March, 2007
Big Shelby’s Financial
Challenges
By:
Mike Ritz as posted in the Main Street Journal
When
it comes to the upcoming challenges facing the County Commission, the
biggest challenge we face will be financial. We have our hands full of
potential property tax increases before the 2008 budget
proposals come from the Mayor, other elected officials, and the City
and County Schools.
For
several months, Mayor Wharton has worked with the suburbs to increase
ambulance service to the county outside the City of Memphis and
Bartlett. (Those two cities operate their own ambulance services.) If
that service contract amendment is approved by the County Commission,
the cost of the $2,180,000 contract amendment will add 1.4 cents on the tax rate. The ambulance service proposed by Mayor Wharton
may be dying as Germantown and Collierville may opt for their own
service and the County bids out what is left.
In
early January, the County Sheriff asked the County Commission to
approve the hiring of an architect and contractor to build a county
jail with a capacity for 4,000 inmates. His cost estimates were
$60,000 per bed. A more realistic estimate is probably $80,000. The
costs to the taxpayers will be at least $320,000,000. On a twenty year
bond schedule, the cost to the taxpayers will add 14.8 cents on
the tax rate. Sheriff Luttrell committed to working with our Committee
in order to discuss his plans further. Most recently, Luttrell sent
out a Requests for Proposals, detailing work he wants done before other alternatives have been discussed and the planning
committee ever met.
A
day later, at a joint Budget and Personnel Committee meeting,
the Commission was informed of a $448,000,000 unfunded liability for retirees health insurance and life insurance. While the
county retirement pension plan is solvent, the health and life
insurance plans will need to have the benefits modified (reduced)
or our taxpayers face an immediate and every year catch up price of
$36,300,000 or 22.6 cents added to the property tax rate. The
County administration has since proposed that (1) the retirees over 65
must use Medicare drug coverage; (2) the retirees pay a higher
percentage of the health insurance premium; and (3) the maximum life
insurance benefit for a retiree be $10,000. The Commission has not
voted on this proposal which still leaves an annual $10,000,000 extra
cost or 6.2 cents on the tax rate.
Later in January, the Mayor Wharton told our Emergency
Communications Committee of his plan to improve ambulance service,
fire service, and emergency communications for the entire County.
While he shared no budget with the Committee, he told the media that
the cost of his plan could be $100,000,000. That $100,000,000 price
tag equates to 62.5 cents on the tax rate. To be fair, the
Mayor did say that he would like to get some state authorization to
help with this a fee, so it was not a property tax burden. However,
he did not commit to delay implementation of the plan until he got the
fee authorization from the state.
Are
you keeping track? 1.4 cents + 14.8 cents + 22.6 cents or 6.2
cents+ 62.5 cents = $1.013 or 84.9 cents on the property
tax rate. This Commissioner is not ready for this spending spree.
As
noted above, all of these new money requests are before any
consideration or presentation of the normal operating budget requests
from the elected officials and the two school systems. The two school
systems have some current capital needs approaching several hundred
million dollars. The Regional Medical Hospital needs a $30,000,000
improvement to centralize and make more functional the trauma center
operations and to make way for the expansion of the LeBonheur
Hospital.
To
help the property tax conscious citizen keep track, every new
$100,000,000 in bonded capital spending costs the County taxpayers
over the twenty years of the bond issue(s) 4.625 cents on the tax
rate. Every $1,606,000 spent on new or expanded county governmental
expenditures will cost an additional one cent on the tax rate.
