MEMPHIS, Tenn. — Memphis Mayor A C Wharton presented his 2016 Budget to the City Council on Tuesday.
The mayor proposed a budget of $656 million that includes $48 million for pensions, $15 million for street paving, $7 million for public safety and $2 million for youth programs.
However, the revenue coming into the city is projected to be only $643 million.
For a full look at the Mayor’s proposal, WREG has included a transcript of the presentation Wharton presented to the council below.
For the Fiscal Year 2016 Proposed Operating Budget, click here.
For the Fiscal Year 2016 Proposed CIP Budget, click here.
Memphis Budget Infographic can be found here.
“Good afternoon Mr. Chairman, Members of Memphis City Council, those gathered here in Council Chambers, and those watching via the internet:
I am here in accordance with our City Charter to present to the Memphis City Council my proposed Budget for Fiscal Year 2016.
I am pleased to report that from a perfect financial storm – the 2008 recession, high unemployment, billions in unfunded liabilities and a huge debt owed to Memphis City Schools – the City of Memphis has successfully emerged bruised but not broken.
My Proposed Fiscal Year 2016 Budget should be viewed in this context.
We had a financial crisis on our hands.
We needed to act, and we did.
While we still have financial challenges, we are now in a position to begin investing in our City and our people again, which is what our FY 2016 Budget is all about.
The Proposed FY 2016 Budget reflects my administration’s continued strong commitment to safe and vibrant neighborhoods.
We are increasing our investment in public safety by nearly $7 million to fund new recruiting classes in both Police and Fire, as well as an increase in the use of Public Safety Technicians so that we can devote more commissioned police officers to the vital, hands-on task of crime fighting.
Although crime has been down over the past few years and down 6% so far this year, we remain vigilant in our commitment to public safety.
The tragic deaths of two of our precious children hammers home that all is not good, and that we cannot rest.
Our proposal to invest $3 million for the demolition of abandoned buildings reflects our ongoing commitment to fighting blight and returning to the days of Memphis being recognized among the most beautiful cities in the country.
Also, as we tear down these eyesores and havens for crime, we are working with community development corporations and others to replenish our housing stock in distressed neighborhoods.
Additionally, our proposed Capital Improvement Budget for FY 2016 General Obligation Bonds is $54 million compared to $82 million in FY 2015, and includes $15 million for street paving compared to $9 million in FY 2016.
This represents a 66% increase over last year.
Over the past year, as we were working on efficiencies and reforms, we were also working on grant applications.
And our work has paid off.
In the coming fiscal year, we hope to bid out construction contracts on an additional $18 million for road paving as a result of these successful grant applications.
Altogether, this will be the most money we have spent on our roads in decades.
We are also increasing our investment in the youth of our City by earmarking $2 million for the MPLOY summer experience program to give 1,000 of our young people the opportunity to gain vital experience – and make valuable connections – in workplaces across Memphis.
This outstanding program was sponsored by Councilwoman Halbert and all of City Government – Administration and City Council – is solidly in favor of its continuation.
Our Proposed Operating Budget calls for expenditures of $656 million with revenue of $643 million.
The shortfall of $13 million is the last installment, so to speak, on our old Retiree Health Care system.
On January 1, 2016, most pre-65 retirees will move off our plan and on to other health insurance plans.
The reserves we built up in 2014 will allow us to cover this shortfall and still leave us with reasonable reserves.
The FY 2016 Proposed Budget also calls for the payment of approximately $48 million toward our annual Pension obligation – this is the amount required of us by Tennessee law.
Recall that just two years ago we paid only $19 million.
In two years, we have been able to more than double our payments and are well on our way toward reaching 100% of our annual commitment.
Also, you may have heard about the Blueprint for Prosperity.
A critical part of that plan to reduce poverty is lowering the cost of transportation.
This budget includes more than a quarter of a million dollars as matching funds for a federal transportation grant so that MATA can begin the critical process of enhancing affordable transit options for our low-income citizens who need reliable transportation to work.
Another critical piece of the Blueprint for Prosperity is economic opportunities and job training.
The recently announced $3 million Jobs Plus grant from HUD will support our efforts to get low-income residents of Foote Homes prepared for jobs and career development opportunities.
These are just highlights of the FY 2016 Proposed Budget.
This does not include federal, state and philanthropic funds such as $800,000 for 901 Bloc Squad, and $5 million for Greater Memphis Alliance for a Competitive Workforce.
When I took office in October 2009, our City was still reeling from the impacts of that Great Recession.
Unemployment was double digits, our Pension and Retiree Health Care plans were underfunded by over $2 BILLION, and we faced the financial fallout from the defunding of the Memphis City Schools.
Also, we faced rising debt payments of over $25 million per year.
We were looking at annual increases in our Pension payments of $55 million, increases in our Retiree Health Care payments of tens of millions of dollars and increased debt payments of nearly $25 million.
The magnitude of this financial storm was at first hard for us to comprehend, and we were slow to react.
Raising taxes seemed to be the only way out.
I recall one frustrated Council Member repeatedly calling for someone to make a motion to raise taxes to $4.01 – just to make a point, of course.
We had a financial crisis on our hands and once we realized what inaction would mean for the future of this great city, doing nothing was not an option.
It takes courage to face challenges and wisdom to make the right choices to overcome them.
Just as the destruction left in the wake of a storm is often an opportunity to rebuild bigger and better structures, the difficulties we faced were opportunities to build a stronger financial foundation for better things to come.
And I am pleased to tell you today that because of the programs proposed by the administration and the difficult, pragmatic, wise decisions made by Council, we have weathered the storm and we are on the road to recovery.
Full recovery requires the sustained action, discipline, and hard choices this City has been making.
We have reduced our unfunded liabilities by $740 million (37%), resolved the nearly eight-year-old dispute with our schools, restructured our debt, and, importantly, unemployment is down substantially across our City.
The financial crisis that seemed beyond our ability to control is now within our reach and our means.
In FY 2014, the Administration made a pledged to work diligently to reduce costs, increase reserves and develop major reform plans for FY 2015.
As you know, we pinched every penny in FY 2014 and increased our reserves by $27 million; an unheard-of increase.
This positioned us for FY 2015, the year we promised reform.
In FY 2015, we made the proposals that would change the course of our financial crisis and put us back in control of our own destiny.
First, we proposed – and Council approved – Retiree Health Care Reform.
Although we will not see the benefits of this fully until FY 2017, those changes will save us over $20 million per year.
Second, we proposed – and Council approved – Pension Reform.
This reform immediately saved us approximately $6 million per year and also reduced our long-term risk of another melt-down like we experienced in 2009.
And we still managed to preserve benefits for current vested employees that have been sacrificed in other cities.
Third, we proposed – and Council approved – a restructuring of our bond debt that will save us as much as $25 million per year over the next five to seven years.
We used some of the reserves we built up in FY 2014 to finally settle the litigation with our Schools.
In recent weeks, our Finance team reviewed our progress over the past two years, along with this FY 2016 Proposed Budget, with the National Bond Rating Agencies.
I am happy to report that both Rating Agencies affirmed our AA credit ratings.
These are among the highest investment grade ratings.
At a time when many cities around the country are struggling to avoid “junk” bond status, we have earned our place among the more fiscally strong.
And we intend to stay right there by exercising the same prudent financial management practices that we’ve been using to address our financial challenges.
Perhaps the best news is that we have been able to make significant progress without a tax increase in our Proposed FY 2016 Budget.
Economically, our City is still vulnerable and in order to maintain the City’s financial strength we must continue to look for cost savings and efficiencies in government, invest in those things that revitalize and stabilize neighborhoods, prepare our young people to be productive citizens and future leaders, and drive economic development projects that create jobs that help Memphians build wealth and escape poverty.
As we move ahead into 2017 and beyond, this will remain the cornerstone, the guiding financial principles, which will secure our future as a City of Choice.
I look forward to working with you, and I urge you to act in the best interest of our city and pass the administration’s budget as presented.
Thank you for your time and consideration.”
