City councilmen question whether "one-time" tax hike is really a - WMC Action News 5 - Memphis, Tennessee

City councilmen question whether "one-time" tax hike is really a "one-time" event

(WMC-TV) – Memphis City Council members are battling over the budget. At the center of the controversy is a "one-time tax hike" that may not be so a "one-time" event after all.

The city council learned Tuesday that the city is in debt $1.26 billion. That is up from $1.2 billion last year.

Memphis finance administrators say though the debt is average for a city of Memphis' size, the debt increase came when the city council reduced the taxes that would have funded city schools, and then spent the money two years in a row.

Roland McElrath, Memphis City Finance Director, said the city had to get resourceful when a judge ruled the city had to pay schools back that money.

"In order to raise revenues for the obligation, one of the strategies was to restructure our debt, push that debt out, and then use the resources from our debt service fund to cover our school funding obligation," said McElrath.

The worst news came when Memphis City Councilman Lee Harris questioned if the one-time tax increase proposal was really one time.

"In 2014, it looks like there's even a larger gap on this graph. Does that already incorporate your plan of keeping taxes relatively high?" asked Harris.

McElrath said if the taxes drop back down after 2013, the city will be in trouble.

"Without that strategy being employed, there already is a gap of about $25 million," said McElrath.

Council members says this will be a rough budget season.

"I think there's got to be a strong case before we raise taxes by that much. That's going to be a serious impact on people. So therefore, we've really got to pour over this thing item by item," McElrath added.

Budget talks continue through mid-May before a final vote on the proposed tax increase.

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