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Tuesday, June 18, 2024

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In effort to avoid tax increase, Memphis City Council considers partial debt forgiveness for overdue fines and fees

On the hunt for alternatives to a proposed 75-cent property tax increase, Memphis City Council members passed a proposed partial amnesty for overdue fines and fees during the Tuesday, May 21 executive session.

“The idea here is we’re trying to find every source of revenue we can to help lower the property tax raise that has been proposed. I have no idea if we’ll get a penny, but we can ask,” said Council Member Jerri Green. 

“From now until the end of the fiscal year, we’ll reduce all payments by 50 percent and see what we can bring in, in hopes of generating revenue to help fill up our coffers. It’s a way for all Memphians to step up and be a part of the solution.”

According to a printout distributed during the meeting, there is around $265 million in outstanding penalties in charges that have accrued since 1991. If the resolution passes on third reading, the revenue it generates would be used to offset the tax hike.

City of Memphis Mayor Paul Young included the hike in his proposed FY2025 budget. It would add another $200 in annual property tax to a house valued at $100,000. For now, the rate is $2.70. 

Extra revenue became necessary because of a $53 million budget shortfall. It includes salaries for 101 new Memphis Fire Department employees that were not included in the FY2024 budget. Council members scrambled to pass a resolution to cover the nearly $12 million in salaries and benefits. Members of Young’s team claim they weren’t informed of the oversight by former Mayor Jim Strickland’s staff.

Further sources of income may also be necessary following an impasse in negotiations between the various bargaining units for city employees and the administration. 

The impasse committee consists of three council members selected by their peers. It is formed if a labor organization’s contract offer doesn’t match an administration proposal. Members make recommendations to the full council.

In every instance, council members preferred the more generous option proposed by the unions.

If all six gain final approval, over $13 million would be added to Young’s $880 million budget offer.

This includes AFSCME, which represents employees of the Solid Waste Division. 

The mayor’s proposal, meanwhile, offers a three percent raise for all city employees in his budget. Most are eligible. The raises are an effort to prevent city employees from fleeing to a generally higher-paying private market, or other municipalities.

Members are also currently considering a $6.98 increase to the monthly solid waste collection fee. Rate payers presently shell out around $30 per month. The added revenue would be used to add staff and new equipment. Two more hikes are planned.

“They are unique, in some degree, because if the solid waste fee stays as proposed, then they are in the general fund. If it doesn’t get approved, they are seriously in the general fund. If it moves up, from what is proposed, they are their own enterprise fund,” said Carlisle. “Keep that relationship in mind…Today, it’s a hybrid system.”

The budget chairman also said any changes to their budget would require a transfer in the general fund, or an increase in the solid waste fee.

Along with the added fee, a resolution to transfer $2.8 million from the division’s FY2024 fleet fund is under consideration. The money would be used to shore up other city divisions’ bottom lines.

The practice is a familiar one in city government. It also echoes the approach Shelby County Mayor Lee Harris is taking with his FY2025 proposal. His pitch calls for over 400 open positions within the Shelby County Sheriff’s office to be left vacant. Shelby County Sheriff Floyd Bonner has threatened a lawsuit,  citing the county charter. It requires the law enforcement agency to be fully staffed.

Along with chiding the practice, Council Chairman JB Smiley pondered whether enough vacancies existed within the city government to offset the bulk of the property tax. 

However, City of Memphis Chief Operating Officer Antonio Adams couldn’t provide an answer to how much money that amounted to.

Prior to the next budget negotiation, Smiley tasked the administration with providing detailed information about each city division to explore the option – and to prevent a recurrence of FY2024’s shortcomings.

“Here’s why I’m concerned, going forward…The administration says, ‘Trust us, trust us.’ The Council says, ‘OK.’ Then, the very first chance we get when we find out something is not right, at the very last minute, you say, ‘Hey, we have these firefighters,’” Smiley said. 

“I know someone in the administration knew fire personnel were not accounted for, prior to coming to the council,” he continued.

The letter organizations that followed AFSCME also faired well. They include Communications Workers Association (CWA), the International Association of Fire Fighters (IAFF), the International Association of Machinists and Aerospace Workers (IAMAW), the International Brotherhood of Electrical Workers and the Memphis Police Association.

Another impasse vote is required before a final vote on the FY2025 budget can be held. It goes into effect on July 1.

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