Memphis Mayor Willie Herenton has proposed a new revenue-sharing arrangement between the City of Memphis and Shelby County. Its fundamental flaws go well beyond the numbers, but there is common ground for some of his ideas.
A press release on this topic is available.
According to published reports, and local newscasts, the plan, as outlined by Herenton, would consist of:
The net result of the shift in tax burdens would be to lower the net taxes paid by Memphis residents (by 62 cents per $1000, to $5.72), and raise the net taxes paid by everyone else (by 85 cents per $1000, which varies by municipality).
There is a fundamental flaw in the numbers, first reported in the October 7 Commercial Appeal. Under state law, all county tax revenues must be shared between the city and county school systems based on an average daily attendance formula. Even though the county school system is rapidly increasing enrollment, and city school enrollment is declining, 70% of all county education taxes must be given to the city.
The shift in funding sources for Memphis City Schools would come under this formula. The problem is that Mayor Herenton's numbers don't account for this: he only shifted the city revenues to the county, without taking account of the need to fund county schools out of the same funds. For the revenue shift to work, Herenton must either make a massive cut in the city school budget or raise county taxes by an additional 24 cents to give the county schools their share of the revenue increase (making the new county tax $4.25 - this makes the Memphis net tax rate $5.96, a decrease of 38 cents from the current $6.34).
This problem points to a more severe problem, which the mayor refused to address: the existence of two school systems. Shifting the revenue stream for Memphis City Schools to non-city residents, who have no say in how the money is spent, is a clear method to ensure that sane fiscal policy does not take root in the MCS, a system plagued by financial irregularities.
The real solution to school funding in Shelby County is:
County funding for the MATA (public transportation) system is not reasonable. Those communities that are served by MATA should pay for it; the rural areas of Shelby County that have no MATA service should not have their taxes spent on MATA. A fair alternative would be:
Herenton's decision to continue challenging Public Chapter 98, remains a disappointment. Since he apparently no longer wants to annex these areas for the foreseeable future, his argument that PC 98 limits Memphis's ability to grow becomes quite specious.
Finally, all spending areas that will be funded exclusively by Shelby County taxes should be functions of the Shelby County Government. Bodies fully-funded by county taxes should be under Shelby County, not the City of Memphis.
In fairness, Herenton's proposal does have a few sensible provisions. Having all library and health department spending come from county tax revenues is, on the face of it, a good idea. Likewise, the five-year freeze on annexation, while motivated by Herenton's desire for a political future rather than any particular desire for a rational growth policy, is to be welcomed.
While the mayor continues his divisive rhetoric, he is to be credited for providing a starting point for a better fiscal policy for Memphis and Shelby County. It is a disappointment, however, that the city continues its intimidation tactics; those tactics will lead to the good ideas in this proposal being ignored, eclipsed by Herenton's invective against those who he would like to see as his constituents.
Any realignment of the tax responsibilities of the city and county must be done in public view, with public input. Specifically:
These two points are essential if Mayor Herenton truly wants to have a frank discussion, instead of force-feeding his ideas to taxpayers without their participation or consent.
The contents of this document are Copyright © 1997 Chris Lawrence. It may be freely redistributed, so long as the text is left intact, along with this copyright notice.