Tag: Memphis problems

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News News Feature

Next Stop: Belize

This is not a threat. It is more a cry, a lament for a city I have come to embrace for more than 30 years. Consider this a pre-farewell to Memphis, but with a few caveats thrown in.

My wife and I made a decision a few months back to earnestly begin preparations to leave Memphis and retire to the country of Belize. It’s not like it’s going to happen for a couple of years, because of our job commitments, but this May we’re doing a scouting trip to see firsthand if this is truly where we want to spend what’s left of our “golden years.” The prospect of leaving my sons, her daughter, and our grandchildren comes with natural trepidations. But, then when you weigh the alternatives based on what we’ve seen and what we project will be the future for us in a city with a myriad of problems and few solutions, it only seems to make our choice clearer.

Sometimes making hard decisions can be as simple as getting out a pen and paper and listing the pros and cons, in this case, for either staying or leaving.

What if we stay? There’s the great probability we will be paying increased city property taxes, based on a proposed refinancing plan advanced by Memphis Mayor A C Wharton’s administration. The “scoop and toss” refinance strategy of dealing with the city’s mounting debt, if passed by the city council, most assuredly will hang like an albatross around the necks of taxpayers for the rest of this decade. To refinance $134 million in debt and borrow another $75 million to keep us solvent can only lead to higher taxes and cuts in services.

The apparent tacit approval of this plan by the same state comptroller who rattled our cages about “kicking the can down the road” when it came to addressing outstanding pension debt just last year, should be viewed as both curious and alarming. This is completely aside from Shelby County Mayor Mark Luttrell’s straightforward assessment that unless Insure Tennessee is resurrected in some fashion, county property taxes might have to cover the possible $70 million shortfall Regional One might face as it’s forced to deal with unreimbursed indigent-care costs. Do we want to stay around for all that to happen?

The upcoming 2015 city election and the slate of announced candidates running for mayor and city council positions offer little hope of changing the status quo. The leadership vacuum we’ve suffered from continues to create a huge “sucking” sound of desperation. Crime continues to be a problem; poverty remains a stifling detriment to our city’s growth potential; and the gap between the haves and the have-nots cripples any vision of attaining the “One Memphis” philosophy our feel-good mayor once espoused. As for challengers, I’ve heard nothing but criticism for the incumbent, but little in the way of concrete solutions advanced by any of them. Granted the economic picture is somewhat brighter, except it will take years to develop an educated workforce that’ll benefit from any influx of higher playing businesses.

Before I completely assume the role of Oscar the Grouch, let me tell you why it’s going to be hard to leave Memphis. Where else in this country are you going to find a city with such rich history and an open appreciation of it? We are a city that embraces both champs and chumps. We are a city with an unmatched musical heritage that could be enhanced if we encouraged and fostered new artists to make their careers blossom here, as others have before. We are a city that plays as hard as we work and does both without apologies to anyone. We are a city that mercilessly lampoons stupidity and loudly cries foul against perceived bigotry and racism, while still able to reach out with genuine compassion to our own or to strangers in need.

As I said, we still have a couple of years left in the “City of Good Abode.” In that time, as a reporter, I’ll continue to try to do stories that inspire us, enrage us, and expose the human condition, and in the process hopefully make a difference. I am very blessed to have the twin swords of television and print media to accomplish those goals. Our ties to Memphis will always be eternal. Then again, who knows? I hear the mosquitos grow pretty big in Belize. If so, that could be a big one on the con side.

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Opinion Viewpoint

The Big Three

Like most big cities in the country, Memphis has challenges. Our number-one problem is the loss of population.

According to the census, Memphis lost 48,000 to 50,000 residents between 2000 and 2010. These losses were offset by annexations that forced over 30,000 people to live in the city. This trend is certainly a problem, especially considering that there will be no big annexations over the next decade. It appears clear to me that people are voting with their taillights on three big issues: crime, schools, and, to a lesser degree, our relatively high property tax rate.

As with prior years, the city council should review Mayor Wharton’s proposed budget with a focus on how we can improve on the Big Three issues. Because the city is no longer funding schools, we can deal solely with crime and the property tax rate.

One of the most effective means adopted by local government to combat crime was the development and use of Blue Crush. Blue Crush is, in part, the use of crime data to determine the increased allocation of police resources to the time and place of spikes in crime.

For about 16 months in late 2011 and 2012, the city administration reduced Blue Crush overtime, and the details were cut by 60 to 70 percent. As a result, serious crime increased by 10 percent. In 2013, Blue Crush details have been reinstated, and crime is again decreasing.

With respect to our property tax rate, Memphians pay the highest rates by far of any Tennesseans. When our city and county tax rates are combined, our rate is about 50 percent higher than Nashville.

Since 2008, the city council has been able to reduce the city’s property tax rate from $3.43 to $3.11, largely due to the termination of the school-funding obligation. This 10 percent decrease is a good starting point.

The mayor’s proposed budget increases the city’s operating budget from $597 million to $622 million and increases the property tax rate from $3.11 to $3.39. Over the next six weeks, the council will conduct hearings on the budget and hear from the administration, labor leaders, and the public. As my colleague Shea Flinn has touched upon in this space, there are a few budget myths that must be shared so that we operate with the same factual information.

First, there has been a lot of discussion about privatization or outsourcing of sanitation services. Sanitation operations are run by a fund completely separate from the city’s operating fund. Memphians pay for garbage collection through a fee on our MLGW bill. Therefore, any reduction in expenses in the sanitation department will not be reflected in lower property taxes.

Second, the pension system is underfunded. The city contributes $25 million to $30 million to the system, when our advisers recommend we move to double that amount. None of the reforms proposed would decrease the yearly contribution below our current level. Therefore, any savings achieved with reforms, such as moving to a 401(k)-type system, would not result in a lower tax rate.

Third, a huge decrease in the 400 appointed positions in city government would certainly lower expenses, but it would also result in closing all the libraries and operating city government without a legal office.

There may be several appointed positions that can be eliminated. In past budget cycles, I have tried to do so, and I will probably try again. But the savings to be achieved are not nearly enough by themselves to avoid a tax increase.

Lastly, the millions of dollars spent on capital projects cannot, under the law, be redirected and spent on operating expenses. Examples of capital projects are the purchase of police cars or fire trucks, repaving streets, building water detention facilities, and the construction of the Overton Square garage.

These capital projects are funded by issuing bonds, which is the equivalent of borrowing money. The effect of these projects on the operating budget and the property tax rate is the payment of debt service, the equivalent of a monthly mortgage payment. The ratio is: $1 million in a capital project equals $80,000 in operating expenses.

This is certainly a relevant consideration, but we must realize that cutting a $10 million capital project does not equal filling a $10 million gap in the operating budget; it equals an $800,000 operating expense.

In conclusion, the council must review each expense with an eye on providing quality service to our taxpayers and a focus on addressing the Big Three issues.

Jim Strickland, chairman of the city council’s budget committee, is in his second term serving District 5.

Categories
Opinion

Signs of Trouble and Hope

In 1980, Ronald Reagan asked Americans: Are you better off than you were four years ago? Enough of them thought the answer was “no” that Reagan beat incumbent Jimmy Carter and was president for the next eight years.

The Memphis mayoral election on October 4th will be an indicator of how well off Memphians think they’ve been since Willie Herenton was elected. Except Herenton has been in office for 16 years, not four years, which is so long that it may be hard for some people to imagine Memphis without him.

You want signs that things are bad?

If you are statistically inclined, a national survey of home loans by the community activist organization ACORN says Memphis is highly vulnerable to foreclosures because 46 percent of home purchase loans in 2006 were high-cost subprime loans. Memphis ranks first in the Southeast and sixth in the country in such loans.

If you are profit-minded, another survey, by CNNMoney.com, ranks Memphis ninth in the country in the number of foreclosures. One man’s misfortune is another’s opportunity, and last week something called the National Foreclosure Institute ran full-page ads in The Commercial Appeal for a series of workshops on how to make money off of this. Along with 10 other people, I attended one of the workshops this week. The speaker said, “You are sitting on the tip of the greatest fire sale in real estate history” — which you can exploit by taking their course for $1,495.

If you are fearful, you may have heard mayoral candidate Carol Chumney say in a debate this week that crime is so bad that Memphians are afraid to walk to their mailboxes, which, if true, will make voting problematic.

If you are nostalgic, you may have heard mayoral candidate John Willingham say in the same debate that the Mid-South Fairgrounds was a great place 40 years ago before Memphis lost, by his unofficial count, 115 major corporations.

If you are disgusted, you can move out of Memphis to the suburbs or to DeSoto County, Mississippi, the fastest-growing county in the state.

Thousands of people will vote for Chumney, but the one vote she needs is Herman Morris’. Thousands of people will vote for Morris, but the one vote he needs is Chumney’s. Apparently, neither one of them is going to get it. They are beating each other up instead.

That has to please Herenton. He won’t get the votes of the people who have thrown up their hands and moved or are scared to walk to their mailboxes or foresee the greatest real estate fire sale the world has ever seen or long for the good old days. He will, however, get votes from Memphians who think they are better off than they were 16 years ago, which could be enough.

On the bright side, Memphis is growing a bit, from 650,000 in 2000 to about 670,000 today. Before the housing bust, there was a housing boom from downtown to Whitehaven to Hickory Hill to Cordova. Inner-city housing projects came down. Robert Lipscomb, the city’s chief financial officer, says 16,000 Memphians became first-time homeowners in the last 12 years. The foreclosure crisis, he agrees, is real, especially in Hickory Hill and Frayser. “On the one hand, there is upward mobility,” he says. “On the other hand, there is no margin for error” if the buyer gets sick or loses a job.

Webb Brewer, head of Memphis Legal Services, says there’s a fine line between the benefits of the housing boom in Memphis and the excesses of a housing bust. “A decade ago I was championing the cause of home ownership, and people were talking about creative financing,” he says.

Now, he helps victims of predatory lending, creative financing’s evil twin.

“The big question,” Brewer says, “is how many people who got into the housing market were able to sustain it?”

If the foreclosure rate on subprime mortgages is 15 percent, is Memphis still better off? What if it is 30 percent? Does that mean 70 percent achieved the dream of home ownership? As Herenton has noted, it’s the nature of the media to report the bad news of crime, corruption, foreclosures, and flight. A growing middle class and a sense of well-being relative to 1991 are harder stories to tell, but they may determine the outcome of the Memphis mayoral election.