Budgets are boring. But in these tight economic times, assessing priorities and creating the best possible budget with the money that's available is a necessary evil. Corporations and businesses all over the country are trimming costs, laying off employees, doing what is deemed essential to stay afloat. In the case of major corporations, CEOs also have to please stockholders, who insist on fiduciary responsibility and a return on their investments.
So what about this local corporation we all invest in — the city of Memphis? Our "CEO," Mayor Willie Herenton, has lately proposed a couple of budgets, the most recent one reflecting the possibility that the city will have to pay $57 million to Memphis City Schools, per a recent court order. If that order stands, the city will owe another $114 million for fiscal year 2010, which begins July 1st.
Our CEO says that to make the new budget, the city will have to cut recreational services, such as swimming pools and golf courses, as well as community centers and libraries and — more troubling — police and fire services. Additionally, the CEO says he will maintain the 3 percent pay raises granted all city employees in the original budget.
Something stinks here. In a crunch-time budget, you don't give raises. In fact, most companies are either freezing salaries or cutting them. We are the "stockholders" in the city, and we need to demand that our "board," the City Council, get tough with the CEO.
It is well-documented that Mayor Herenton has stocked the upper-management of several city agencies with cronies and former bodyguards, most of whom make over $100,000 a year. There is fat in this $620 million budget that can be cut in personnel — either through layoffs, salary reductions, or a combination thereof. Cutting the proposed raise itself will save around $70 million.
Some council members have begun to take on the onerous task of line-by-line accounting in the CEO's budget, but hard, reality-based decisions need to be made, and soon. Maintaining police and fire budgets and other services that citizens want and need has to take priority over sustaining raises and keeping bloated staffs. We stockholders need to demand a better return on our investment.
(Read more on the BruceV blog at memphisflyer.com.)