Saturday, January 03, 2009

Nothing Healthy About Inequitable Taxes For Memphians

Memphis City Council is right.

Its members have proposed the end of city government’s funding of the Health Department.

The logic is similar to the logical – and courageous – cut of $66 million in school funding: Shelby County Government, according to state law, is mandated to provide health services, and Memphis taxpayers are paying twice for them – once as county taxpayers and again as city taxpayers.

It’s an untenable, not to mention completely inequitable and regressive, tax policy, and the Council finds itself once again leading a cause of significance to every Memphis taxpayer.

Communicate, Not Litigate

That’s not to say that Shelby County CAO Jim Huntzicker isn’t also correct when he says that city and county governments should meet to discuss these funding issues. That is of course always preferable, and based on what we are hearing from City Hall, there’s really no aversion to doing that, and the sooner, the better.

Meanwhile, Bartlett Mayor Keith McDonald engages in magical thinking in trying to defend the status quo, which for decades has resulted in Shelby County Government directly subsidizing services within the small town borders as part of their heritage of preferential treatment. Mayor McDonald says that Memphis entered into an agreement to pay more for health services because they use most of the services.

There’s nothing to indicate that he’s right, and anyway, we thought he abhorred consolidation in principle. When the city and county health departments were officially merged September 1, 1950, it followed the consolidation of several functions – vital records in 1934, venereal diseases in 1939 and tuberculosis in 1941.
Times Change

It was a totally different time. Shelby County Government was a rural government of good old boys who provided services to Memphis grudgingly, if at all, and even then, Memphis had to scratch and claw for whatever it got. It’s this fact that is behind city funding for several services typically the sole province of county governments.

We are now light years from the county government that was so rurally dominated that it was ground zero for the landmark U.S. Supreme Court's "one man one vote" ruling in Baker vs. Carr that changed reapportionment not only for Shelby County, but for every legislative body in the entire country. Until then, although the majority of Shelby County's population had always lived inside Memphis, the majority of the county's legislative body members was from outside Memphis.

In fact, every county town – including the hamlets Germantown and Collierville and four-way stops like Arlington – had their own County Court Squires (now the county board of commissioners), so decisions were all about what to do for the people outside of Memphis. Meanwhile, the Chairman of the County Court was also in charge of large parts of the administrative functions, and the long-time occupant of that post was the legendary, powerful Charles Baker of Millington, whose name is attached to the Supreme Court ruling.

Small Town Logic

In other words, Memphis got short shrift in services and funding, and because of it, city government layered on funding to get services that the other towns got without any funding at all from their local governments, prompting city government to jump into the breach and tax for schools and other services although it was ultimately the responsibility of county government.

Over the years, the predecessors to the present cadre of town mayors have pushed back anytime anyone in Shelby County Government tried to even out the taxation scales. To his credit, after 30 years of limited efforts to create more fairness, Mayor AC Wharton has made strides in ending some county subsidies that had existed for decades for things from roads to libraries.

As part of this tug of war, the county mayors have created their own justifications for the double taxation of Memphians. Mayor McDonald – ironically someone who talks a good game of “we’re all in this together” – rolled out his explanation: Memphians pay twice for health services because these funding arrangements were made years ago on the basis of who uses the services.

He’s wrong. There has never been such a test for funding. And last time we checked Bartlett provided no city funding for schools funded only by county taxes (with about 60% from Memphians).

Two Wrongs Don’t Make A Right

To add to his error, Mayor McDonald said that Bartlett residents pay county taxes for certain things, including the county jail, in which Memphis usage is high but its funding is minimal. Actually, Memphis has no jail, because it helped to fund the Justice Center (unlike the towns, by the way) and the merged city-county jail was part of the quid pro for the funding help.

As for his fundamental point, he’s right and he’s wrong. Yes, the vast majority of people in the Shelby County Jail are Memphians, but no, Bartlett taxpayers shouldn’t be freed from paying taxes for it. After all, it's the concept democracy is built on. Despite the demagoguery of the recent presidential election, our entire government is built on the basis of redistributed taxes from one area to another to pay for services that are needed for the overall health. And come to think of it, most Memphians aren’t using the roads and schools that they were forced to pay for as county government willingly enriched politically-connected developers with unsustainable sprawl (which costs about $125 million a year in bond payments, and again, the majority is paid by Memphians).

We’ve said it until you’re tired of hearing it, but Memphians should only be paying for services that are comparable to services in the county towns. All other services should be regional, or countywide, and they should be supported by the larger tax base.

A Level Playing Field

In other words, Memphians should be paying primarily for fire, police, sanitation, parks and libraries. Everything else should be immediately moved to the county tax base, especially regional amenities like museums that should be backed with the broader tax base, and Memphis Area Transit Authority, which is running buses to the towns although citizens of Memphis are footing the bill. These are regional services and should be treated and funded as such.

If we had the power, we would also move to the countywide tax base all libraries and all parks. We deserve to have a coordinated, interconnected system that delivers services seamlessly and without regard to the imaginary government borders that we put so much stock into.

Clearly, Shelby County Government saw this funding issue coming. Mr. Huntzicker asked for a legal opinion about it from the Shelby County Attorney’s office a few months ago, and on October 13, 2008, he received the standard “the county is right and the city is wrong” legal opinion. Before this debate ratchets up much more, we are certain that we’ll have a City Attorney’s opinion saying just the opposite.

Opinions: Everybody’s Got One

Mr. Huntzicker asked the attorney’s office to answer this question: “Whether the City of Memphis could reduce or terminate funding to the Memphis and Shelby County and what consequence would result?” Of course, no one in City Hall is swayed by what county government says about city rights and responsibilities, but the answer from the county attorney’s office was: “City of Memphis remains a financial partner of the Memphis and Shelby County Health Department.” The opinion acknowledged that by law, Shelby County is “required to maintain and support a county health department,” but adds that the “City of Memphis is responsible for a proportionate share of the costs of operations, maintenance, and financing of the Memphis and Shelby County Health Department.”

Not mentioned in the opinion is that the conclusion flies in the face of three decades of county policy built on the principle that county government is required to provide health services and that city government could end its funding any time it had the political will to do so. In fact, it was 10 years ago that the former director of the health department wrote a memo reiterating the long-held belief. He said county government is ultimately responsible for the health department, not the city, and that the city could end its funding with six months notice.

In fact, when city and county governments sat down at the table to consider a new alignment of public services in the wake of the “tiny town” controversy, both sides agreed at the beginning of the meeting that Shelby County Government was responsible for health funding, not city government. For that reason, it was assumed as a given that health department funding should move totally to the county’s side of the
ledger.

Courting Disaster

Perhaps, this issue is headed for court, where it can join the tin-eared lawsuit filed by Memphis City Schools against City Council for cutting its funding. Some, including the editorial page of our daily newspaper, say that a court judgment is the wisest way to resolve this issue.

It isn't. That idea fails to recognize the obvious fact: This is not about contractual obligations and 50-year-old legal agreements. It is a question of equitable tax policy for Memphians.

Surely, no one in county government would argue that it is fair that Memphians pay twice for services and that city taxpayers- -who have lower median incomes - should pay a greater percentage of their incomes in taxes than taxpayers outside Memphis - who make higher median incomes.

That’s why it was encouraging that Mr. Huntzicker said that city and county governments should begin discussions to consider the full array of funding issues between them. That said, it’s got to begin immediately and have a deadline that we’ll live to see, based on 30 years of promises that city and county engineering will be merged or headlines two years ago that city and county fire departments were looking to merge.

It’s past time to bring rationality to our local tax structure, and it’s way past time for Memphians’ tax burden to be equitable and fair. In the end, there should be no greater objective for either city or county governments.

5 comments:

Chuck said...

Dear Smart:

I've always thought that Tennessee's Constitution on local government consolidation was in conflict with the U. S. Constitution because of the 1962 Baker v. Carr Supreme Court decision. How can Memphians be denied a vote on consolidation as county residents? Any thoughts?

Chuck

Smart City Consulting said...

Chuck:

You raise an interesting point, and there does seem to be an obvious conflict. We're not sure that the Tennessee attorney general has ever been asked to render an opinion on this question, and it would be good if one of our state legislators did just that.

As for the vote on consolidation, every one in Shelby County (including Memphians) gets to vote on consolidation. The hurdle to be cleared is that it must pass by a vote of Memphians, and in a separate tally, it must be approved by a majority of non-Memphians. It's a formidable hurdle, and allows a minority of the residents of Shelby County to control the destiny of the majority.

Anonymous said...

You know, after seeing this debacle play out, and then to top it off, the CA's 14 chapter articles on the "Life and Times of Ghetto Willie" I've about had it with the downhill spiral Memphis is on.

Time for me to leave as well.

That's one less tax payer who makes in the neighborhood of 70K a year pulling out.

Thanks for the memories. I'll be much happier paying my taxes and spending my disposable income in a town that thinks logically.

I know Willie doesn't care, the City Council doesn't care, and I'm sure I'm going to hear the same old tired tirade that is you won't stay and fight, then leave.

Will the last paying customer please turn out the lights ?

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