Mayor and Council Spar Over How They Arrived at Fiscal Crisis

(Memphis) While the budget for the next fiscal year has yet to be approved, the mayor and city council members continue to point fingers at how they arrived at such a precarious financial situation.

In recent months, the state comptroller has warned that the city holds negative balances in certain funds going back more than ten years, and has had issues with inter-fund loans.

Specifically, the city has borrowed to pay for some operating expenses, which increases the amount they must pay back in years to come.

Some refer to this refinancing as the “scoop and toss,” because the plan scoops up current debt payments and tosses them into the future.

Council members have accused Mayor AC Wharton for allowing this to happen, but he sent an email Tuesday that implied the council was responsible.

The council had given a tax cut years ago when deciding to no longer fund Memphis City Schools. Wharton said he then asked them to restore that tax rate when it became obvious they were legally bound to pay the school system.

“Essentially, I asked for the restoration of the tax rate to avoid the situation we are now facing.  Specifically, we were not going to be able to fund  Memphis City Schools solely on the 10 cent tax allocation and that we would have to make cuts – which we did – and borrow, use funds from reserves, and pull funds from other needed services.

“The opposition to the restoration of the tax rate, which the Supreme Court ultimately ruled had been done illegally, was led by current Budget Chair, Councilman Jim Strickland who now complains the loudest about the measures we were forced to resort to in honoring our legal obligation to the schools.”

But Councilman Jim Strickland said he voted against the 2010 refinancing that’s at the center of the current controversy.

“I’m not sure what he’s going off on in this email, but the facts are the facts,” Strickland said. “I voted against it because it increased our interest rate, and increased our debt.”

He added, “What more can I do but vote against it? And talk against it?”

But Wharton wrote, “I do not recall his having led any sustained opposition to this measure. It is now odd to me that almost a year to the day after being directly informed about the cost of the 2010 financing, he now speaks out loudly against it.”

Strickland said, “The mayor is misrepresenting his position, misrepresenting my position, to cover up his reckless financing.”

While the back and forth continues, Strickland said that his purpose in bringing up the past is to make sure it doesn’t happen again. He worries that there is more of the “scoop and toss” financing in this year’s proposed budget.

“As has been obvious I have tried to refrain from ‘finger pointing.’ I will still continue to refrain from this practice moving forward and only when the true situation is misrepresented will I speak out,” Wharton wrote.

Wharton said that he only brought forward refinancing plans when his attempts to restore the higher tax rate were shot down by the council.

Meanwhile, Strickland said more cuts need to be made, before raising taxes or borrowing money.

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