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Budget Crunch

The County Commission struggles to reach an agreement on where and how to squeeze.

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Now you see it, now you don't.

What seemed last week to be a done deal on a Shelby County budget for fiscal 2003/4 came undone this week as the county commission, meeting in full session, plucked seven cents from the provisional 32-cent property-tax rate increase proposed last Wednesday by the commission's budget committee.

Missing in action after Monday's commission meeting were: a four-cent component to cover additional operating costs for the city and county schools; and three cents from what had been a 21-cent proposed increase in the county's general fund. Left intact were an additional seven cents for service of the county debt and -- for non-Memphis residents only -- another five cents to cover the costs of rural school bonds to build a new Arlington school and renovate several other county schools.

As things stand, the general county tax rate will rise by a total of 25 cents, bringing it to $4.04 per $100 of assessed value. County property-owners outside Memphis proper would find their rate up another nickel's worth, to $4.09. The Memphis owner of a homestead evaluated at $150,000 would pay an annual county property-tax rate of $1,515, up $94 from the current assessment of $1,421. A similar homestead outside the city limits would cost its owner $1,534 annually, up by $113. (See "City Beat,"page 9.) But county taxpayers are well advised to keep their wallets holstered and their household budgets on hold. None of this is certain. The changes made Monday may well be amended before the commission meets again in two weeks to take up its scheduled third and final reading of a budget that is already overdue.

County government meanwhile chugs along on a continuation budget at last year's spending levels. But the elected officials and other department administrators have made it abundantly clear that they prefer that state of affairs to what is coming. Most of them, in hearings conducted by the commission over the past several months, predicted results bordering on catastrophic if seriously deep cuts ended up being required of them. (See sidebars.)

The commission itself is in a state of tenuous balance. On one side of the debate are such hold-the-tax-line commissioners as Bruce Thompson and David Lillard, both still in their first year of service and both determined to bring a new outlook and a new stricter methodology to the county's budgeting process. On the other side are the commission's Democrats, who maintain that their constituencies would be harder hit by severe budget cuts affecting county services.

An important side issue has been that of the rural school bonds, a departure from past practice whereby capital expenditures for new schools in Shelby County have been appropriated at a 3-to-1 ratio favoring city schools over county schools, in conformity with a state average-daily-attendance (ADA) formula. The rural school bonds would, in effect, do an end run around that formula by assessing only county taxpayers to pay for them.

In general, Democratic commissioners have opposed the rural school bonds precedent while Republicans, most of whom represent the affected suburban communities, favor it. In practice, the issue has been made part of the complicated on-again, off-again budget negotiations.

A primary broker of the provisional deal reached last week was budget chairman Cleo Kirk, a Democrat. He and other commission Democrats -- chairman Walter Bailey, in particular -- have made it clear that their acquiescence in the bond issue (which they continue to vote against) was contingent on an acceptable tax rate.

Kirk and the other Democrats -- all save Bailey -- remain on board for a compromise solution after this week's excision of seven cents from last week's tax-increase proposal. It was Bailey who proposed the four-cent item for school operating expenditures, and he remains committed to it. "I'm going to take a stand," he told Kirk after Monday's meeting. "I may vote against the tax rate without that money for the schools."

If he does, and is not assuaged by concessions and add-backs elsewhere, and if there aren't enough votes to force an agreement on a new tax rate, the county rate will remain at the current rate of $3.79 per $100 of assessed value.

Some hearts might be broken by that outcome, but they wouldn't be those of Thompson and Lillard, who have been insisting on annual zero-based budgeting procedures -- i.e., ones requiring that all appropriations be justified anew -- begun early in the fiscal years preceding approval of a new budget. And they would not be those of the chorus of homeowners and conservative activists who, like Shelby County Republican chairman Kemp Conrad, bombarded commission members with complaints after the apparent cutting of a deal last week.

One commission member in particular was hot-boxed: Tom Moss, a homebuilder whose outer-county district -- shared with Lillard and Joyce Avery -- is the site of the proposed new Arlington high school and of the other school renovations that rural school bonds would finance.

It was Moss' decision to break ranks with his fellow Republicans that led to last week's apparent budget deal, and it was Moss, too, who took the initiative in trimming back portions of that deal this week.

"There ain't any formation," was Moss's heated response last week to complaints from colleagues Thompson, Lillard, and GOP chairman Conrad that he had dropped out of the Republican formation.

Said Moss of his commission critics: "They're immature as politicians and immature as commissioners. We've got some social obligations in county government, whatever they are. There's no point in playing games and asking questions without offering conclusions. We can't do all the budget reform this year. It's like Jell-O. You squish down here and it squishes out over there. The bottom line is, we're saddled with [former county mayor] Jim Rout's refinancing. It's come home to roost. We started out there. Then you've got [county trustee] Bob Patterson's situation, underestimating -- and I don't fault him for it -- what the property-tax appeals would be, and we're $15 million under expectations there. And then we've got obligations, certain functions we've got to fulfill."

Moss pointed out, "As far as party solidarity goes, what do you make of the fact that all of the elected officials we've heard from, with one or two exceptions, are Republicans? They're saying they can't live with the kinds of cuts some want to make."

As Moss sees it, something had to give in budget negotiations. The bottom line for him was the rural school bonds issue, which had been stymied for months. "You want to come away with something in your hand, whether it's future budget procedures or something tangible like a school. I came away from it with Millington High School reconstructed, the elementary school reconstructed, Lucy School redone, and the school at Arlington. They're all in my district."

Anyhow, said Moss about his decision to break ranks, "We've had too much of this partisan crap. You've got to look out for your district. You've got to look out for your constituency."

There was a good deal of speculation in Republican circles, not all of it flattering, about Moss' motives in joining with commission Democrats to make a budget deal possible. Some of his GOP colleagues wondered if he hadn't made an arrangement similar to the alleged one involving his vote as a newly appointed commissioner to make Shep Wilbun Juvenile Court clerk back in 2000. "No," said fellow GOP commissioner Linda Rendtorff in her colleague's defense. "Any deal Tom made with the Democrats was paid off then and there."

And there was an argument, pressed by Channel 13 reporter Allison Triarsi in a confrontation with Moss after Monday's commission meeting, that the commissioner might have been unduly influenced by the fact of his owning some 30-odd lots in the vicinity of the proposed new Arlington school.

"That's pretty lame," said Moss, who responded that he was representing his constituents' interests, not his own, and maintained that the proposed Arlington school boundaries would not necessarily include his lots.

There was no doubt, however, that Moss was subjected to enormous pressure after last week's committee vote -- technically ending with a 6-6 tie since Democratic commissioner Julian Bolton, assumed to favor a higher tax rate, was absent.

So on Monday he got together with two Democrats -- Joe Ford, who has been swing voter on many partisan-inflected issues, and Deidre Malone, who, like Moss, was said to have received pressure from constituents to make further reductions. They agreed on the seven cents worth of reductions in the proposed tax increase.

In opening the budget discussion Monday, Malone said she had been moved by "conscience" and constituents, and, wishing to avoid a "major mistake," promptly moved to subtract the four-cent school component. Moss quickly seconded and her motion passed, Bailey objecting.

After some more parliamentary back-and-forth, Moss introduced his own proposal to subtract another three cents across the board, and it, too, with Bailey and Kirk objecting, would pass.

Things weren't really that straightforward, of course. To grasp the general air of confusion that accompanied the by-the-seat-of-the-pants negotiations on Monday, you just -- as the saying goes -- had to be there.

There was, for example, a resolution from Bolton, who proposed separating the two components of the amended budget deal. For differing reasons, enough commissioners on both sides of the budget issue sided with him to force separate votes on the tax-rate question and the rural school bonds issue. That led to one of the more bizarre moments of a bizarre and frenzied day when Thompson and Moss, whose rhetoric concerning each other had bordered on the ballistic, came together briefly after the meeting to commiserate.

This was over their shared anxiety about Bolton's actions, which they feared might endanger prospects for rural school bonds, the one issue they concurred on. Chairman Bailey, no friend of rural school bonds, had ruled that the votes at a third and decisive reading would follow the order of tax-rate first, bond issue second. That was the sequence at Monday's second reading when the votes had been on hand to approve both the newly configured tax rate and rural school bonds.

Thompson, especially, nursed suspicions concerning Bolton's motives and a fear of potential deal-breaking by the commission's Democrats -- all of whom were on record as preferring to keep the traditional state-established Average Daily Attendance (ADA) formula by which capital construction funds were allocated to city and county school districts in a three-to-one ratio favoring the Memphis schools.

"Once they get the tax rate they want, what's to prevent their voting their convictions on rural school bonds and killing them?" Thompson wondered out loud after the meeting. In practical terms, the question related to Commissioners Malone and Ford, Democrats who voted Monday for rural school bonds. (So did Michael Hooks, but Hooks switched his vote to no for the record when the outcome was certain.)

Concern over separating the tax-rate and school-bond issues was initially shared by others, including County Mayor A C Wharton, who worriedly asked Chairman Walter Bailey later whether the rural school bonds issue might come to him separately and in advance of a third reading on the tax rate.

"No," said Bailey, "because we didn't pass an authorizing resolution to go with it."

The rural school bond issue seemed to be over the hump -- though it could be endangered if Bailey follows through on his discontent about the loss of the four-cent component for operating expenses for city and county schools. That appropriation, amounting to some $5 million, would be allocated according to the ADA formula. Though both city school superintendent Johnnie B. Watson and county school superintendent Bobby Webb beseeched the commission on behalf of the four-cent component, Webb's objections were conspicuously more pro forma than those of Watson, who spoke of "agonizing" choices that would be forced upon him if the item were not restored.

Webb and county school board president David Pickler, both of whom have insistently lobbied the commission for months on behalf of the rural school bonds issue and, in particular, on behalf of the proposed new Arlington school, seemed satisfied with the half-loaf that was apparently within their reach on Monday -- the five cents, to be assessed on non-Memphis residents only, tentatively approved by the commission.

The fact is that the four-cent component for the school systems' operating expenses was conjured up only last week by Bailey, who dropped it into the provisional agreement at a budget-committee hearing.

"That's more or less the way we've been doing business in all areas. We start out with a high figure, which is then subject to negotiation downward," said Thompson, who pointedly noted that he did not doubt the sincerity of Bailey's motives -- nor the seriousness of the chairman's threat to withhold his assent from a tax-rate formula that did not include the four-cent item, or some major fraction of it.

Not all of the cleavage on the commission concerns partisan differences. Some of it is nuanced according to even racial/social lines. At one point, when Lillard was holding forth on the issue of closing down the beleaguered Oakville Sanitarium, Kirk responded angrily, "When it's a matter of where poor people or black people are, that's what gets cut." And he challenged the good faith of Lillard, Thompson, and others wanting to hold the tax line. "You're not going to vote for anything anyway. I wasn't born this morning."

Nor was potential discord among the commission's Republicans limited to that between Moss and the GOP majority. Republican Commissioner Joyce Avery made a point of publicly embracing Moss after Monday's meeting. Avery, a supporter of full funding for the county Health Department and Oakville vigorously nodded when Moss suggested she might have been the victim of a "stab in the back."

That was a reference to several actions directed at Oakville Monday by Lillard, who -- supported by Thompson -- disparaged the institution's viability and quality of care for residents, suggested it should be closed, and moved unsuccessfully to make Moss's proposed across-the-board three-cent cut apply only to the mayor's component of the budget.

Negotiations for the current fiscal year lasted through last August, and it may be that this year's budget is destined for a similar course. Then again, Bailey, Thompson, Lillard, and others may find enough reason to suppress their doubts about the emerging compromise and pass something like the jerry-built formula arrived at Monday.

On the evidence of the turbulence manifested so far, however, there is a fair degree of certainty that the great fussbudget battle of 2003 will get even fussier -- perhaps even dramatically so -- before it is finally resolved.


Square Knot

Health department faces cuts from four funding sources.

Last week's provisional budget agreement on the county commission seemed to afford the Memphis/Shelby County Health Department a reprieve, reducing the department's proposed budget by a little more than $117,000 but insulating the department from the outright cuts that the commission had mandated for other departments of county government.

But with the scuttling this week of that prior deal and the call for dropping 3 cents from the county's general budget, the Health Department will also have to do some trimming. Director Yvonne Madlock has indicated her department might be able to cut operating costs by as much as 5 percent.

But that's only part of her concern. As with many county divisions, the local budget provides only one source of the total Health Department budget, which was approximately $55 million last year. At stake in any reduction formula are matching funds from city, state, and federal sources.

"I am certainly grateful for the acknowledgement of the commitment of public health that the Commission has made in supporting our budgets to the extent that they did," said Madlock. "But remember that 80 percent of our budget dollars are spent on providing services, so if you have cuts the only way to absorb them is through reductions in staff."

Tightened federal and state revenues and tough economic times have already resulted in staff and program cuts in Madlock's division. When Tennessee Governor Phil Bredesen mandated a 9 percent across-the-board cut for all state departments this year, the Tennessee Department of Health passed on a $450,000 cut to the Memphis/Shelby County Health Department. As a result, nine employees and four programs were lost: an adolescent pregnancy program; Parents Encouraging Parents, a support program for families of developmentally disabled children; alcohol and drug intake and case management; and a family outreach program geared toward Hispanic families. A syphilis elimination program and WIC (Women, Infants, and Children) resources for low-income mothers have both been on the receiving end of federal cuts.

"When people hear that our budget is the same as it was last year, it is and it isn't," said Madlock last week, before the specter of new cuts reared itself. "Not that our situation is unique in county government, but ours is exacerbated by expansion, increased service level, and the mandate of providing health services." One of those contractual obligations which has increased costs for the department is the agreement to provide health services at the county jails. A contract of $5.9 million for services for next year (which was deferred by the County Commission last week) includes funds for increased staffing levels and medication costs. Budget cuts will not affect jail services, but will have to be accounted for with service reductions in other areas.

Already the department has phased out an estimated 45 to 60 vacant positions. The county's nursing staff has decreased from 117 nurses last year to 96 this year. Given the local budget proposal, some 15 to 20 more positions will be lost, all in the service delivery area. "I think the public will be aware of the cuts because every one of them is providing some kind of direct service and if you remove that level of staff from the workforce I think the value of their work goes away. These are not easy decisions and we will try to minimize the effect on the public, but we cannot say there will be no impact," said Madlock.

Just how bad could the situation get? Madlock doesn't know. Luckily, phase one of smallpox vaccinations has been completed, with a large number of nurses, doctors, and administrators prepared in case of an outbreak, and local cuts do not affect other immunization efforts. But with health emergencies -- like the West Nile virus crisis of last year -- always a possibility, a reduction in services could force administrators to petition all levels of government for more funding.

"We probably are at a point where some things that we've come to expect as routine services just won't be there," said Madlock. "These are adult decisions that we as an adult community have to live with." -- Janel Davis


Leaner and Meaner

Already squeezed hard by pending budget cuts, Sheriff Luttrell now faces more.

When Mark Luttrell ran for sheriff, his platform included overhauling the department into a lean and mean operation. Little did he know how lean it was going to get.

Under the provisional county budget proposed last week, the sheriff's department stood to take an almost $8.5 million hit, a hit that Luttrell said would have a significant impact on the department.

"I am concerned," Luttrell said last week of the cuts. "When we submitted our budget in the spring, we did it in good faith. We cut $19 million and 500 positions and now they're asking us to come up with another $8.4 million."

And that prognosis, dire as it was, did not even include the impact of new cuts that the loss of three cents from last week's anticipated tax-rate increase will force.

The department remains one of the most expensive items on the county's budget, but it also suffered a higher percentage of reductions from its original original budget. Even at the $123 million figure that was proposed last week, Luttrell faced a struggle.

He said the additional monies will have to come from cuts to personnel or operations, the bricks and mortar that help the division run effectively.

"It will be bread and butter type things that will have to be sacrificed," said Luttrell. Things like not updating the department's fleet of vehicles or its weapons. Luttrell says he already feels that the department doesn't have all the equipment it needs in its patrol cars to make it as efficient as it could be.

"If we start cutting people," said Luttrell, "it will cut back on our response time. It will cut down how much we can deal with drug issues and gang activity. We have officers in all the high schools in Shelby County. All those areas will be impacted."

In a statement to the county commission last week, Luttrell said that with fewer deputy sheriffs, patrols would become more reactionary. More of the deputies' time would be spent answering service calls rather than looking for people breaking the law.

"We've seen significant problems in the area of criminal behavior," he said.

As an elected official, Luttrell could file a salary petition to have the court sanction the amount of staff he needs, but he says he probably won't do so. "If we see our manpower decrease to the point that we can't carry out our duties, we have that recourse. It's an option. I want to avoid that if we can."

One area that's seemingly safe, so to speak, is the beleaguered Shelby County jail at 210 Poplar. Because of a mandate stemming from a 1996 federal court case, Luttrell had to go before federal court judge Jon McCalla before cutting personnel positions inside the jail last March. Both McCalla and the attorneys for the inmates agreed to the staffing reduction, but deputy jailers said it would make the jail more dangerous for staff.

"If we make any more cuts at the jail, it would unravel the sensitive arrangement we have with the federal court and I'm not willing to do that," said Luttrell. "It would be financially catastrophic for the county."

The sheriff hopes to get to a point where the jail and the department are running so efficiently that he can make additional cuts, but stresses that he's not there yet. "In two or three years, if we stay on the plan, we'll become more efficient and still meet the mandates of that court. To do that," he said, "we need more training and better management. Cutting $8 million will not fix the problem. -- Mary Cashiola

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