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Tuesday, July 23, 2024

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Memphis City Council Approves FY 2025 Budget, $0.49 Property Tax Increase

After last-minute backroom bargaining with City of Memphis Mayor Paul Young and administration officials, city council members approved a FY2025 budget that includes a 49-cent property tax.

The private discussion postponed the Tuesday, June 25 meeting by an hour. Council members approved the tax hike, along with the operating and capital budgets on an 8-5 vote.

“There are a lot of tough decisions. We did not come at this lightly, knowing we were asking the residents of our community to pay more; to increase taxes,” said Young.

The administration originally sought a 75-cent hike in its budget proposal. The last property tax increase was in 2012. Young’s administration inherited a $82 million funding gap when they began preparing a budget.

A final number was hit upon after council member Edmund Ford, Sr. pitched a 55-cent property tax increase, alongside a mixture of fees and $7.9 million in budget cuts.

“There was a lot of movement during the budget process. Our team worked with the city council to make various cuts. We’re at 49 cents, in terms of a tax increase,” said Young. “It still should give us enough revenue to do the things our citizens are asking for.”

The increased revenue will cover the costs of a 5% raise for city employees, up from the administration’s proposed 3% bump in pay. The difference amounts to $13 million, which meant extra revenue was necessary.

Over recent years, the city has experienced significant employee loss due to a competitive job landscape – often with higher salaries to offer.

“We have to invest to see the better Memphis we want. I hope everybody feels like we have reached a good compromise,” said council member Janika White.

Another $14 million will go towards the city’s reserve fund.

A healthy fund balance reassures credit rating agencies, which analyze the city’s finances to set its credit rate on its debt.

An amendment by council member Philip Spinosa to push the tax rate further down failed. It sought to lift the city’s attrition rate by adding vacant positions. The administration also opposed the accounting maneuver.

Meanwhile, Memphians will also see a $12 increase in their solid waste fees, to bring their bills to $42 per month. The ordinance to up the fee passed 12-1. Spinosa was the only no vote. Young requested a $6.89 solid waste fee increase in his proposal. Over the next few years, further increases are expected.

The new fiscal year will also be greeted with a two-fold increase in auto registration for several classifications of vehicles. Council member Jerri Green’s proposal passed unanimously. The first term member had been in discussion with administration officials about new rates during over the budget season.

Council members also added $15 million from city reserves to cover overtime costs for Memphis Police Department personnel.

Requested by Young during the Monday, June 24 budget meeting, the eleventh hour submission bookends budget shortfalls baked into the FY2024 budget by the previous Strickland administration. It passed 9-2-2.

“The attrition was higher than it should have been. Because it was higher, it pulled more money out of the budget, so we had to go find it from somewhere else, which is the fund balance,” said Young. “This upcoming year, FY2025, we are able to replenish the fund balance to the tune of $10 million.

He added the move could put the city “on a trajectory” to add to the fund balance, “instead of pulling from it.”

An $11 million shortfall in staffing for new Memphis Fire Department hires was discovered when the Young administration began preparing the FY2025 budget. Angered council members covered the costs with a funding resolution in April. The surprise also expanded FY2025 budget forecasts upward.

The administration has also asserted that MPD overtime costs can be minimized in the future through stricter management.

An amendment to eliminate at least 10% of city positions vacant over 18 months – mainly within the MPD – was withdrawn by Green.

During their budget negotiations, the administration of Shelby County Mayor Lee Harris attempted to unfund vacant positions within the Shelby County Sheriff’s Office to shore up a $60 million shortfall and to pay for raises for county employees.

An attorney, Green works as an advisor for the Harris administration.

The spots were left vacant after Bonner threatened a lawsuit.

Council members also reduced the pay of interim MPD chief Cerelyn “C.J.” Davis by $35,000 per year to $246,370.28. The new amount matches the pay of MFD counterpart Gina Sweat. The pair are the currently the city’s highest paid employees. Davis’ previous pay was $281,000, which was more than New York City Police Commissioner, or the Chicago superintendent of police earn annually.

The FY2025 budget takes effect July 1.

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