Tag: revenue

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Politics Politics Feature

Slowdown Coming

Photo: Georgios Kollidas | Dreamstime.com

With pressure building for potential tax increases in Memphis city government, the outlook for additional aid from state government took a hit Monday, as the State Funding Board acknowledged weaker-than-expected revenues and set a deliberately slow growth rate.

The board, composed of the state’s three constitutional officers and the state finance commissioner, set a growth rate in general fund revenue of 1 percent to 2 percent and total tax growth at 1.25 percent to 2.15 percent for fiscal 2025-26. That is on the heels of an estimated total growth rate projection for fiscal 2024-25 of -1.68 percent to -1.34 percent. 

Economic growth has ground down considerably in Tennessee after a double-digit revenue windfall of two years ago. Among other factors, the state is facing a $1.9 billion business tax reduction stemming from legislative approval of Governor Bill Lee’s proposal to eliminate the property portion of the state’s franchise and excise taxes. That move followed additional tax breaks for businesses the previous year. The Department of Revenue has processed nearly $900 million in rebates this year, and more are expected.

On the eve of the oncoming 2025 legislative session, the weak budget outlook could affect lawmakers’ decisions, leaving in the lurch not only localities’ requests for aid but funding requests from state agencies totaling over $4.2 billion. The revenue forecast isn’t expected to come close to matching that figure, even with anticipated federal funds covering some of the costs.

• Two Memphians are finalists to succeed soon-to-be-retiring state Court of Appeals Judge Arnold Goldin of Memphis: Shelby County Circuit Judge Valerie Smith and interim Memphis Chancellor Jim Newsom. A third candidate is Jackson Chancellor Steve Maroney, a former chair of the Madison County Republican Party.

Smith was a member of a three-judge chancery court panel that dismissed a lawsuit challenging the legality of the state’s school voucher program. The decision was later reversed by the Court of Appeals. 

Newsom was named in 2015 to a Chancery Court position by former Governor Bill Haslam but was defeated for re-election in 2016 by current Chancellor JoeDae Jenkins. He was reappointed interim chancellor this past summer by Governor Lee to assume the duties of Chancellor Jim Kyle, who has been disabled by illness.

• The three gun-safety measures approved resoundingly by Memphis voters earlier this month via ballot referenda have predictably come under legal challenge. The Tennessee Firearms Association has filed a lawsuit in Shelby County Circuit Court seeking to block city government from activating the measures. 

In a sense, the gun-lobby group’s suit is pointless, in that backers of the referenda conceded that voter approval of the measures was conditional on the will and pleasure of state government, which had made clear that state policy at this point would disallow the implementation of the three measures.

State House Speaker Cameron Sexton had angrily opposed the referenda as antithetical to state law and threatened to retaliate by cutting Memphis off from various state-shared revenues if the measures were enacted.

The measures, certified for the ballot by the city council, would re-institute a requirement locally for gun-carry permits, ban the sale of assault weapons, and enable the local judiciary to impose red-flag laws allowing confiscation of weapons from individuals certified as risks to public safety.

Mindful of Sexton’s attitude, backed by Governor Lee, the Shelby County Election Commission originally acted to remove the referendum measures from the November ballot, but they were approved for the ballot by Chancellor Melanie Taylor Jefferson.

• It begins to look as though the beleaguered Shelby County Clerk Wanda Halbert will survive various ouster attempts and will survive in office until the election of 2026, when she will be term-limited.

Her latest reprieve came from Circuit Court Judge Felicia Corbin-Johnson, who disallowed an ouster petition from attorney Robert Meyers, ruling that such an action had to be pursued by Shelby County Attorney Marlinee Iverson, who had recused herself.

Judge Corbin-Johnson had previously disallowed an ouster attempt from Hamilton County District Attorney Coty Wamp, who was acting as a special prosecutor. 

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News

FedEx Announces Lower Earnings

In a bad sign for Memphis and the U.S. economy, FedEx today reported lower quarterly earnings than a year ago.

“High fuel prices and weak U.S. economic growth year over year have impacted our business,” said Frederick W. Smith, FedEx chairman, president, and CEO. “We continue to benefit from solid international growth, which helps mitigate softness in U.S. industrial production. While we see challenging near-term economic trends, we remain confident about long-term prospects in all our business segments.”

The company earned $1.54 per share for the second quarter ended November 30th, compared to $1.64 per share a year ago.

Revenue was $9.45 billion, up 6 percent from the previous year. Operating income of $783 million was down 7 percent, net income of $479 million was down 6 percent, and operating margin of 8.3 percent was down from 9.4 percent.

Total combined average daily package volume in the FedEx Express and FedEx Ground segments grew 8 percent year over year for the quarter, due to growh in ground and international priority shipments.

For the third quarter, FedEx expects earning to be $1.15 to $1.30 per share, compared to $1.35 per share a year ago. The capital spending forecast has been reduced from $3.5 billion to $3.1 billion, “with additional reductions possible as management continues to review the timing of capital outlays,” the company said in a press release.

Following the announcement of earnings, FedEx stock was lower on Thursday by just over $1 to $93 a share, which is near its 52-week low of $91.

–John Branston

Categories
News The Fly-By

High Stakes

I know. What happens in Vegas stays in Vegas. But I’m sorry, that’s one mantra I can’t keep.

Honestly, I didn’t know what to expect when I traveled to Las Vegas earlier this month. I thought I’d soak up some sun, drop a few dollars in the slots, and basically relax.

But two things occurred to me. The first is that other cities could learn a lot from Vegas, the country’s premier convention city. While I was there, I heard that the city had three conventions in town, and every single one of their 150,000-plus hotel rooms was booked.

To be fair, other cities don’t have the luxury of living off gamblers and casinos, but there are other things the city has done that could be in the cards.

If Vegas did anything successfully, it was taking a patch of desert and creating a place that people want to experience, even if that means experiencing 3,000-degree heat, dust from ongoing construction sites in their eyes and mouths, and strange men flicking pictures of nude women at them.

Last week, during a nationwide heat wave, the mercury in Vegas hit 116, just a degree below its record. But people were still on the Strip in droves.

What is it? Despite the nudie-picture people, tourists feel safe. Maybe not in New York, New York, where a recent shooting gave the casino’s theme a bit more realism, but I digress.

And even though most things in Vegas costs an arm and a leg, the Strip is a free show.

We found ourselves walking down it one night and, although we missed seeing the ship sink at Treasure Island, we chanced upon a volcano erupting at the Mirage, fountains dancing at the Bellagio, and nightly fireworks exploding above Caesars Palace that put Memphis’ July 4th celebrations to shame.

Yes, erupting volcanoes, dancing fountains, and exploding fireworks take money, and the gaming industry — with its $85 billion in annual revenue — has it in spades. But think about what they’ve gotten in return.

I will say, I thought the volcano was a bit ridiculous. But when a fountain set to music can make people crowd together in record-breaking heat, maybe it’s something to consider when looking at local public spaces.

A lot of people have cited Vegas’ successful marketing campaign, but having something so marketable raises the odds. They’ve mined their image very successfully, not just the Rat Pack image from the past but the idea that everyone can find a little bit of excitement in Vegas.

And that happens — literally — even at street level.

The second thing that occurred to me has a lot more riding on it locally. Tunica might be dismissed in Ocean’s Thirteen as the place old games go to die, but Memphis can’t overlook Tunica.

Las Vegas is going through a major building boom, one said to be fed by smaller gambling venues across the United States whetting Americans’ appetites. I don’t see the trend stopping any time soon.

According to Hoover’s online industry profiles, 50 to 60 percent of a hotel casino’s revenue comes from gaming. The other roughly 50 percent comes from food and beverages, guest rooms, shows, and other entertainment.

I don’t know how much of Vegas’ profits ride on high rollers, but I saw a lot of people in cargo shorts, T-shirts, and fanny packs … people who would not be out of place in Tunica.

We don’t need to worry just about DeSoto County becoming the place to live, we need to think about DeSoto County becoming the area’s leading tourist destination. What would it take? A Cirque du Soleil? A water park? More golf courses?

Ideally, Graceland and Stax could benefit from Tunica the same way the Grand Canyon benefits from Vegas — as a place for visiting gamblers to go on day trips.

How can you compete with a place that comps buffets and is designed to attract people … and keep them there?

If I were a betting woman, I’d say we need to find a way to get in on the action.

Categories
Editorial Opinion

What Gives?

Three members of the Shelby County Commission cast votes Monday for a proposal that may be good politics but makes for unsound public policy. This initiative — for a five-cent across-the-board reduction in the county property tax — came from Wyatt Bunker, who represents the county’s suburban and rural edge and its ideologically conservative edge, as well.

According to Bunker, the proposal, if enacted, would have cut $8 million out of county revenues for the next fiscal year — although the commissioner maintains that such a cut would, sooner or later, raise revenues. Right. The same logic pursued by the relentlessly tax-cutting Bush administration has driven the national deficit to new historical heights.

Various of Bunker’s commission colleagues expressed exasperation with the proposal, especially since A) it came just after a tense debate concerning the commission’s need to divert wheel-tax money originally earmarked as operating funds for the schools into the county’s general fund, where it can be tapped for future capital improvements, and B) it followed weeks of a painstaking budgetary process, now concluded, in which every stray corner of county government was scrutinized for real or potential waste.

Yet, two other commissioners, fellow suburbanite George Flinn and Chairman Joe Ford of Memphis’ inner city, joined with Bunker in voting for the proposal which, had it passed, would have thrown county government back to square one in its financial planning for the next cycle.

What gives? Well, the legitimate needs of the taxpayers would have been first. As several commissioners pointed out, the needs of the schools would have come asunder, closely followed by law enforcement. It made a certain political sense for Bunker and Flinn to vote the way they did, since they represent (or believe they represent) constituents who favor tax cuts at all costs. But what was Chairman Ford, who normally balances policy and service needs with the legitimate requirements of fiscal solvency, thinking?

Ford, who must have known the discussion and the vote were pro forma, urged Bunker to reintroduce the proposal next year. Fair enough. At least that will give the commission enough lead time to reorganize fiscal priorities so as to facilitate such an across-the-board cut, if that’s what they regard as needful. Given Governor Bredesen’s success in imposing drastic cuts when he took office in 2003, we’re not saying the idea of an across-the-board cut is impossible. But the last time we looked, the governor was taking some criticism of policy changes (his gutting of TennCare, for example) that we regard as legitimate.

Property owners are surely entitled to relief and deserve consideration of the sort just awarded in Nashville, where state senator Mark Norris and state representative John DeBerry won passage of legislation authorizing the state’s local governments to enact limited tax freezes for seniors.

Those eligible in Shelby County are homeowners at least 65 years old with incomes not exceeding $31,549. That amounts to 59 percent of the county’s senior households and is consistent with Shelby County’s unique need for balance between revenues and services. When it can, the commission should act upon the new law. Anything more drastic will have to wait.