Federal funding to fill city shortfalls
Memphis mayor says property taxes will ease
Memphis Mayor Jim Strickland said the city will use much of the initial money it will get from the American Rescue Plan to shore up revenue shortfalls in several key city funds, including the Downtown Tourism Development Zone and hotel/motel tax fund.
The city will spend $18 million of its first $80 to $84 million in the federal funds it gets under the American Rescue Plan that Congress passed in March making up a shortfall in the city’s operating budget, Strickland said. The city will receive the $160 to $168 million in funding in two pieces — one half in 2021 and the other half in 2022.
Memphis will then spend $5.7 million to make up a shortfall in the Downtown Tourism Development Zone Fund and a $9 million shortfall for the hotel/motel tax fund. Both of those funds are responsible for paying off the $200 million in bonds issued for the renovated Renasant Convention Center. The Downtown Tourism Development Zone captures a sales tax increment within Downtown Memphis.
Strickland is also proposing that the city will reset the city’s property tax rate to somewhere between $2.75 to $2.80 per $100 of assessed value, a reduction from the current $3.19 per $100.
“City government will collect the same,” Strickland said. He said the reset rate is due to state laws that require
the city to only receive more revenue from increasing property taxes, not increased assessments. He said the recent four-year assessment conducted by the Shelby County Tax Assessor’s Office had resulted in a 23% rise in overall property value in the city of Memphis.
“The only way for City government to collect more property taxes is a tax increase. I will not be proposing a tax increase, especially because so many of our neighbors have suffered significantly over the last 12 months. I will be proposing a tax rate which we calculate will result in the same revenue as before the assessment,” Strickland said.
Strickland is proposing a budget of $716 million, an increase of $8 million from the $708 million budget the Memphis City Council adopted last year.
The city council could decide to set the tax rate at a different level and bring in more property tax revenue to further fund the Memphis Area Transit Authority or salary increases for some city employees.
Strickland proposes pay increases
Strickland is proposing a 2% raise for commissioned police officers and firefighters, which he said is about $7 million. That money, he said, would come from a $9 million decline in the city’s required pension contribution. The other $2 million would potentially fund Strickland’s proposed group violence reduction initiative, which he announced in his State of the City speech this January.
“As it is each year that I present our budget, I wish I could give all city employees a raise for the incredible service they deliver to our citizens each day. But, unfortunately, each year we have a finite amount of resources. Fortunately as discussed a moment ago, we can use $16 million in federal funds to give premium pay or bonuses,” Strickland said.
The lack of pay raise for sanitation workers has already sparked the ire of its employees and their union.
In a news release, AFSCME Local 1733 said it proposed a 5% pay increase and the Strickland administration responded with zero.
“The passage of the American Rescue Plan is providing city officials with more than enough resources to alleviate budget shortfalls due to the coronavirus pandemic. Throughout that time, these dedicated employees put their lives on the line to serve their communities, even when COVID-19 cases were soaring...it’s time the City of Memphis take care of people that make Memphis happen,” AFSCME said in a news release.