value of assessed property in Memphis increased an average of 14 percent each period. The suburbs were up even more, led by Collierville (up 24 percent in 2005) and Lakeland (up 30 percent in 2005).

Higher property appraisals are an indication of a healthy economy and provide a cushion for Memphis and Shelby County governments, which operate primarily on property taxes and sales tax. If housing prices continue to fall, lower appraisals will mean lower tax collections and less money for schools, police and teacher salaries, sports facilities, parks, and debt service.

There is also the prospect of no tax collections at all from some property owners. Memphis is one of the top foreclosure markets in the country. Foreclosures are expected to get worse in 2008 as subprime mortgages are reset at higher rates.

The usual way to balance the budget in Memphis and Shelby County is with a tax increase, but Memphians already pay the highest property tax rate in Tennessee. The smell of scandal is in the air. Houses aren’t selling. Values are declining. Mayor Herenton got only 43 percent of the vote. The 2008 City Council will have nine new members. And they’re going to increase taxes? Don’t think so.

Other signs point to a stagnant city that is getting poorer, not richer. In banking as in real estate, it looks like the big money has been made for a while. This has been an awful year for banks. The stock price of First Horizon, the last of the big Memphis-based banks, is $21 a share compared to $43 a year ago. The share prices of other regional banks with a big presence in Memphis, including Regions, Renasant, Trustmark, and Cadence, are all down at least 30 percent this year and are at or near five-year lows. FedEx, our corporate jewel, is off 15 percent so far this year.

At the risk of piling on, there is an unsettling tone in the public relations campaign to “liberate” the National Civil Rights Museum from “corporate interest domination.” Unsettling because it sounds like the preelection rhetoric of our soon-to-be fifth-term mayor who as much as wrote off the white vote. So much for public-private partnerships.

The $30 dinner entrée, the $570 a night hotel suite, the $140 Grizzlies ticket, the $45,000 SUV, the $40,000 a year college tuition, and a $30 million public boat landing look like relics of a golden age. Let’s hope Memphis can still support them a year from now, but I wonder.

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Memphis Selling For Less

CREDIT: image: venturacountystar.com

From South Memphis to Southwind, Memphis is losing value. Two people who ought to know say so. Both are professionals, and neither is an alarmist or a naysayer.

One of them is Shelby County asssessor Rita Clark, whose job is putting a dollar value on houses, buildings, and land for tax purposes. The other is auctioneer John Roebuck of Roebuck Auctions, one of the leading real estate auction firms in the South.

They calculate value differently. Clark and her staff use computer models, comparables, sales histories, and first-hand “windshield” inspections. Roebuck wields a microphone and a gavel and stands in front of a group of buyers and opens the bidding.

But they’ve come to the same conclusion: Real estate prices are declining, which reverses a long trend of increasing values.

“Memphis is a strange city that does not dip and rise like other parts of the country,” Roebuck said. “Right now, Memphis is down about as far as I can remember in 30 years.”

He said people are leaving the city, demand for housing is low, and there is a surplus of new homes and condos. Even the owners of some million-dollar homes are turning to auctions as a way to unload their property.

“Auctions get a bad rap,” Roebuck said. “An auction typically brings the true market value that day. Appraisals are just one man’s opinion.”

He expects to see “a substantial reduction” in home values in the next countywide reappraisal in 2009, leading to an overall decline in the tax base.

Clark doesn’t disagree with that evaluation.
“Absolutely,” she said, when asked if the tax base in Memphis could be shrinking, although she declined to put a number on it at this time. “We follow the market. We don’t predict the market.”

Clark will leave office next September after serving 10 years. In the 1998, 2001, and 2005 reappraisals, the total value of assessed property in Memphis increased an average of 14 percent each period. The suburbs were up even more, led by Collierville (up 24 percent in 2005) and Lakeland (up 30 percent in 2005).

Higher property appraisals are an indication of a healthy economy and provide a cushion for Memphis and Shelby County governments, which operate primarily on property taxes and sales tax. If housing prices continue to fall, lower appraisals will mean lower tax collections and less money for schools, police and teacher salaries, sports facilities, parks, and debt service.

There is also the prospect of no tax collections at all from some property owners. Memphis is one of the top foreclosure markets in the country. Foreclosures are expected to get worse in 2008 as subprime mortgages are reset at higher rates.

The usual way to balance the budget in Memphis and Shelby County is with a tax increase, but Memphians already pay the highest property tax rate in Tennessee. The smell of scandal is in the air. Houses aren’t selling. Values are declining. Mayor Herenton got only 43 percent of the vote. The 2008 City Council will have nine new members. And they’re going to increase taxes? Don’t think so.

Other signs point to a stagnant city that is getting poorer, not richer. In banking as in real estate, it looks like the big money has been made for a while. This has been an awful year for banks. The stock price of First Horizon, the last of the big Memphis-based banks, is $21 a share compared to $43 a year ago. The share prices of other regional banks with a big presence in Memphis, including Regions, Renasant, Trustmark, and Cadence, are all down at least 30 percent this year and are at or near five-year lows. FedEx, our corporate jewel, is off 15 percent so far this year.

At the risk of piling on, there is an unsettling tone in the public relations campaign to “liberate” the National Civil Rights Museum from “corporate interest domination.” Unsettling because it sounds like the preelection rhetoric of our soon-to-be fifth-term mayor who as much as wrote off the white vote. So much for public-private partnerships.

The $30 dinner entrée, the $570 a night hotel suite, the $140 Grizzlies ticket, the $45,000 SUV, the $40,000 a year college tuition, and a $30 million public boat landing look like relics of a golden age. Let’s hope Memphis can still support them a year from now, but I wonder.