Service Versus Savings

More often than not, local government budgeting has become all about hitting a target.



illustration by Andrea Allison Ong | Dreamstime

It’s about forcing budgets to conform to a property tax rate that is often agreed upon before budget hearings even begin. As a result, budget meetings are about hitting the property tax target rather than discussing what kind of city Memphis should be and what it would cost to make that happen.

Because those kinds of conversations don’t take place, the development of budgets are regularly more about politics than policies. That’s why budgets are skewed toward public safety (police and fire departments), which amounts to 60.3 percent of the city’s total operating budget, or $391 million. By way of comparison, the total amount of property taxes and sales taxes in the operating budget is $381 million.

Although no correlation is clear between the number of police officers and cities’ crime rates, nothing is harder for elected officials to do than resisting the call for more money for police. That’s certainly true in Memphis, where the police department budget has grown by 23 percent since 2008.

In New York City, crime rates have dramatically dropped even as the size of the police force was cut, because the administration of Mayor Michael Bloomberg decided that interventions should have as much prominence as arrests. It’s a philosophy that Shelby County Mayor Mark Luttrell, when he was sheriff, advocated for Memphis. He said suppression (arrests) is the easiest thing to do, but it’s prevention and intervention — the other two legs of what he called the three legs of crime fighting — that deserve equal attention.

City budgets are like the laws of motion: Every action — an increase in money for public safety — has an equal and opposite reaction: a reduction in money for neighborhood-based services like libraries, parks, community centers, public transit, and blight removal. As a result, when compared to its peer cities, Memphis is on the lowest rungs for funding these services.

These days, cutting budgets is often a proxy for efficiency.  That’s no longer the case because more and more, it’s the budget cuts themselves that are causing the inefficiencies.

For example, Memphis provides $23 in per capita funding for libraries compared to $35 in Atlanta, $37 in Nashville, $74 in Birmingham, and $78 in St. Louis. City funding for public transit falls below its peers, and in a ranking of 88 cities for per capita park funding, Memphis is next to last with per capita funding of $27, compared to the overall average of $82.

Contrary to public opinion, talking points, and commenters to newspaper websites, Memphis ranks high on efficiency and productivity rankings, largely because it is delivering services at low per capita costs and doing it with a property tax rate that has been reduced from $3.43 to $3.11 since 2006.

In other words, despite conventional wisdom, Memphis services come up wanting, but not because of mismanagement or waste. Rather, they are simply underfunded.

To move up toward the middle of the funding levels in comparable cities, Memphis needs about $35 million more for parks, public transit, libraries, and community centers.

This need for more funding occurs when, for the first time in modern history, Memphis’ property tax rate will rise, rather than fall, as a result of reappraisal. Tennessee’s “Truth in Taxation” law requires that after reappraisal, a certified property tax rate will be set that produces the same amount of revenue as before reappraisal.

This year, with values going down, the certified tax rate is estimated to go up 14 cents. As for the increases in the budgets for libraries, community centers, parks, and public transit, the Memphis City Council is blessed with options that can be mixed and matched to come up with the needed amount:
ω     Cutting 8 percent in the total budget for police and fire departments equals $35 million.
ω     Passing a sales tax increase with some of the funding allocated to the improvement of public services could produce $15 million.
ω     Increasing city fees which are in serious need of updating could produce $8 million.
ω     Cutting the number of tax freezes in the PILOT program by half would free up $20 million.
ω     Passing a 15 cent increase in the property tax rate would produce $15 million.

These days, cutting budgets is often a proxy for efficiency.  That’s no longer the case because more and more, it’s the budget cuts themselves that are causing the inefficiencies.

Here’s the thing: City of Memphis services matter. But what matters most of all is that they are effective, accessible, and responsive, which is what a progressive, high-performing government is supposed to deliver. 

 

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