A 5-year county budget plan: Cut $150M
Peter Drucker said, “Management is doing things right; leadership is doing the right things.”
While I am reluctant to vote for a property tax increase, I need to consider doing what is in the best interest of Shelby County despite the political consequences.
To keep the county tax rate at $ 4.02, we would need to reduce spending by about $57 million. If the County Commission voted to keep the tax rate at the current level, the administration would be forced to cut 800 to 900 jobs. I do not believe that level of cost reduction would be in the best interest of the county at this time.
If the city of Memphis were to pay its $57 million obligation toward education, we would be able to keep the tax rate at current levels. The consolidated school board put together a budget that is $75 million lower than the combined budgets of the Memphis City Schools and Shelby County Schools last year. We need to support funding for the schools, especially during this year of transition from SCS and MCS to a consolidated system. The $20 million increase in funding from the county will keep more teachers in the classrooms and minimize disruptions next fall.
Next to schools, the Sheriff’s Office has the largest piece of the county budget. There is no escaping the hard reality that we cannot have significant reductions in spending without impacting the sheriff and the other parts of the criminal justice system. We need to ensure that public safety is not put at risk, which is why I rec- ommend a multiyear approach to our cost reduction efforts. I may be able to support the certified tax rate ($4.32) which would keep revenue neutral versus the prior year. The current budget proposal from county Mayor Mark Luttrell includes a 6- cent increase ($9.6 million) over the certified tax rate for the consolidated school system. If we can reduce spending by $10 million, we would have a revenue-neutral budget.
With a tax rate of $4.32, about two-thirds of property owners will pay the same or less in property taxes than they did last year. It is in our best interest to find $10 million in savings by July 8 so we can adopt the certified tax rate and show that we have the resolve to start the difficult process of reducing spending.
I am not a fan of taxes, and I believe it is my duty as a county commissioner to ensure that tax dollars are being spent wisely. Unfortunately, there is no simple solution — no silver bullet. We need a balanced approach and, given the state of the economy, I suspect that mass layoffs would do more harm than good.
When we discuss the tax rate, I will propose we adopt a goal of reducing county government spending by $150 million over the next five years. This should result in an 80-cent reduction in the tax rate without accounting for any growth in the tax base. This will be the first step toward developing a culture of change in county government.
I will ask Luttrell to appoint members of his administration to a crossfunctional team that will focus on identifying and implementing initiatives to reduce the cost structure of government.
The county’s trustee, assessor of property and other elected officials will also be engaged as we work to streamline and simplify all facets of county government.
Expect the County Commission to provide greater urgency and focus on the budget process going forward. We should have built a base expectation that each department and local official would present a budget asking for 2-5 percent less than the prior year. Instead, we gave everyone a “hall pass” if they were not asking for additional funding. This sent the wrong message and will not be repeated going forward. We need to focus on the task of reducing spending by $150 million over the next five years.
The current tax rate is $4.02 and the mayor is proposing a rate of $4.38. To put that in perspective, on every property appraised at $100,000 the additional tax would be $90 per year. We have high property taxes relative to other cities in Tennessee and surrounding communities. We cannot blindly increase taxes and expect to remain economically competitive.
Looking ahead, we need a sophisticated approach to budgeting, coupled with some long-range financial planning. We need to find ways to streamline and optimize functions like purchasing and information technology. We need to create a culture of change where innovation and creativity are rewarded. We need to grow the tax base and work to reduce taxes.
A little less conversation and more action.