The proposed budget is notable for three things.
It covers the first year in which Memphis is not obligated to support schools. It is the first time in modern history that overall property values have dropped. And it restores half of the 4.6 percent pay cut city employees took in 2011.
The current fiscal year budget is $648.9 million. The city operating budget is only part of the Memphis financial picture. Still to come are the capital improvements budget and the Shelby County budget.
Wharton said there will be no net savings from getting out from under the school funding obligation because the funds, averaging about $60 million in recent years, came from non-recurring sources.
"These funds must now be restored," he said. "For example, $22 million must be returned to the budget to pay for Pensioner's Insurance costs this coming fiscal year. Additionally, the police department budget has increased by more than $43 million since fiscal year 2008. Also in FY 2008 the property tax rate was reduced, resulting in a revenue loss of $33.6 million."
The city currently has 6,290 employees but proposes to cut that to 6,170. The greatest number of employees are in police (3032) and fire (1830.).
"The drop in assessed property values will not generate the same amount of revenue necessary to cover the operations outlined in this budget," said Wharton. "Not at the current tax rate. I mention these things because it better frames the existing options. While the administration is open to alternatives to this budget, I ask that you be mindful that we cannot meet ongoing financial demands by drawing on non-recurring revenue as we've done in previous years."