Opinion » Viewpoint

Budget Basics

The language and definitions that Memphis taxpayers should know.

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"The Grizzlies are in the playoffs, and we've come together as a community to cheer on the home team. During the playoffs, we'll evaluate the players, break down their stat lines, and hope that Zach Randolph scores a lot of touch downs and that Tony Allen pitches a no-hitter."

If the second sentence seems a tad off to you, you might now have an understanding of what it is like listening to some of our community discussions about the city of Memphis' budget.

Too often, we can't have a focused discussion, because we don't understand the rules of the game.

Rule 1: The city of Memphis has two budgets. The first is the General Operating budget, which funds the daily cost of running the city. That includes your fire employees, your police employees, and all other city employees. All are paid out of this budget. This is the budget that will have a direct impact on your property-tax rate.

The other budget is the Capital Improvement budget, aka the CIP. This is where the city issues long-term obligations in the form of bonds to fund higher-cost, long-term improvements to the city or capital improvements such as new police stations, sewer repairs, and vehicle fleet purchases. This is comparable to a home mortgage or car payment.

In the operating budget, $1 million means $1 million. Borrowing $1 million for projects in the CIP equates to an annual debt payment of $80,000, paid out of the operating budget.

Rule 2: Your tax rate hasn't gone up. The frequent lament that politicians are always raising our taxes is simply not true. The fact is: Your tax rate was higher in 2007 than it is today.

While the council discussed a tax hike last year, it was never implemented. We are not "always raising" your taxes. But as every business owner knows, costs have gone up from 2007. The city must pay these increased costs, too.

Waste and inefficiency must be tackled head on, but as the cost of providing services rises, either this higher cost must be borne by spending more revenue or the service must end or be reduced. This means parks, libraries, community centers, golf courses, etc.

We can no longer pick and choose where to spend our scarce tax dollars based on our personal preferences or our pet projects and services. Sacrifice must be shared by all.

Rule 3: There are no sacred cows. By far the largest area of the budget is public safety. The operating budgets for our fire and police departments comprise more than 60 percent of the city's entire operating budget. If we spent every penny of our property-tax revenues on police and fire alone, we still wouldn't have enough money to cover those budgets.

It is important to note, however, that the compensation package for fire and police is lower in Memphis than in many cities of a similar size. Our citizens have the right to live in a safe city, but the cost of safety is something the public must be willing to pay for.

Rule 4: There are no fringe players. You often may hear politicians and members of the public demand that the city cut or eliminate a specific area of government, as if that cut alone would solve our budget shortfall. For example, I've heard the drumbeat to cut Mayor Wharton's 400 appointees. Keep in mind that every librarian and city attorney is a mayoral appointee. It is a myth that the majority of those jobs are political-patronage jobs.

I've also heard demands that perks that cost taxpayers' money should be eliminated from government; that expenses for food and travel are unnecessary. Truthfully, I agree and I have consistently voted to reduce these frivolous expenses.

But let's not kid ourselves. When faced with a $47 million deficit — or even a $10 million deficit — these cuts wouldn't come close to solving our budget problems. Cut them all, and you are still left with the real issue: How much in government services are taxpayers willing to pay for?

The citizens of Memphis are the highest-taxed people in a low-tax state. This clearly must change on a systemic level. But that also means we must have a real discussion about government priorities. We all can have different opinions about how to balance the city's operating budget, but, to start that discussion, we all must be working with the same facts.

Shea Flinn is a member of the Memphis City Council and was last year's budget chairman.

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