Watch out for F-bombs when the Memphis City Council and Shelby County Commission work out their budgets this year.
Not the kind you're probably thinking. The new F-bombs are fees and fines, and expect to see lots of them instead of those terribly unpopular tax increases.
The big picture was played out on a small scale at the Memphis City Council on Tuesday. First, the Budget Committee revisited last year's confusing 18-cent "one-time" tax assessment for Memphis City Schools. A couple of hours later, the Parks Committee took up the issue of improving Liberty Bowl Stadium and "appropriate funding" including user fees.
Coincidentally, 18 cents, give or take a fraction of a cent, is also the amount of a portion of the city tax rate that already goes to schools. In yet another coincidence, the overall Memphis tax rate is $3.1889. Hence the confusion. The council might or might not send property owners a separate tax bill for the "other" or "special" 18 cents, which would cost the owner of a $100,000 house about $47 and raise roughly $20.5 million.
Fees, fines, and freezes all have an impact on the city and county budgets. The city administration went over this at a retreat two weeks ago, using a graphic of the sinking of the Titanic to illustrate their point that they were serious about running a tight ship. Chief administrative officer George Little said property tax collections declined by 2 percent — the first decline in 50 years. And finance officer Roland McElrath said the budget has a "structural deficit" even if the "other" 18-cent tax is levied.
Some council members aren't so sure about the icebergs-ahead warning given that the city gave out $5 million worth of employee bonuses last December.
"I'd rather the city take the strain than the taxpayers," said Budget Committee chairman Jim Strickland.
Little pointed out that city employees took a 4.6 percent pay cut last year. And Councilman Shea Flinn said the council passed the "extra" 18-cent tax last June (and, he said, got called "sons of bitches" by angry citizens), but then it was not levied.
Whether it will be levied is unknown, but here's a guide to taxes, fines, and fees and what you can do about them.
Fees come in many flavors: bank fees, credit-card fees, phone fees. MLGW bills are full of them. The city is considering increasing existing fees or imposing new ones for car inspections. A $2 surcharge on tickets to football games at Liberty Bowl Stadium would essentially be a user fee to service the debt on improvements to the stadium and field and a new scoreboard and JumboTron.
Fines are fees' ugly sister. If you forget to feed a quarter into a parking meter and get a ticket it will cost you $20, and if you ignore that the fines can really add up to well over $100 plus a court appearance, for which there will be more fees. And if you get a couple of speeding tickets they can easily cost more than that controversial 18-cent property tax increase.
Freezes are often passed out by quasi-city agencies to bring in new businesses or development and keep old businesses. They are contagious. Nonprofits also get special treatment. In all, about 30 percent of Memphis property is exempt from standard property taxes. This option, unfortunately, is not available to homeowners. What they can do, however, is appeal their county assessment. In fact, so many people did this successfully last year that it contributed to the budget deficit, Little said.
One-time fees are pretty much fairy tales. The county wheel tax was pitched several years ago as a one-time fee for roads, but it is still around and can be used for lots of things. A one-time 18-cent levy for Memphis City Schools is slightly more believable due to the pending consolidation of the school systems in 2013 that could do away with the city schools tax and shift the whole burden to the county tax. But counting on or counting out any tax is risky.
The sales tax is the target of the suburbs that want to start their own school systems. The beauty, of course, is that it is paid by outsiders as well as residents. A half-cent increase in the sales tax would bring the total to 9.75 percent, one of the highest in the U.S.
The so-called bed tax on hotels and motels is a hefty 14 percent in most cities but is usually dedicated to the local convention and visitors bureau. A "seat tax" at FedExForum helps pay off the bonds on the arena.
One way or another, we all pay for what we get.