Roland McElrath – Memphis Flyer

Greg Cravens

About Toby Sells’ story, “Confederate Heritage Groups Vow to Fight Park Name Changes” …

Health Sciences Park, Mississippi River Park, and Memphis Park. Good Lord, how about just Tree Park, Grass Park, and Wino Park (let’s be real). Or since the Confederates surrendered Memphis after 15 minutes of battle, how about Slam Bam Thank You Ma’am Park.

CL_Mullins

About Les Smith’s At Large column, “Hot Water” …

Les Smith incorrectly stated that Roland McElrath, MLGW controller, was the man behind the prepared rate hike. Then he continued by criticizing Mr. McElrath’s previous record as a public servant. Smith complained of being blindsided with a rate hike. Smith’s article deserves a response to set the record straight.

Up until mid-September, we at MLGW were confident that we would not need to ask for a rate increase for next year in the electric, gas, and water divisions. Then on September 16th, Cargill announced it would close its plant on President’s Island on January 1, 2015.

Water utility costs reflect 84 percent fixed costs and only 16 percent variable or consumption costs. Since Cargill is by far our largest potable water customer, I knew as soon as Cargill made the closure announcement that MLGW could not sustain the $2 million per year loss of revenues to pay for fixed expenses. Absorbing the loss of Cargill revenues was not an option. I knew a small rate increase would be needed. How small? Thirty-five cents (35 cents) per month for the average residential customer. This represents a 2.3 percent increase.

Despite this increase, MLGW’s water rates will still be the second-lowest of any major city in this country. In fact, MLGW’s combined electric, gas, and water rates will remain the lowest of any major city.

The announcement for the need for this small rate increase was appropriately made during our budget presentation to the MLGW Board on October 9th. Despite our breathtakingly low combined utility rates, MLGW is in excellent financial shape. MLGW has relatively little debt, excellent bond ratings, and a properly funded pension plan.

Our governing principle at MLGW is to always do that which is in the best interest of our customers as a whole. Although this includes keeping our rates low, it sometimes also includes a rate increase. It’s called fiscal responsibility.

Jerry Collins Jr., President & CEO

Memphis Light, Gas & Water

Les Smith incorrectly stated that I was the man behind the proposed rate hike. Then he continued by criticizing my previous record as a public servant by using inaccurate and faulty information to make his point. As the former finance director for the city of Memphis, I am compelled to address the inaccuracies in his article.

According to the city’s June 30, 2012 Comprehensive Annual Financial Report (CAFR), the city ended its fiscal year 2012 with a $5 million general fund operating surplus, not a $17 million deficit. This surplus was generated even after paying the employee bonuses referred to in Smith’s commentary.

There’s also another factual error.

MLGW’s estimated revenue loss from the closure of the Cargill facility is $2.2 million, not $4 million.

As evidenced by our breathtakingly low combined utility rates, MLGW is committed to providing high quality, reliable service to our customers in the most cost efficient manner possible while also maintaining the financial integrity of the organization.

Roland McElrath, CPA, CMFO

About Jackson Baker’s Politics column, “Alexander, Bell in Heated Senate Race” …

Senator Lamar Alexander is at is again. He would have us forget he was the first secretary of education to suggest common core type standards. He backs the right to work law. He wants to kill Obamacare, but doesn’t say what would happen to the thousands of citizens who would lose their insurance, the ones with pre-existing conditions or the workers whose employers who do not offer health insurance.

Alexander has never voted against a pay raise for himself, but abhors the right of working people to organize. His “unselfish service” to the people of Tennessee has allowed him to become a multi-millionaire. Since entering government, he and his family have never been without a paycheck, vacation time, or health care, yet he is opposed to all those benefits for the poor and middle-class.

Jack Bishop

Gary Oldman

Best line of the day: Wall Street Journal writer Tom Perrotta on Rafael Nadal’s ability to beat everyone except Novak Djokovic: “To lose so often to one player almost defies logic. It’s like Isaac Newton forgetting how to multiply.” After watching Djokovic beat Andy Murray in a little less than five hours, I think pro tennis players are the best-conditioned athletes on the planet. And the pro men and women are coming to the Racquet Club in February, minus the Big Four, but still a great field. This tournament won’t be here forever so go see it.

Lots of Memphis-related business news in the national press today. Delta Air Lines wants to buy US Airways, which would be its first acquisition since buying Northwest Airlines in 2008. US Airways offers a good deal of what little competition Delta has in Memphis.

The Wall Street Journal also has a story about St. Joe Co. scaling back its Florida Panhandle developments near Destin and Panama City, favorite destinations for Memphians. Anyone who has been down there and seen WaterSound at Santa Rosa Beach probably saw this coming. A successor to WaterColor which is a few miles to the west, the development’s empty lots and unoccupied houses in the midst of all that expensive infrastructure says it all. Some of us at Memphis magazine and The Flyer freelanced for a magazine underwritten by Joe, and we miss the assignments and the paychecks. Joe gave the land for the new airport in Panama City and is the largest landowner in northern Florida, with more than half a million acres.

If you’re on Facebook prepare to be monetized. The Facebook IPO could come as early as next week. Once it’s priced, ordinary investors can own a piece of the company that boasts more than 800 million members. I predict a “hot” IPO that rises but then tapers off. Over time, I think privacy concerns will wear down Facebook and cut the number of members.

I saw the movie “Tinker Tailor Soldier Spy” last night on the recommendation of Flyer movie critic Greg Akers. No one in our group of six understood it very well. The next time I watch Gary Oldman will be in “Shaun of the Dead.” “Tinker etc.” should come with an introduction in which the actors tell us their movie names and identities. Or explanatory subtitles in addition to the Russian dialogue subtitles. Better than all those commercials you have to sit through.

To research the schools merger story, I dug out my old tax bills and looked up some old articles to put together this chronology, which I then ran past City Finance Director Roland McElrath to check the numbers. Tax bills should be as clear and easy to understand as restaurant checks.

2007. The Memphis property tax rate is $3.43. There is no breakout for schools on the tax bill.

2008: Mayor Willie Herenton proposes a 58-cent increase, which would push the rate over $4 — one of those milestone numbers, sort of like $4-a-gallon gas. The Memphis City Council cuts school funds from $93.7 million to approximately $27 million, against Herenton’s advice, in an effort to shift school funding to Shelby County. But other city government spending, including a 5-percent pay raise for employees, costs $42 million. The net result is an 18-cent tax decrease to $3.25.

2009: It is a reappraisal year, and there cannot, by law, be a windfall tax increase due to higher valuations, so the tax rate has to be adjusted. The council sets the rate at $3.19. The tax rate includes a breakout of $.1868 for “schools” on the bill. There is talk of a special tax bill for schools in addition to this but it does not happen. In the special election in October, A C Wharton is elected mayor with 60 percent of the vote.

2010: The rate is $3.19. Chancery Court rules against the City of Memphis and determines that the funding cut in 2008-9 is due back to Memphis City Schools. The city appeals (the appeal is still pending).

2011: Mayor Wharton proposes restoration of the 18 cents for schools. In June, the council puts in a “one-time assessment” of 18 cents for schools to be held in a separate bank account until lawsuits resolved. (McElrath said the funds can be used to pay for any education obligation city has, whether 2009 or any current obligation.) There is confusion in the council chambers. Some councilmen believe this amounts to a tax rate increase to $3.37. But the council sets the rate at $3.1889, virtually the same as the previous year, by taking out the .1868 for schools. Tax bills that go out in July include the “one time assessment” of 18 cents for schools and a disclaimer that any additional taxes approved by council will come in a separate bill. However there is, so far, no supplemental tax bill. In October, Wharton wins the mayoral election with 65 percent of the vote and council incumbents are reelected.

City taxes for schools are small compared to county taxes. On the 2011 Shelby County tax bill, of the $4.02 tax rate, $1.30 goes to city schools and 60 cents goes to county schools. The tax impact hits all property owners while the school organization issues mainly impact people with school-age children in or about to be in public schools.