sunday - The Commercial Appeal

Transcription

Section H
19, 2015
Sunday, April
NBA PLAYOFFS
BLAZERS
GRIZZLIES vs. TRAIL
FFS PREVIEW
2015 NBA PLAYO
Game 1: 7 p.m. today,
FedExForum
It’s part brawl, part
nervous breakdown
PHOTOS BY
Once again,
on what has
become an
annual spring
event — the
NBA playoff
basketball
NIKKI BOERTMAN/THE
COMMERCIAL
APPEAL
The next few weeks could affect Gasol’s future. SPORTS, 1D
festival.
BUST
BELIEVE OR
Marc Gasol
(left), Zach
Randolph and
Mike Conley
will take Memphians
mean the
, but that doesn’t g the way
of year in Memphis
alon
It’s the best time ’t make you an emotional wreck
NBA playofs won
Get ready
to flex your
What you must know about the best time of the year. SECTION H
VS.
GRIZZLIES RS
TRAIL BLAZE
today,
collective
Game 1: 7 p.m.
TNT,
muscle
FedExForum,
Memphis!
SportsSouth
Sunday in San
Wednesday,
It’s playoff
t began on a
Shane BatGame 2: 7 p.m.
TNT, FSTN
time for
Antonio, when
Grizzly,
FedExForum, p.m. CDT April
Tony Allen
tier, the prodigal
hit a 3-point
Game 3: 9:30
Portland,
and the
rose up and
GEOFF
25, Moda Center, th
Grizzlies
shot.
NBA playofs
CALKINS
ESPN, SportsSou
beginning
moOh, there were
p.m. CDT April
before that
T
Game 4: 9:30
today at
in Memphis want to be techCOLUMNIS
Portland,
FedExFo27, Moda Center,th
ment, if you it. There was the
hitting that
rum.
TNT, SportsSou29,
nical about season, when the
us Battier,
to be
Hubie Brown swept. And the given then racing of she
Game 5: April
n slump FedExForum * FSTN
Heidi, as
Grizzlies wereafter that, when jumper,
wife,
late-seaso
a
his
But
by
and the
re- ished
6: May 1, Moda
two seasons were swept again. with
their irst child.
was a doozy,
a spasm of injuries of the Game
also given
the Grizzliesdrab times. Futile, delivered
That series straight games and
Portland *
brilliance
playofs have
that
well, Center, May 3, FedExForum
transcendent
Four
Those were was so fun about theOklahoma City, later
7:
The Griz- Warriors and the Spurs,
Game
Griz- member?
us
the
overtime.
What
t
right?
even.
beating
went into
a four-poin
anyway?
never know,
same year, overtime.
Anything *
the playofs, had no idea.
to win you
zlies overcame
triple
necessary
This is the playofs.
hit zlies in playofs have given us play by Kevin Durant t play
This city
only thing you * If
rose up and
The
Clipa four-poin win can happen. Thethat the towels
and
hated
2
Until Battier
then,
the
is
to
Game
k
and since
in
be sure of
the Clippers, from 24 down
Russell Westbroo
that jumper,has changed.
over- can say “Believe Memphis”
pers, coming quarter to beat by
they couldn’t
town. The towels
everything
of
game.
Game 3 but
Reggie will
are now the
fourth
derdog river
Game 1 in come 32 points fromGame 4. the irst home
thing the have since become a symbol , a
The playofs year in Mem- in the
Grizzlies in
win
the
city.
That’s another
about Memphis
part the But the playofs have Jackson (gah!) to
best time of
cost
given this
a new spirit optimism.
have become
2012.
, the very And that’s what ultimately
playofs have
mind you.
phis. They
us Randolph
and the league Not just the towels, you have new can-doplayofs have given
calendar.
of the civic the BBQ festival givenseason, doing a pushup them. Well, that
should
Yes, the
And here
And now
The belief. May 7, 2011, when
then tossing deciding Randolph
There is
to the city.
festival next
his hotel room
Blake Griin,
st all that
back to
more. More
rowd,
s the music
I
CA
SUNDAY
174TH YEAR I COMMERCIALAPPEAL.COM I SUNDAY, APRIL 19, 2015
★★
$2.00
CA INVESTIGATION
Day 1 of a 6-day series exploring Memphis’ fiscal condition
Our Financial Mess
How it happened. What it means.
0
se
crea ating
n
i
t
en
,
pe r
Percost of o ce 1973 ion
t
n
c
i
a
in city s r infl
the sted fo
adju
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7
as
Are exed 0
annce 196
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47
62
W
hen Mayor
A C Wharton steps to the
podium Tuesday to
deliver his $600 million-plus budget to the Memphis City Council, he
faces the bruising financial legacy of the
city’s decades-old grow-or-die strategy of
annexation, chasing middle-class taxpayers
no matter their address.
Since 1960, Memphis more than doubled in
land mass by leapfrogging fleeing residents,
annexing dozens of times, the city now
stretching 24 miles from the Mississippi
River to the Fayette County line — making
it larger than Boston, St. Louis, Atlanta
and Washington, D.C., combined, according to U.S. Census figures.
Along the way, employee costs have
soared, more than doubling since 1992,
alone. Even adjusted for inflation, they’re
up 22 percent.
REVEALING
FIGURES
There are no tangible financial
measures that indicate Memphis is
doomed to follow Detroit into bankruptcy.
But by any measure, the Bluff City faces
lean, difficult years as the bills come due for
decades of aggressive expansion, huge
borrowing and generous promises to
employees – all as taxpayers fled
the city limits. Here is a look at
Memphis’ quandary, by
the numbers.
See LEGACY, 4A
IN VIEWPOINT
64
The Commercial Appeal
City employees
earning $100,000
a year or more
By Marc Perrusquia
and Grant Smith
Pe
gro rcent
fro wth pop
m 1 in
u
980 Me latio
to mph n
201 is
0
ANNEXATION AND POPULATION
C
w ity
f it r
of ewe h 15 etir
se r y o ee
rv e r s
ic ar
e s
Outward migration’s impact is subtle. But the cumulative effect of
all those residents leaving with their wallets is evident in Memphis’
financial struggles. Section V
NEXT IN THE SERIES
DEBT: The strain of record debt. “We could afford those things
once,” said former City Councilman Brent Taylor. “But when
the economy tanked, that exposed who was swimming
with swimming trunks.” Read it tomorrow in The Commercial Appeal or now at commercialappeal.com.
3
5
5
DIGITAL EXCLUSIVES
Videos and animated graphics: Watch the
population scatter as Memphis annexes 62
times. Understand the numbers that add up to
trouble for Memphis.
92
Percent of
Memphis’
borrowing sed
capacity u
Sources: U.S. Census; City Comprehensive Annual
Financial Reports; Office of Planning and Development;
City databases for DROP, payroll and pensions
TODAY’S CA
COUNTY DEBT
ON THE DECLINE
INTEREST IN ICE
SPORT HEATS UP
BANKING ON A
NEW GENERATION
ICONIC SITE READY
FOR RENOVATION
Shelby County is
sticking to its plan to
reduce debt, which
has fallen by $500
million since 2010.
Curling adds Memphis converts after the
unusual game comes to
Mid-South Ice House.
VP Chao Lin revamps
the Bank of Bartlett’s
digital presence, and
brings in Asian and
millennial customers.
Universal Life Insurance building, symbol
of city’s black history,
will be refurbished.
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4A » Sunday, April 19, 2015 »
THE COMMERCIAL APPEAL
««
CA INVESTIGATION
NN
THE BIG PICTURE: TOTAL SPENDING
$479M
$447M
$476M
$461M
$356M
$488M
$464M
WHARTON
$510M
$499M
HERENTON
HACKETT
CHANDLER
Adjusted for inflation, city general fund spending, in millions, has increased dramatically over the terms of the city’s
last four mayors, even as population remained largely unchanged.
$697M
$680M
$610M
Wyeth Chandler
Richard C. Hackett
Willie W. Herenton
A C Wharton
Jan. 1, 1972-Oct. 1, 1982
Dec. 8, 1982-Dec. 31, 1991
Jan. 1, 1992-July 30, 2009
Oct. 26, 2009present
Population
1970: 623,530
1980: 646,356
Source: Numbers are based on general fund expenditures from the city's annual Comprehensive Annual Financial Report, less sanitation
costs, multiplied by the rounded value of a dollar that year adjusted to 2014 dollars. Population figures from U.S. Census.
LEGACY
from 1A
City Hall handed out annual pay
raises and lavished generous beneits on that growing workforce.
Today, even after substantial cuts,
there are 64 people on the payroll
making at least $100,000 a year.
Among the youngest retirees is a
former police lieutenant who left
last year at 44 with a $41,000-a-year
pension, and a second, better-paying
career — just one of more than 1,200
current pensioners who retired in
their 40s or younger.
The city built ire and police stations, schools and roads, pledging
$150 million in improvements in
1998, alone, to annex Hickory Hill.
Debt soared — tripling since 1997
— to record levels. Daily interest
payments now exceed $168,000.
Even adjusted for inlation, the
cost of operating the city has grown
by more than 70 percent since 1973.
And yet — and this is the problem
— population fell. Though Memphis
has added as many as 157,000 people
through annexation since the 1970s,
there are fewer of us now — by nearly 8,000 — than in 1975. Fewer of us
to repay $1.2 billion in debt, to fund
the salaries, health care and retirement of all those city workers. In one
devastating three-year period last
decade, Memphis spent nearly $80
million more than it took in.
The fallout is ugly and, in some
cases, life changing, a consequence
of city government’s admission it
cannot aford the beneits it promised thousands of workers.
The fear of losing health insurance brought 65-year-old retired
firefighter Enoch Gentry to the
microphone during a emotionally
charged City Council session last
summer to deliver a message from
his cancer-stricken wife:
“She wanted me to let you know,
shame on you for trying to kill her.”
But hard-fought, multimilliondollar cuts in insurance coverage for
Gentry and scores of other retirees
along with stinging pension reforms
that save millions of dollars more
don’t solve the problem. Simply put,
Memphis is short of cash.
This is the fragile narrative that
emerges from The Commercial Appeal’s examination of city inancial
and demographic data in advance
of critical budget decisions facing
Wharton and the 13-member council
in the weeks ahead. Using information collected from long-forgotten
spiral-ring budget books and inancial reports tucked away in the basements of City Hall and the public archives, the newspaper constructed
a database spanning 40 years to explore and explain Memphis’ inancial condition, its solvency, amid the
common refrain the city is doomed
to follow Detroit into bankruptcy.
It’s not.
Memphis has the third-highest municipal bond rating given by Moody’s,
a barometer of Wall Street’s faith in
the city’s solvency and credit worthiness. It has $82 million in the bank
when, a decade ago, it was spending
money it didn’t have, running up a $4
million deicit in reserves one year.
Debt is inching down.
1990: 610,337
2000: 650,100
Note: Does not include the tenures of interim mayors J. O Patterson Jr and Wallace Madewell in 1982; or Myron Lowery in 2009. Data
unavailable for 1972, 1976, 1984 and 1992.
REVEALING FIGURES
1,688
94
Number of $100 bills needed
to pay the interest on
Memphis’ debt every day
Retirees receiving $60,000 or
more in annual pension
161.6
40
Millions of dollars spent on
retiree pensions annually
16
Percent drop in city
households at or above a
middle income between
1980 and 2010
2010: 646,889
Percent of city budget
that goes to Memphis
Police Department
200K
Average payout, in dollars,
to the 50 largest DROP
retirement plan recipients
“We have gone from what some
people have described as a inancial
Armageddon and we have dealt with
those big things,” said Finance Director Brian Collins, asserting pension and health care reforms, as well
as a pending debt restructure, may
avert a budget shortfall as large as
$55 million by 2020.
But neither can Memphis aford
another major inancial misstep.
Already facing the pressure of
record debt and spending, the City
Council made matters dramatically
worse in 2008 when it stopped funding Memphis City Schools and used
the resulting windfall on an employee pay raise and tax cut for property
owners. The money was gone by the
time the city was hit with a court order requiring it repay the schools $57
million. It dug the hole still deeper
in 2010 by reinancing and delaying
debt payments to free up cash for
the schools.
Memphis faces several major inancial challenges over the next
decade before it can pronounce
itself inancially healthy. Before it
can say it survived the massively expensive strategy of growth through
annexation as the urban core hollowed out. That it survived Mayor
Willie W. Herenton’s record levels
of borrowing and spending ahead
of the 2008 economic collapse. That
it survived that pair of devastating
inancial missteps and the massive
cost of MPD’s escalating war on
violent crime even as the city lost
population. That it survived making
inadequate pension contributions
for the past six years.
The city will need to dip into its
savings this year to cover an estimated $13 million budget deicit, and
Collins is betting on major help from
a recovering economy — as much as
$42 million in new revenue over ive
years — to pay its bills.
PERSONAL
PERSPECTIVE
“It has been more than
three decades since I’ve
had a drink, but there’s
no denying that I’m an
alcoholic. Over those
years I’ve worked with
individuals struggling with
substance abuse, and I’ve
seen the seemingly small
mistakes they make result
in significant problems.
Now, as Tennessee’s
comptroller, I encounter
local governments that
make unwise financial
decisions. The patterns
are surprisingly similar... I
believe the City of Memphis
is now in recovery.”
Justin P. Wilson, Tennessee
Comptroller of the Treasury.
Read Wilson’s essay only at
commercialappeal.com
CA INVESTIGATION
NN
Even after those wrenching cuts
made to health care and pensions,
the city has ive years, by law, to ind
money to cover the remaining $550
million shortfall in pension guarantees to workers and retirees.
Add $30 million to the annual budget — for as many as 30 years.
Because of that act of inancial
desperation in 2010, that reinancing
that delayed repayment of millions of
dollars of borrowing, annual debt payments began exploding in 2013.
Add another $26 million a year by
2022.
Or reinance, again, as the city is
doing by early May. That inancial
mulligan would flatten payments
largely because of historically low
interest rates, but also would add
nearly $13 million in debt payments
over time.
While the newspaper found Wharton, elected in 2009, contributed to
the problem — famously by putting
of those payments and reinancing
at a higher cost after the council rejected his proposed 31-cent tax hike
— his predecessors, including Wyeth
Chandler, Dick Hackett and Herenton, share responsibility for the city’s
inancial condition, in large measure
the result of creating a massive, costly
city infrastructure serving fewer and
fewer taxpayers.
Imagine the 1960 city limits that
roughly approximate a jagged semicircle formed by I-240 and enveloping nearly 469,000 people. Today that
same area — that same 85-square mile
nucleus of Memphis — is home to
an estimated 190,000 fewer people.
That’s like erasing Knoxville, the
state’s third-largest city, from the
map. Flight and neglect have devastated many inner-city neighborhoods
that now contribute precious little to
the tax base.
“What we did was we created disposable communities,” said former
City Councilman Jack Sammons, who
will become the city’s new chief administrative oicer next month. Over
Sammons’ 16 years on the council,
Memphis annexed at least ive times.
“We weren’t adding people. We were
building our own coin.”
Over the next week, The Commercial Appeal will examine in detail
what drove Memphis to the inancial
edge.
We’ll look deeply at the policies
that stretched our borders to an estimated 320 square miles (350 when
water surfaces are included). We’ll
probe the prohibitively expensive
pension system and explore the inancial impact of a policy that allowed
employees to retire with full beneits
after as few as 12 years of work. And,
importantly, we’ll follow the money:
««
« Sunday, April 19, 2015 « 5A
JIM WEBER/THE COMMERCIAL APPEAL FILES
Tax breaks to attract companies and create jobs like these on the production line at Electrolux cost Memphis $16 million per year.
what did we get for all that borrowing? We’ll examine the doubling of
public safety spending (adjusted for
inlation) over 45 years. And, inally,
we’ll explore other steps Memphis
must take to clean up the mess, even
if an improving economy brings in
more tax dollars.
This exploration frames several unavoidable inancial challenges:
■ Memphis’ 50-plus year strategy
of expanding its borders to stay ahead
of its expenses — essentially a pyramid scheme — has been ended by the
Tennessee General Assembly. Legislators slammed that door last year when
they gave residents outside the city
limits a vote on future annexations.
■ The impact of that decision is
compounded by the fact that Memphis’ tax base shrunk the last four
years and might not be measurably
larger until the scheduled 2017 property reappraisal.
■ With a shrinking tax base, the
council can raise substantially more
cash only by raising the property tax
rate. But in doing so it imperils economic development, the very engine
that could restart growth inside the
city limits. Memphis already has the
state’s highest tax rate, a distinction
popularly cited by industrial prospects and competing cities.
INSTANT FEEDBACK
The following are selected comments,
edited for length, on commercialappeal.
com about the city’s financial troubles.
■ How about cutting some of the highly
paid employees instead of the firemen/
policemen pensions? Very top heavy and
overpaid in the admin.
■ Downtown was hopping (Thursday)
night. Every restaurant was full, music
was in the air and there were young
people everywhere. Driving through
Overton Square on the way home — the
same thing. There are many projects being
started downtown, and the city looks like
it is on a modest upswing. There aren’t a
lot of answers other than lower expenses
(health care, retirement benefits and
policies), raise taxes and get our senators
and congressmen off their duffs and
get them to get some government
■ Because Memphis is job-starved,
nearly every major deal bringing new
jobs to the city in the last decade included some level of tax forgiveness.
There are more than 250 companies
enjoying tax deals in Memphis.
Subtract $16 million a year.
■ Were it not to raise the tax rate,
the council will need to cut spending,
and that’s diicult without reaching
projects like other congressmen get for
their districts — shipbuilding, military
production ... anything.
■ Annexation of unincorporated areas,
dwindling population, allowing retirees
to get out before they were 55, and
a workforce that doesn’t reflect the
city’s population are among the biggest
reasons why Memphis has become the
city that it is today. In order to reverse
the curse, areas such as Hickory Hill,
Southwind, Cordova and Raleigh need
to use the de-annexation law that will
pass very soon, de-annex from Memphis
and form their own municipalities
through incorporation, so that the city
of Memphis can focus on addressing
mounting issues within communities
such as North Memphis, South Memphis,
Westwood, Binghampton, Glenview,
Whitehaven and Orange Mound.
Join the conversation at commercialappeal.com
into MPD’s budget since it’s responsible for 38 percent of all general fund
spending. That’s a political tripwire
in a city so focused on crime.
“We have been pretending for too
long,” said City Councilman Shea
Flinn, who does not plan to seek reelection when his term expires Dec.
31. “This is a monster breathing down
our neck.”
th
0
3Annivesary
Shelby County (TN) Chapter
I
Leadership Academy
t’s the 30th anniversary of a local women’s group and the year-end celebration of their African-American male
youth development and empowerment program – and so the occasion is being observed as, “A Legacy of
Sisterhood Celebrating the Pride and Promise of Brotherhood.” The Shelby County (TN) Chapter of The Links,
Incorporated will celebrate its anniversary and the graduating fellows of its youth mentoring program at their Le’
Beautillion Militaire and Leadership Academy’s black tie, this Saturday, April 25, Peabody Hotel. Tickets are $100
and FedEx is the presenting sponsor.
The Le’ Beautillion Militaire and Leadership Academy is a program for young men (10th-12th grade) to develop
leadership skills, engage in service to the community, cultivate relationships with peers and connect with role
models. The program was developed by The Links in1987 so that the young men of the community could network
with mentors as they learn about and participate in living out the legacy of the African-American male’s strength of
character, history of community service, promise and pride.
The Le’ Beautillion Militaire and Leadership Academy also provides an avenue for African-American parents, families
and friends to encourage and salute these young men for their achievements as they move into manhood.
Chapter President, Ruby Bright, Vice President, Dara Davis. Leadership Academy Chair, Tamara Turner; Co-Chairs,
Mikki Cobbins and Sandra Polk. Event Co-Chairs Cassandra Webster, Mary McDaniel and Michelle Fifer
For ticket information call (901) 292-7505 or email shelbycountytnlinks.org.
Visit their website at www.shelbycountylinksinc.org
The Links, Incorporated, Shelby County (TN) Chapter Leadership Academy Senior Fellows 2014-2015
Fellow Richard Kelly
Fellow Brent
Joseph Palmer
Fellow Donnell R.
Cobbins, III
Fellow Tyler C.
Davis
Whitehaven High School
Son of Heir-o-Link Donnell Cobbins, Jr.
and Lakesa Dodson
Donnell is a four-year starter for the
Whitehaven High School baseball team.
He plans to attend Mississippi Valley
State University. He aspired to become an
attorney and fight for social justice causes.
Heir-O-Link Odell
Horton III
Memphis Academy of Health Sciences
Son of Tommy and Cynthia
Thompson- Davis
Tyler serves as the captain of
the varsity football, track team and
member of the national honor society.
He plans to attend Howard University and
major in accounting.
Concord Academy
Son of Link Ella and Connecting Link
Attorney Odell Horton, Jr.
Odell plans to attend the University of
Memphis or UT Knoxville and plans to
major in business administration.
White Station High School
Son of Heir o-Link
James and Rita Kelly
Richard plans to attend The University
of Tennessee at Knoxville and major
in Computer Engineering. His goal is
to become a computer engineer and
entrepreneur.
Fellow Michael L.
Rankin
Fellow Robert L.
Ruth, III
Fellow Bryce
Kristopher Smith
Heir-o-Link Clinton
Vaughn, III
Fellow Glenn M.
Vaulx, III
Power Center Academy High School
Son of Dr. Daphne E. Rankin
Michael is a published author, and will
attend Morehouse College and major
in Business Administration. He plans to
become an entrepreneur.
Germantown High School
Son of Cametra and Robert Ruth Jr.
Robert is a member of the varsity football
and track team.
Robert will attend Middle Tennessee
State University and plans to major in
Finance & Accounting. His goal is to
obtain his CPA license and help elevate
the family business.
Bartlett High School
Son of Michael and Vickie Smith
Bryce is active in leadership,
sports and music.
Bryce plans to attend Tennessee State
University and major in mechanical
engineer. Bryce’s goal is to become an
entrepreneur.
Arlington High School
Son of Link Lashelle & Connecting Link
Clinton Vaughn, Jr.
Clinton is a member of the Varsity football
and track team and a Life Boy Scout.
Clinton plans to attend Mississippi State
University with a major in Sports Marketing
and Management with a minor in Film and
Video. Clinton would like to pursue a career
in Sports Journalism and Commentating.
Central High School
Son of Kimmie and Glenn Vaulx, Jr.
Glenn is President, NAACP Youth Council
and Student Council VP.
Glenn plans to attend Morehouse
College or Howard University and
major in architecture or business
administration.
Arlington High School
Son of Robert and Tanya Palmer
Brent is a member of Memphis Challenge.
Brent plans to attend Samford University
in Birmingham or Sewanee: The University
of South as a political science major. Brent
aspires to become a politician.
««
CA INVESTIGATION
««
« Sunday, April 19, 2015 « 1V
OUR FINANCIAL MESS
ANNEXATION
“You had a
lot of people
voting with
their feet.”
URBAN
STAGNATION
Metro Memphis
population in the
thousands from
1970 to 2010
AS THE CITY GREW
BY GOBBLING UP
NEIGHBORING
COMMUNITIES,
IT WAS ALSO
SHRINKING AS MORE
AND MORE RESIDENTS
MOVED OUT
1970
624
1980
646
1990
610
By Marc Perrusquia
[email protected]
901-529-2545
2000
650
Carmen Osenbaugh fought annexation with all the fervor the mother
of five could muster.
She organized neighbors. She
raised money to hire lawyers. She
forfeited precious family time to
attend strategy meetings and badgered the Memphis City Council
with impassioned speeches.
Yet, even before the city finally
annexed Hickory Hill in 1998, lassoing some 46,000 residents in a land
grab equal to taking over a small
city, Osenbaugh and her husband
fled — first to suburban east Shelby
County and then, with renewed
resolve, over the state line into
north Mississippi.
It was something of a self-fulfilling prophecy, but Osenbaugh’s fears
were realized: The neighborhood
she and her friends and neighbors
ran from is plagued by crime, by
home foreclosures and declining
property values.
“It’s horrible. They ruined Hickory Hill,” says Osenbaugh, 71, who
now lives in Olive Branch. “All they
wanted was money, money, money.”
The story of Memphis’ decadesold grow-or-die strategy of annexation is filled with such accounts.
But it’s also a story of prosperity.
Central Gardens, River Oaks, Belle
Meade, Chickasaw Gardens — all
these aluent neighborhoods were
originally located outside the city
that began as a tiny frontier outpost
and pushed its brand from one end
of Shelby County to the other, from
the Mississippi River 24 miles east
to the Fayette County line.
For years, Memphis saw itself as
one of those fortunate “elastic cities”
with room to grow. Unhemmed by
natural barriers or suburbs — “we
don’t want to become St. Louis” was
the common refrain — it stretched
to find new tax revenue and wealth.
New ways to sustain itself.
Yet the legacy of annexation, which
climaxed in a series of spectacular
additions before state lawmakers
reined it in last year, may be seen,
too, as one of the culprits that pushed
Memphis to its financial brink.
2010
647
Source: U.S. Census
SUBURBAN
BOOM
Percent population
growth between 1980
and 2010
Memphis
0
Germantown
90
Southaven
205
Bartlett
218
Collierville
461
Source: U.S. Census
See ANNEX, 2V
DATA WORK BY GRANT SMITH/ ILLUSTRATED BY RICHARD ROBBINS/THE COMMERCIALAPPEAL
IN TODAY’S NEWSPAPER
MEMPHIS BLUES
The comparisons to Detroit are unfounded, but Memphis
faces deep inancial challenges. Front page, 1A
NEXT IN THE SERIES
DEBT: The inancial strain of Memphis’ record debt. We
follow the money. “We could aford those things once,” said
former City Councilman Brent Taylor. “But when the economy
tanked, that exposed who was swimming with swimming
trunks.’’ Read it tomorrow in The Commercial Appeal or now
at commercialappeal.com.
DIGITAL EXCLUSIVES
Videos and animated graphics: Watch the
population scatter as Memphis annexes 62
times. Understand the numbers that add up to
trouble for Memphis.
GRowING SmALL
Despite all those annexations, Memphis was actually shrinking as
residents led the core city. It’s as if a city the size of Knoxville was
erased from the map.
“We created disposable communities,” said former City Councilman
Jack Sammons, who becomes the city’s new CAO next month. “They
built them in Whitehaven, they built them in Hickory Hill, they built
them in Cordova. So when the hinges started falling of the doors and
the roofs leaked and that kind of thing, they just walked away from
their mortgages. And they moved to the next new community.”
See story on 5V.
EDITOrIAlS 9V
COMMEnTAry 9V
lETTErS 10V
2V » Sunday, April 19, 2015 »

CA INVESTIGATION
NN
OUR FINANCIAL MESS
BRAD VEST/THE COMMERCIAL APPEAL
Carmen Osenbaugh holds a binder full of news clippings and letters from when she fought to block the annexation of Hickory Hill. She and her husband fled, as did thousands of other
middle-class residents. “It’s horrible,” she said. “They ruined Hickory Hill. All they wanted was money, money, money.” Now 71, widowed, she lives in Olive Branch.
40
55
385
240
Enlarged area
It’s ironic, but all those years the city
was growing, it was shrinking, too.
Though Memphis has added as
many as 157,000 residents through
annexation since 1970, swelling its
land mass by roughly 50 percent to
an estimated 320 square miles —
bigger than New York City, the nation’s most populated city with 8.4
million residents — our population
isn’t substantially different now than
before we gained all that land. In fact,
with an estimated 653,450 current
residents, the city actually has 7,900
fewer people than it did in 1975, when
661,319 people called Memphis home.
“You’ve got infrastructure built
out there to service all of these
places, but we didn’t add any human
beings,” says city Community Development Director Robert Lipscomb,
who thinks leaders need to closely
re-examine the cost of delivering services. “Our population didn’t grow
but our service area probably nearly
doubled.”
Think about it this way:
As the city entered 1970, it had 37
fi re stations. We’ve since added 21.
Memphis had some 1,000 police
officers then patrolling fewer than
3,000 miles of streets and alleys from
three stations.
Today, we have twice as many officers working from 10 precinct stations scattered from Downtown to
Cordova, 17 miles away.
Those officers have much more
Riverdale
dale Rd.
HICKORY
HICK
HICKOR
ORY
OR
HILL
Hickory Hill Rd.
from 1V
ground to cover, too: 6,818 miles of
paved streets counted as of last July
— enough, if stretched end to end, to
travel from New York to Los Angeles
2½ times.
We have all those extra employees and facilities, yet the city is serving fewer residents now than it did
through much of the 1970s; all of it
adding significantly to the cost of
operating city government.
The open question — and it’s immensely difficult to sort out because
Memphis doesn’t systematically account for its spending by region —
is whether over time these annexations, some two dozen since 1970,
raised more in annual tax revenue
than they generated in expenses.
Opinions vary sharply on the subject, but the newspaper could fi nd
no defi nitive study on the cost and
benefits of Memphis’ polarizing history of annexation.
Still, this much is clear: The thinking on annexation has made a huge
political shift. Many now wonder if
Memphis simply didn’t overdo it, given how so many people were fleeing
as Memphis pushed its boundaries
outward.
“It’s a huge efficiency issue if you
continue to stretch the land mass that
the city needs to cover,” said Charlie
Santo, director of city and regional
planning at the University of Memphis’ School of Urban Affairs and
Public Policy.
“We are annexing and have access
to more land that we can tax, but that
land is becoming less and less valuable. So it’s become entirely counterproductive — and inefficient.”
La
ANNEX
en
Mend
d.
hall R
Winchester Rd.
e.
Av
r
ma
“our population
didn’t grow but our
service area probably
nearly doubled.”
Kirby Pkwy.
1998 ANNEXATION AREA
Raines Rd.
Shelby Dr.
Holmes Rd.
Few would have made such an assessment 40 or 50 years ago.
A state law passed in 1955 gave
Tennessee’s cities broad power to annex, and Memphis wasted little time
capitalizing. In 1957, through a simple
act of ordinance by the then-City
Commission, Memphis swallowed
its neighbor to the north, unincorporated Frayser, adding 15 square miles
and as many as 20,000 residents.
The city steamrolled into two
dozen neighborhoods, open areas
and industrial centers before striking big in 1969 outside the I-240 loop.
It simultaneously seized sprawling
Whitehaven, 19.5 square miles that
reached all the way to the Mississippi state line on the south, and an
8-square-mile area known as East
Metro, pushing the city limits to the
current boundary of suburban Germantown on the east.
On Dec. 31, 1969, more than 55,000
people woke up as Memphians.
“Many cities are located in states
… (that) do not have the legal power
to annex. Others are hamstrung by
legislative restrictions so severe that,
for all practical purposes, expansion
is prohibited,” reads a 1967 planning
document, “Annexation: A Must for a
Growing Memphis.” It reasoned that
urban growth — which planners then
expected to be as large over the coming 25 years as it had been in the city’s
previous 140 — would occur with or
without an expanded Memphis.
“These cities are not able to expand along with the rapid urban
growth taking place around them,”
the ’67 document warned. “As a result they have suffered population
declines, rapid obsolescence and corresponding losses in the tax base, and
loss of key resident leadership.”
For years, this was a rallying cry:
The development is already out
there. Let’s bring urban-level services to those areas.
Historian Robert Sigafoos wrote
the Frayser and Whitehaven annexations likely prevented those communities from incorporating and
encircling Memphis with suburbs it
couldn’t control.
That prospect could have cost
Memphis more than annexation,
says Josh Whitehead, director of the
Memphis-Shelby County Office of
Planning and Development.
“What if we let Whitehaven incorporate? It’s going to come at a bigger
cost to us. Because you know what
they’re going to do? They’re going
to start approving more commercial
developments than they ought to.
And it’s going to suck the commer-
PERSONAL
PERSPECTIVE
“Right-minded public
officials do not make
decisions knowing they are
bad decisions. Bad decisions
are made in the absence of
complete information.”
Carmen Osenbaugh shows off news
clippings and other collected items from
the time when she fought to block the
annexation of Hickory Hill. She and her
husband fled, as did thousands of other
middle-class residents.
— John Gnuschke, director of
the Sparks Bureau of Business
and Economic Research at the
University of Memphis.
Read Gnuschke’s essay only at
BARNEY SELLERS/THE COMMERCIAL APPEAL FILES
Carmen Osenbaugh — at a neighborhood meeting on June 14, 1982 — organized her
neighbors in the Hickory Hill area to fight annexation by the city.
NN
CA INVESTIGATION

PERSONAL
PERSPECTIVE
“It is inarguable in
hindsight that aggressive
annexation by the City of
Memphis was not a race
to prosperity as much as
it set in motion dynamics
that temporary stalled
but ultimately deepened
Memphis’ serious budget
challenges.”
Tom Jones, consultant, editor of
Smart City Memphis blog
Read Jones’ essay only at
David Moore of 4400 Crescent Park
Drive holds signs showing his sentiments at a Dec. 22, 1987, Memphis
City Council meeting. Several hundred
Hickory Hill residents attended the
standing-room-only meeting at City
Hall.
DAVE DARNELL/THE COMMERCIAL APPEAL FILES
cial developments out of the other
parts of the city,” Whitehead said of
the thinking of the time.
But in the years that followed, the
city triggered massive growth outside its limits by extending sewer
lines, at a cost of more than $500,000
a year, then chased those new communities through annexation.
“The thinking was, we’re making
money doing this,” said Mike Ritz,
a recent county commissioner who,
in an earlier role, served as planning
director from 1977 to 1981. Though
Ritz now questions the wisdom of
some of the city’s later expansion,
he’s critical of a budding school of
thought calling for the city to forfeit
— to de-annex — some of that hardfought ground.
“In retrospect, if you sit back and
look at it right now, decisions were
made for what they thought were rational reasons, and I’m not sure there
would be much beneit in unwinding
any of that,” he said.
There’s no denying annexation
opened spigots of new revenue.
A year after Hickory Hill was annexed in 1998, the city’s tax base
jumped by 11 percent.
By 2008, after a series of annexations that pushed the city limits to
the Fayette County line, the city’s
total appraised property value rose
Commissioner Henry Loeb (center) was on hand Jan. 2, 1958, as a
Memphis sanitation crew started its
work in Frayser, the newest addition
to the city of Memphis. W.H. Hugo
(right), city director of sanitation, and
Thomas F. Scott, sanitation superintendent in charge of Frayser, “picked
up” garbage and trash right along
with the commissioner. The worker
on the truck, in background, was not
identified. Eighty-four new employees
had been added to the Public Works
Department to care for the 20 percent
more land area added by Frayser. A
street maintenance crew was to work,
too, changing Frayser’s three-sided
street name posts to four-sided ones
that were standard in Memphis.
COURTESY SPECIAL COLLECTIONS /
UNIVERSITY OF MEMPHIS LIBRARIES
to $36.6 billion — 52 percent higher
(15 percent higher when adjusted
for inl ation) than before it added
Hickory Hill.
Property tax revenue more than
doubled in those 10 years, up nearly
70 percent even when adjusted for
inlation.
But the cost of operations rose,
too.
Ten years after Hickory Hill, the
city was collecting an additional $115
million a year in local taxes — mainly property and sales taxes — but it
was spending an extra $153 million
in its general operations. Simultaneously pouring millions into the longneglected inner city and into newly
annexed areas, Memphis engaged in
deicit spending over several of those
years. City leaders dipped heavily
into reserve funds that all but evaporated for a time.
Measuring annexation’s role in
that — did it pay for itself? — is extraordinarily complicated.
“It’s muddied. It’s so hard to
quantify. I think that’s why no one
has done it,” said planning director
Whitehead, who wrote a graduate
thesis that found service delivery
is more cost efective in Memphis,
because of annexation, than in Cincinnati, where there is more fragmentation of services among local
VACANCY RATES
The rental and homeowner vacancy rates for housing in Memphis rose steadily over the
decades as the demand for housing grew in many suburban municipalities.
Memphis
Bartlett
Collierville
7.5%
4%
4% 3.4%
6.8%
6.2%
14.2%
4%
1970
3.8%
1990
Germantown
Southaven
8.7%
6.3% 3.1%
3.8%
4%
2010
5.9%
Source: U.S. Census via National Historical Geographic Information System
governments.
One thing is certain: Hickory Hill
was an expensive undertaking.
The City Council voted to annex
the area in 1987 during Mayor Dick
Hackett’s administration, but a lawsuit blocked the addition for 11 years,
until Willie Herenton was mayor. To
settle that lawsuit, Memphis agreed
to make $150 million in improvements. That included $52 million to
build four schools and to renovate
another. The city spent $4 million for
a police precinct station. It built a $10
million community center, two i re
stations and ive neighborhood parks.
“Before that, the city usually broke
its promises,” said Dan Norwood, the
attorney who fought the Hickory
Hill annexation. Norwood believes
his suit marked the i rst time an annexation plan of services was made
part of an enforceable court order.
But Norwood had a problem, too.
See ANNEX, 4V
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CA INVESTIGATION
NN
OUR FINANCIAL MESS
HOLIDAY HEIGHTS
NOB HILL OLD HICKORY HILLS
WHITEHAVEN
LAKEVIEW GARDENS
BARTON HEIGHTS
FRAYSER
ALCY HILLS
PARKWAY VILLAGE
OAKHAVEN BALMORAL
VICTORY HEIGHTS CAPLEVILLE
Kirby Meadows
OAKVILLE
SCENIC HILLS RALEIGH SPRINGS
BALLENTINE GARDENS
williford estates
BLUE RIDGE PARK
EADS HILLSHIRE
MEADOWBROOK
COUNTRYWOOD
FOREST LAKE ESTATES
HICKORY HILL
stage ParK estates
EGYPT CENTRAL
RIDGE PARK SPRINGHILL
MATTHEW CRAIG/THE COMMERCIAL APPEAL FILES
FOX MEADOWS
INDIAN HILLS
KIRBY WOODS HILLMONT SCHOOLFIELD
RIVER OAKS JOHNS CREEK ST. ELMO
RALEIGH
Regina McKinney and other Cordova parents were in the dark about where their kids
would go to go to school in May 2005 as the city and county school districts wrangled
over students during the long, drawn-out annexation of Cordova.
FIRESTONE PARK
HERITAGE COLONY
CORDOVA
WINDYKE
EASON HILLS
GREEN GLADE WOODBRIAR
SOUTHWIND
FAIRVIEW
CORO LAKE HARVESTER HILLS
STONEBRIDGE
BERRYHILL CEDAR RIDGE
RAINESHAVEN
WESTWOOD
HOLMESDALE
HOLMESDALE HEIGHTS
FRED J. GRIFFITH/THE COMMERCIAL APPEAL FILES
Memphis police cars, garbage trucks, fire trucks and other service vehicles were displayed at Armour Center
on Dec. 29, 1969, ready to serve newly annexed areas of East Memphis and Whitehaven.
BOXTOWN
VALLEYWOOD
RED OAKS
WALKER HOMES
BLUEBIRD ESTATES
GRACELAND
GRACELAND FARMS
NEIGHBORHOODS ANNEXED BY THE CITY OF MEMPHIS SINCE 1960
“No, we’re not like
Detroit. we’re
iscally conservative.
we’re pretty
tightisted.”
ANNEX
from 3V
REVEALING
FIGURES
2.4
Factor by which debt increased
under Mayor Willie W. Herenton,
adjusted for inflation
Among a dozen or more plaintiffs
he represented in the suit, he could
hardly find one still living in Hickory
Hill when it came time to sign the
settlement.
“I call one after the other,” he recalls. “They didn’t live there anymore.”
Like thousands of other Hickory
Hill residents running from city
taxes, from the perception of inferior city schools and their own fears,
Norwood’s clients led.
The impact of that exodus of the
middle class was devastating:
The median household income fell
by more than half in parts of Hickory
Hill, from an adjusted $51,900 in 1990
in its northeast corner to as low as
$22,100 in parts of that area in 2010.
Foreclosures soared, increasing by
32 percent to as much as 246 percent
in some neighborhoods over one iveyear stretch last decade.
The decline is seen in the largely
vacant Hickory Ridge Mall, where
anchor stores such as Macy’s, Sears
and Dillard’s are gone, where large
shopping crowds are a thing of the
past.
“It was like a perfect storm,” says
Patrick Jacobs, who manages the mall
for a nonproit group set up by World
Overcomers Outreach Ministries,
which bought the mall after a tornado
struck in 2008.
Jacobs describes the trek of the
storm like this: Annexation hit; followed by new city taxes; the departure of Hickory Hill’s middle class;
their replacement by residents
of lesser means; followed by widespread home foreclosures; and the
opening of a new roadway, Tenn.
385, which only accelerated the migration.
Numbers of homeowners were
replaced by renters as the city tore
down inner-city public housing and
gave its former tenants Section 8
rental vouchers, casting them into
apartment complexes and singlefamily homes across Hickory Hill.
In January the mall was 38 percent occupied; its tenants include a
nail salon, men’s and women’s apparel stores, a tax preparation service, some government oices and
a “Prayer Station,” stafed by volunteers to educate the public on the
power of prayer. Exercisers walk the
long hallways at the mall, which has
taken to calling itself the Hickory
Ridge Towne Center, past darkened
shops and its famous double-decked
carousel, which sat idle on a recent
morning.
“We’re busily working to ind out
what’s going to click with our clientele,” says the optimistic Jacobs.
The decline is seen, too, in the
boarded-up houses around Flowering Peach Park, which the city agreed
to redevelop as part of the annexation settlement, and in Carmen Osenbaugh’s old neighborhood near
Raines and Ridgeway, where property values have plummeted.
Osenbaugh and her late husband
bought their four-bedroom Hickory
Hill home in 1976 for $44,400, an
amount equal to $185,000 in current
dollars. It sold in 2011 for $45,000.
Among 30 homes located along a
two-block stretch along Park Forest
Drive where the Osenbaughs lived,
16 are owned by nonresident investors, some who live as far away as
California and Connecticut; an equal
amount have experienced foreclosure. Prices of homes sold there between 2005 and this January ran 61
percent lower, adjusted for inlation,
than when the neighborhood was developed in the 1970s.
“Everything was getting run down.
They had cops coming in,” said Osenbaugh, who’s found a quieter life
in Olive Branch, where she doesn’t
fear crime and where she’s satisied
with the schools, attended by two
grandsons.
These patterns actually began
before the city took over, posing a
chicken-and-egg question: Did annexation cause the decline or would
it have happened anyway?
“Annexation ignored the fact that
people would just leave and go to the
next suburb,” said Norwood, who believes the city made a major miscalculation.
That reality — people leaving —
factored into a state law change that
efectively ends Memphis’ annexation.
“It was counterproductive,” said
state Sen. Mark Norris (R-Collierville), who co-sponsored a bill passed
last year terminating annexation by
ordinance. State law now requires
the consent of residents in the area
to be annexed, either by petition or
referendum.
“You had a lot of people voting
with their feet.”
Despite challenges, not all of Hickory Hill is in decline.
“I’ve had friends say, ‘Really? You
live over there?’ ’’ said Carrie Moss,
32, who lives in a thriving middleclass neighborhood with her iancé
and teenage son on Hickory Hill’s
eastern fringe. “Then they actually
see the neighborhood and they said,
‘It’s really nice.’”
Hundreds of good-paying jobs remain. Sharp Manufacturing, which
opposed annexation, is there still. So
is the old Stroh’s brewery, now is operated by Blues City Brewery.
“Job creation is the single most
important thing we can do,” said U
of M professor John Gnuschke, who
believes annexation on the whole was
good for the city. While troubling,
population loss is not insurmountable, he said, not a force of the order
that destroyed some cities.
“We’re absolutely not Detroit,”
he said. “When all that came up everyone said, ‘Oh my God, we’re like
Detroit.’ No, we’re not like Detroit.
We’re iscally conservative. We’re
pretty tightisted. The inancial problems that we have are minor relative
to other cities. We still have the ability to pay all our bills and do it within
the budget that we’ve got. So that’s
pretty rare in most communities.”
««
CA INVESTIGATION
««
OUR FINANCIAL MESS
PHOTOS BY YALONDA M. JAMES/THE COMMERCIAL APPEAL
A track runner for KIPP Memphis Collegiate High School (formerly Cypress Middle School) runs a relay leg during practice on Howell Avenue in the Hyde Park neighborhood. The school does
not have a track, so student athletes perfect their sprints and mid-distance runs on streets in this once-thriving community. Back in 1970, Census Tract 6 in Hyde Park had more than 5,500
people. It is now a shell of its former self, with as few as 2,152 residents counted in the 2010 Census. The median income of $14,710 is two-thirds what it was in 1970, when adjusted for inflation.
POPULATION LOSS
“We created
disposable
communities”
THE ONCE-BUSTLING HYDE PARK
REFLECTS NUMEROUS INNER-CITY
NEIGHBORHOODS HOLLOWED OUT
AS RESIDENTS MOVED TO SUBURBS.
By Marc Perrusquia
[email protected]
901-529-2545
Michael Jamerson motions down
Davis Street toward a row of vacant
lots and abandoned houses caving in
from years of neglect.
“That was Eie Key’s place,’’ he said,
nodding toward a grassy lot. “That was
Mrs. Wilson’s over there….
“Those houses really looked nice,”
said Jamerson, 59, who grew up here in
this now emptied-out North Memphis
neighborhood.
This is Hyde Park, once a bustling,
tight-knit working-class community
where Jamerson and his boyhood
friends swam competitively in the local
city pool, where he remembers everyone as family, where neighbors looked
out for one another.
It’s also known in the arcane world
of demographics as Census Tract 6,
its decline emblematic of the broad
impact that light and urban decay are
having on Memphis’ bottom line. In
1970, when Jamerson was growing up,
the neighborhood teemed with more
than 5,500 people. There are fewer
than half as many now, 2,152 counted in
the 2010 Census.
An estimated 1,264 families lived
here in 1970; today, just 513.
The median household income,
$14,710, is just two-thirds what it was
then, adjusted for inlation.
The story of Hyde Park is the story
of a multitude of inner-city neighborhoods hollowed out as Memphis’
population moved outward, into the
city’s outer reaches, to the suburbs and
beyond, leeing crime and higher taxes,
pursuing jobs and higher-performing
schools.
Outward migration is an old story
in Memphis that reaches back to postWorld War II, its incremental impact
largely subtle. But the cumulative
impact of all those residents leaving
the city limits with their wallets tucked
irmly in their back pockets is evident
in Memphis’ inancial struggles.
See POPULATION, 6V
Michael Jamerson, 59, smooths the hair of his 91-year-old father, Rev. J.D. Jamerson, during an afternoon visit to his home
in Hyde Park. When the Jamersons moved into this community 56 years ago, it was a tight-knit, bustling neighborhood. “It
was a lot better then than it is now,” the younger Jamerson says.
PERSONAL PERSPECTIVE
“The worst-case scenario is that
the tax base will fail to support
city services, the quality of life will
decline, the number of Memphians
voting with their feet will increase,
population loss will escalate,
and the tax base spirals further
downward. Comparisons to Detroit
inevitably follow.”
Phyllis Betts is former director of the University
of Memphis’ Center for Community Building and
Neighborhood Action.
Read Betts’ essay only at commercialappeal.com
DIGITAL EXCLUSIVES
HYDE PARK: Visit commercialappeal.com to see Hyde Park through
the eyes of Michael Jamerson, who
moved to the community 56 years
ago. Also, view a photo gallery by
The Commercial Appeal photographer Yalonda M. James, who will
take you on a tour looking at the lives
of those who live, work, worship and
attend school in the North Memphis
neighborhood.
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CA INVESTIGATION
NN
OUR FINANCIAL MESS
PHOTOS BY YALONDA M. JAMES/THE COMMERCIAL APPEAL
Marye M. Bandy, 67, shouts as she worships during a Sunday morning service at Holy Tabernacle Apostolic Church in the Hyde Park community. In its heyday, the neighborhood benefitted from a number of good-paying manufacturing jobs in the area and had amenities such as a dry cleaner, pharmacy, grocery stores and restaurants.
“The four-year trend of
falling property values
is extremely troubling.”
POPULATION
from 5V
There are fewer of us to shoulder
the 68 percent increase in annual
spending (adjusted for inlation)
since 1970.
Fewer to pay the cost of policing
the streets, up nearly 50 percent, adjusted, since 1997.
Fewer to cover annual debt payments, up $45 million since 2008.
While the trickle of out-migration
is long established, the 2010 Census
reveals something of a lood during
the last decade, its grinding impact
on the tax rolls now especially relevant as Memphis struggles to shore
up its inances.
Oicially, Memphis lost 3,211 people between 2000-2010. But when
other factors are considered, including the 38,910 residents the city
gained through annexation during
the period, Memphis’ outward migration becomes a much bigger concern. Researchers believe as many as
112,000 more people moved out than
moved in during those 10 years. Census estimates reveal a recent uptick
between 2011 and 2013, yet it would
take decades of such gains to ofset
the toll.
This is hardly on the magnitude
of Cleveland, which has lost more
REVEALING FIGURES
48
Percentage drop in population in Mayor A C
Wharton’s Midtown Census tract, 1970-2010
935
Police officers added during
Mayor Willie W. Herenton’s tenure
than half its population since 1950,
or Detroit, which lost over a million
residents in that time, but it has serious consequences for Memphis.
“It’s a huge concern for the city because you start to lose access to that
tax base,” said Charlie Santo, director of city and regional planning at
the University of Memphis’ School
of Urban Afairs and Public Policy.
“And it’s a diferent kind of problem for the areas outside the city because as those (people) move around,
you have to provide infrastructure
to support them. You’ve got to build
roads out in places where they move.
You’ve got to build schools and parks.
So it’s two sides of the same coin. But
that sort of unfettered expansion, unplanned, causes iscal strain either
way.”
It helps, Santo says, to think of the
First-grade students Jamareon Adair (left) and Denise Moore, both 7, dance with their
assistant principal, Kaitlyn Gosman, at KIPP Academy Elementary School, formerly
Shannon Elementary School, in the Hyde Park community. Longtime resident Michael
Jamerson recalls growing up in the area: “It was nice here.”
nine-county Memphis metropolitan
area as a giant bag of marbles. With
a population of 1.3 million, metro
Memphis has swelled at a steady
rate of about 12 percent every 10
years. But like a leather pouch with
its string loosed, our marbles — our
people, once concentrated in Memphis’ central core — are rolling out
across the area, out of the reach of
Memphis’ taxing authority.
“We want to keep these marbles
inside the I-240 loop. But somehow
that got opened,” says Santo, who
characterizes Memphis’ decline as a
“population decentralization” issue.
“They’ve spilled out across the
entire Shelby County area and into
Fayette County and down into Mississippi.”
In 1960, as many as 468,000 people
lived inside the eastern loop of Inter-
state 240, which then encircled the
city. By 1980, that population fell to
370,000; then to 332,000 in 1990; and
to 296,000 in 2000.
By 2010, fewer than 282,000 people
were living in that old central core —
a 40 percent drop in 50 years.
It’s clear this decentralization affects Memphis’ bottom line — fewer
taxpayers are contributing — but it’s
a complicated calculus to measure
the exact impact. But those who follow such trend lines know residents
leaving tend to have more wealth —
Memphis is getting poorer. The percent of households considered middle income or higher dropped from
about 63 percent in 1980 to about 52
percent in 2010.
The city’s tax base is shrinking.
Weakened by an ailing economy, the
total property value has contracted
HYDE PARK
40
40
240
55
240
Springdale
McLean
Chelsea
Hollywood
40
Vollintine
Cyretta Wilson, 24, covers her face as friends and relatives sing “Happy Birthday” during a party in her honor. Wilson, a mother of two
children, has lived in Hyde Park for two years and is expecting a baby in May. Wilson says her children play indoors, but she observes
them closely when they’re entertaining themselves outside. She adds her area needs a larger police presence and security cameras because of the abundance of crime. “From what I’ve been seeing, it’s basically a lot of crime over here,” Wilson states. “Like, don’t nobody
care about this neighborhood.”
CA INVESTIGATION
NN
««
Ash Grove Cement Co. is at 2050 Hunter, near the heart of the
Hyde Park neighborhood. The once-thriving community has
seen a substantial population and business decrease in recent
decades. In 1970, the Census Bureau recorded 1,264 families
living here. Today, there are just 513.
Mark “Permanater” Bowie, 49, gives himself a dry shave as
he waits on a customer to show up for a car wash in the Hyde
Park neighborhood. Bowie says he’s been working at the car
wash every day for the last three years.
Damien Calvin rolls a tire through the lot to install on a customer’s car at T. Reed and Sons Detail and Tire Shop, a new business near Austin Street and Chelsea Avenue. Good jobs are
rare in Hyde Park these days, said longtime resident Michael Jamerson. Manufacturers such as Layne & Bowler, International Harvester and Firestone Tire and Rubber Co., are all gone
now. “Most of the jobs are just gone,” said Jamerson. “If you get a job, it’s going to be way out.”
in each of the past four years.
“The four-year trend of falling
property values is extremely troubling, and, if continued, would put
severe inancial strain on the city
operating and capital budgets,” said
Marlin Mosby, who served as city inance director under Mayor Wyeth
Chandler from 1976 to 1982 and later
advised the city as a inance consultant.
“We’re either on a tipping point
coming out of the recession and beginning to really recover from that,
or we’re really kind of teeter-tottering on a point where the assessed
values are going down, people are
leaving the city and the costs are basically going up but there’s no way to
fund that cost.”
Adjusted for inlation, the picture
is considerably worse: The value of
taxable real estate within the city
limits was worth more in 2000 than
today.
It bears repeating: Over the past 14
years as Memphis grew through annexation, as expenses exploded, the
city’s inancial lifeline, its property
tax base that produces 43 percent of
its annual revenue, shrank when adjusted for inlation.
In 2000, the city’s total appraised
property valuation was $37.1 billion
when adjusted to 2014 dollars.
Last year, the city reported its appraised property valuation at $36.5
billion — about $500,000 less than
the 2000 value.
For Jamerson, the decay crosses
decades. People started abandoning his corner of Hyde Park, called
Homeland, as early as the 1960s. A
key factor: loss of jobs.
In its heyday, Hyde Park was populated with families beneiting from
an abundance of well-paying jobs.
Directly across busy Chelsea Avenue,
water pump manufacturer Layne &
Bowler employed as many as a thousand workers. Giant employers such
as the Firestone Tire and Rubber
plant and farm equipment manufacturer International Harvester sat just
down the road.
Jamerson’s neighborhood had a
pharmacy, groceries, a dry cleaner
— even its own “Harlem House” restaurant.
“It was nice here,” says the thin,
mild-mannered Jamerson as he
drives his 1992 Buick Roadmaster
past the now shelled-out pharmacy
where rubble piles out an open doorway. “When I was growing up, everyone knew everyone. That pretty
Three-year-old Keyoinna Hailey takes a break while playing on University Street. Over the past 14 years, Memphis expanded through annexation, causing expenses to explode. But the city’s lifeline, its property tax base, has decreased. This is partially due to a trend: Those
who can afford to move, go and leave behind their poorer neighbors — thus aggravating the city’s economic and racial isolation.
much kept the neighborhood sane.”
Firestone and Harvester closed by
1985. A decade later, Layne & Bowler,
sold to out-of-town buyers, closed its
plant.
“Most of the jobs are just gone,”
said Jamerson. “If you get a job, it’s
going to be way out.”
Anecdotally, the story of Hyde
Park fractures a myth often associated with Memphis’ population decentralization: That it’s simply white
light. Though white Memphians left
the city in huge numbers after city
schools integrated in the ’60s and
’70s, so have black residents.
The former teen swimming champion watched as his African-American neighbors led, irst to places
such as Frayser, a northern addition
to the city via annexation in 1957,
and to Whitehaven, annexed on the
south in 1969. Over time, some moved
east to the suburbs and southeast to
neighborhoods surrounding the massive warehouse and logistics district
that built up around FedEx. Jamerson
says some of his former neighbors are
now in Memphis’ outer urban ring, in
places such as Olive Branch, where
Williams-Sonoma Inc. recently announced the addition of 900 jobs.
“They moved out and no one
moved in,” he says with an affirming
nod. “That’s what happened.”
A consequence of decentralization
is that pockets of poverty have grown
more severe. The people who moved,
those who could aford it, very often
left behind a poorer set of neighbors,
aggravating the city’s economic and
racial isolation.
It’s a trend seen in big-picture
numbers — the city’s median household income in 2000 adjusted for inlation was $43,676; in 2013 that fell
to an estimated $36,772. It’s apparent
in more granular igures, too. Home
vacancy rates reached as high as 47
percent in pockets of the city, according to a study published in 2012.
“Part of the problem is that there
was a lot of building in Shelby County
that was really overbuilding,” said retired University of Memphis professor Phyllis Betts, who coordinated research for the report, “Lending Study
of Shelby County, 2010: An Evaluation of Lending Performance and
Neighborhood Market Indicators,”
published in conjunction with the
Community Development Council.
See POPULATION, 8V
««
CA INVESTIGATION
NN
OUR FINANCIAL MESS
YALONDA M. JAMES/THE COMMERCIAL APPEAL
Tontrevion Crawford, 10, hugs his older brother, Trevin Harris, 19, as they play basketball at Gooch Park. Longtime resident Michael Jamerson recalls how the area was in his own
childhood: “It was nice here,” he said. “When I was growing up, everyone knew everyone. That pretty much kept the neighborhood sane.”
“They moved out
and no one moved in.
That’s what happened.”
POPULATION
from 7V
Subprime lending took its toll on
Memphis, but so did sprawl, said
Betts, former director of the U of M’s
Center for Community Building and
Neighborhood Action.
“It’s not like all of these new people were moving to Shelby County
and so we had to keep building to
accommodate them,” Betts said. “It
was, instead, (creating) new subdivisions outside the city of Memphis.
And people who are concerned about
development in Memphis will have
some place to move. So you had a
lot of depopulation in places where
people had actually moved to begin
with because they were better neighborhoods.”
What Betts is describing is leapfrogging: Residents moving time and
again, further out, into new housing
developments.
It’s something former Councilman
Jack Sammons watched during his
two stints in oice, from 1988 to 1996
and 2000 to 2008.
“We created disposable communities,” said Sammons. “They built
them in Whitehaven, they built them
in Hickory Hill, they built them in
Cordova. So when the hinges started
falling of the doors and the roofs
leaked and that kind of thing, they
just walked from their mortgages.
And they moved to the next new community.”
One such place is Wooddale Condominiums, a once-prosperous 176unit development boasting dozens of
brick buildings spread across 9 acres
of pine- and oak-shaded grounds.
Built as an apartment complex in the
late 1960s in Fox Meadows, which was
then at the city’s outskirts, and redeveloped in the ’80s as independently
owned condos, Wooddale was home
to hundreds.
Today, it’s a ghost town — a largely
empty community surrounded by a
decorative wrought-iron fence and
the buzz of dense urban development.
Boarded windows, discarded mattresses and trash litter the complex,
declared a public nuisance by a judge
in 2010 following a rash of homicides,
drug arrests and a meth lab explosion.
“We couldn’t even ind the owners,” said Michael Logan, the former
Wooddale Condominium Association
president who paid $89,000 for two
condos there in 1985 and abandoned
them to a tax sale in 2011 as the com-
Robert Taliaferro, 88, a retired Memphis sanitation worker, plays with his cat, Lily
Mae, in his front yard on Davis Street. Taliaferro, who has lived in the neighborhood for
70 years, is sometimes called the mayor of Hyde Park. “This used to be a fine neighborhood, but it’s done changed now,” says Taliaferro. “A lot of folks don’t clean up, not
like they’re supposed to.” He adds Hyde Park was once a top neighborhood. “We were
No. 1,” he said. “The city used to be No. 1 a long time ago ... the cleanest city on the
map years ago.”
plex fell into ruins. Most of the condos had been leased to low-income
renters. Some had been lipped so
many times by lenders the association had no clue who even owned
them.
“The quality of the tenants went
down,” Logan said, “and I just gave
(the condos) up.”
The complex is one of several targets of a city-led anti-blight initiative that aims to re-energize pockets
of devastation throughout the city.
Coupled with recent economic development and initiatives to build
bike lanes, “walkable” communities
and other amenities attractive to the
so-called “creative class” — young,
educated professionals — the efort
is credited with a recent uptick in
population since that last Census
count in 2010.
Census estimates placed Memphis’ population at 653,450 in 2013, up
about 1 percent from the 2010 population of 646,889.
Demographic researchers are unsure if those numbers are inlated
by Memphis’ last two annexations
— South Cordova and SouthwindWindyke — but strike a hopeful chord.
“It appears ... the population has
stabilized and may be growing,” said
the U of M’s Betts.
REVEALING
FIGURES
3,818
Miles of city-maintained streets
added since 1977
10,880
Acres New York City would need to add
to equal Memphis’ current land mass
Yvette Churchman (left), 27, has a phone conversation while her daughter Le’na Churchman, 9, her niece Damia Fason, 10, and daughter
Dar-Janae Churchman, 4, amuse themselves by styling each other’s hair. For the past several months, at Cypress Gardens, a Section
8 apartment complex in Hyde Park, Churchman has endured bedbug and rodent infestations, mold and mildrew, and burst pipes. “My
floor’s so weak, in a minute, I’m going to fall into (the apartment below),” Churchman said. “There’s nothing I can do.”

Viewpoint
Editorials
Financial series
sets context for
budget decisions
We begin a special look inside the city’s budget
problems today on our front page and in Viewpoint.
It’s a critical, independent investigation led by veteran reporter Marc Perrusquia into how and why
things went so wrong.
The exhaustive “Our Financial Mess” series, a year
in the making, is designed to explore and explain,
and to light a path out of the considerable tangle that
threatens our city’s economic vitality.
We encourage you to invest time with it because
it provides essential context for the budget battles
that will unfold in the weeks ahead at City Hall. As
Memphians, we need to understand the mess and
hold our elected oicials accountable for fixing it, and
not allow them to ignore it as they seek re-election
or vie for higher oices.
It’s our hope the 13 members of the City Council
will better understand the problem, how it happened
and how they dug the hole deeper. Memphis can’t
aford more costly missteps or, frankly, election-year
politics that further delay action on problems that
have festered too long.
Yes, the council deserves credit for making some
necessarily unpleasant decisions to partially address
the most critical problems, including the massive
pension shortfall, but it would be foolish or dishonest
to declare “Mission Accomplished.” We fear that,
as Tennessee Comptroller Justin Wilson suggests
in an online column today, Memphis resembles an
alcoholic who has begun addressing his problem
but could easily relapse.
We saw Mayor A C Wharton fall of the wagon on
New Year’s Day just by mentioning possible employee
pay raises Memphis simply cannot aford.
We will see it again during budget season when
council members invariably try to boost their favorite
programs or causes with no means to fund them.
As Memphis’ economy bounces back and more tax
dollars roll in, the last thing we can aford is to act as
if we’re back in the money. We’re not. Those dollars
were committed years ago and the bill collector is
at the door.
It’s important for this community to understand the
financial impact of past decisions. Forty-plus years
of aggressive annexation grew our borders, but also
stretched our budget. Mayor Willie W. Herenton’s
record borrowing led to arguably worthwhile if
not essential infrastructure repairs and additions,
but it is squeezing our budget. Massive increases in
spending at MPD may be essential to combat our
embarrassingly high violent crime rate, but they’re
contributing significantly to the city’s fragile financial condition. All of these decisions added to the
cost of operating the city even as population shrank,
leaving fewer of us to shoulder the bills.
We don’t profess to have found overnight solutions
to problems decades in the making. But The Commercial Appeal is in a unique position to facilitate
an essential community discussion over how we fix
the problems and forge a strong, forward-leaning
Memphis. That begins with our mayoral forums,
the first of which is April 27, where we will ask candidates about their vision for Memphis — financial
and otherwise.
Our intent is not to lay blame or dredge up a debate
that takes us in reverse. Ours is to inform and explain
so Memphis can invest in its future, rather than
wringing its hands over how to keep the lights on.
Happily, the series swats away the popular notion
that we’re doomed to become the next Detroit and
plunge into bankruptcy. But if we don’t take our
financial challenges seriously, future comparisons
may shift. It’s possible that one day cities that don’t
bother to understand the roots of their problems and
address them honestly will become the next Memphis.
Our mission statement
— To be an advocate for social and economic progress, ethical behavior, eicient use of public resources
and an improved quality of life.
— To act independently and fairly.
— To celebrate the successes of Greater Memphis
and surrounding areas.
— To be the forum for ideas and opinions of public
interest.
Memphis Publishing Company, 495 Union Ave., Memphis, TN 38103
A JOURNAL MEDIA GROUP NEWSPAPER
The Memphis Commercial, 1889
The Appeal, 1841
The Avalanche, 1867
Consolidated July 1, 1894
LOUIS GRAHAM
JEROME WRIGHT
EDITOR
EDITORIAL PAGE
EDITOR
Contact Jerome Wright at 901-529-5830
or [email protected]
TODAY’S BIBLE VERSE
Fools give full vent to their rage, but the wise bring calm in the
end. Proverbs 29:11
ROBERT ARIAIL/SPECIAL TO THE COMMERCIAL APPEAL
Local reserves valuable to police
Ever since 73-year-old
reserve sheriff deputy
Robert Bates apparently
shot Eric Harris to death
by accident April 2 during
an undercover investigation in Tulsa, Oklahoma,
the 24-hour cable news
shows have filled airtime
with talking heads giving
their opinions on what
happened.
Bates, a wealthy Tulsa
insurance executive and
well-known community
volunteer, is accused of
second-degree murder in
connection with the incident. The Tulsa World
newspaper reported he
was part of an undercover
operation the Tulsa County Sherif ’s Oice Violent
Crimes Task Force was
conducting. Harris, according to the sherif ’s department, had previously
sold methamphetamine to
undercover deputies and
was in the act of selling
them a stolen gun.
As deputies moved in
to make the arrest, Harris
jumped from a truck and
ran, with deputies giving
chase. After they brought
him to the ground, Bates
said he meant to subdue
Harris with a stun gun, but
accidentally pulled his pistol instead. The Sherif ’s
Oice told reporters Bates
was in a support role, assisting the task force.
Coming on the heels of
other controversial fatal
police shootings, the Tulsa
incident, as expected, has
been a news topic for days.
Thursday, The World reported that sherif ’s supervisors were ordered
to falsify Bates’ training
records, giving him credit
for field training he never
took and firearms certifications he should not have
JeroMe
wrigHt
COLUMNIST
received. The newspaper
quoted sources as saying
at least three of Bates’ supervisors were transferred
after they refused to sign
of on his state-required
training.
The shooting sparked
questions about whether
someone his age should
be a reserve oicer, let
alone working that kind
of potentially dangerous
detail. Also, Bates’ longtime friendship with the
Tulsa County sherif raises the question of whether
friendship trumped prudence in placing a person
in a job that carries so
much responsibility.
In the coming weeks,
those questions, including whether Bates’ certification records were falsified, will be answered
in a department internal
investigation and possible
criminal trial.
What should not get
lost in this is the fact that
reserve law enforcement
oicers who are properly
trained and certified are
important assets to a community and the departments they serve.
They are volunteers
who normally provide security for special and community events, transport
prisoners and work traic
control, freeing full-time
oicers for regular police
duty. Depending on their
competencies, they work
regular police patrols and,
on rare occasions, serve as
backup for possible highrisk enforcement actions.
They can save a depart-
ments thousands of dollars
in overtime costs.
The Shelby County
Sherif ’s Oice has some
150 reserve oicers. A class
of 12 reserve deputies is
scheduled to graduate in
May. The reserves have to
meet the same standards
as full-time deputies, said
Chief Inspector Joe Huf,
who is in charge of the department’s training,
The state requires 400
hours of training to be a
commissioned oicer. Huf
said full-time deputies receive 800 hours of training; reserves receive between 500 and 600 hours
of training, depending
on whether they want to
qualify for a special competency, such as crisis intervention or crime scene
investigation.
In addition, regular and
reserve deputies receive 40
hours of in-service training a year, including firearms proficiency testing.
Sherif reserves serve
in a variety of roles, from
working special events
to routine patrol enforcement. Asked if a reserve
would be used in a special
operation like the one that
led to the Tulsa shooting,
Huff said that decision
would be up to the unit
commander, but it is not
something that is done on
a regular basis.
Longtime Collierville
Police Chief Larry Goodwin said his department
has five reserve oicers
who undergo 400 to 450
hours of training. He said
they pretty much work
special events, but will
sometimes work on regular patrol duty. “They are
a very valuable resource,”
he told me last week.
Asked if he thought
someone who is 73 years
old should be working as
a reserve, he said it would
depend on a person’s physical ability to perform the
job. Could they physically
run down a suspect, for
example?
Undergoing annual
ti med-f i rea rms-prof iciency testing would be
another good indicator of
whether someone is competent to be a reserve or,
for that matter, a full-time
oicer.
(The Memphis Police Department did not
provide someone to talk
about its reserve oicers
program by the deadline
for this column.)
In the minds of some
people, the Tulsa shooting cast reserve oicers
in a negative light. In fact,
though, on New Year’s Day
2009, a man was fatally
shot by a BART police oicer in Oakland, California.
The oicer told investigators he was going to shock
the man with a stun gun,
but accidentally drew his
pistol.
Still, the big question
in the Tulsa shooting is
whether Bates, the reserve oicer, should have
even been acting as a law
enforcement oicer.
Locally, though, the
reserve oicers are not
fulfi lling a little boy or
girl’s fantasy of becoming
a police oicer. And they
are not being sent into the
public domain with a pistol
on their hip without having been thoroughly vetted
and trained.
These are men and
women who generally
have full-time careers,
yet volunteer many hours
a year to protect and serve
the public.
Public education needs all the help it can get
By Rekha Basu
Des Moines Register
Some Republican prospective presidential
candidates turned to an
unusual constituency last
week in hopes of scoring
Iowans’ caucus votes:
parents who home-school
their children. But in their
bid to appeal to Christianvalues voters, four hopefuls ended up taking aim at
a proud American legacy
that made us unique in the
world: public education.
Speaking at a Christian
homeschooling conference in Des Moines, former Arkansas governor
Mike Huckabee, former
U.S. senator Rick Santorum of Pennsylvania, Texas Sen. Ted Cruz and Louisiana Gov. Bobby Jindal
slammed everything
from restricting public
education dollars to public
schools to Common Core
educational standards to
accreditation policies that
don’t hold Biblical teachings on par with college
academic curricula.
Cruz called school
choice “the civil rights
issue of the 21st century.”
Huckabee said, “Decisions
for your child’s education should not be in the
hands of government, but
of mothers and fathers.”
Santorum exhorted: “We
don’t need education standards or Common Core.
We need parents!” He described home-schooling
parents as “pioneers,”
and promised, “I’m going
to make sure that you have
control of the educational
system from here on out!”
In fact, the real pioneers
were those who took U.S.
education out of private
homes and into schools
after the Revolution. The
colonists had relied on
the family, church and
community for education,
though the success of that
tended to depend on family income and education.
“The whole people must
take upon themselves the
education of the whole people and be willing to bear
the expenses of it,” President John Adams said in
1785. “There should not be a
district of one mile square,
without a school in it — not
founded by a charitable individual, but maintained at
the public expense of the
people themselves.”
By 1870, every state had
free elementary schools
and Americans had one of
the highest literacy rates.
Public funding, local and
state control, an academic
curriculum and separation
of church and state were
all key to mass public education. In 1918, everyone
was required to complete
elementary school, and
most states passed a constitutional amendment
forbidding use of tax mon-
ey for parochial schools.
Now, candidates courting
GOP votes want to scrap
that wall of separation.
Some would let tax dollars follow a child whose
family opts out of public
school for private school
or a family dining table.
Earlier last Thursday,
Huckabee was joined at an
event by Michelle and Jim
Bob Duggar, who became
reality TV stars after birthing and home-schooling 19
children. Said Huckabee:
“They exemplify the family you’d love for every family in America to be like.”
He said they were saving
the state millions by keeping their kids out of public
school. “Shouldn’t we be
grateful for that and be giving them back some of that
money?” he asked.
No, we shouldn’t.
The Duggars may be
great parents who’ve done
a remarkable job of caring
for and educating their
children. But they made
the choice to school them
at home. Had they chosen
public school, they would
have had the benefit of taxpayer dollars. Siphoning
money away from public
to private schools would
cause already fragile public schools to fail. Public
education needs all the
resources it can get.
And is it wise to make
role models of people
who don’t practice family
planning and end up with
such large families? How
many parents could manage or aford it without
their own TV show? How
many have a solid enough
educational foundation
or teaching skills to give
their kids what they need
to be truly educated? As
it is, America is falling
behind other countries in
our grasp of math, sciences and technology. Now
states, including Iowa, are
exempting home-schooled
children from testing and
other requirements.
Perhaps this is a subtle
way of encouraging families back into traditional
roles with stay-at-home
moms, because one of
the great contributions of
public education was liberating mothers from the
responsibility of homeschooling their children.
But it’s doubtful any of
these politicians would
hold up a large Muslim
family that taught their
kids their religious values
for emulation. It seems the
real intent here is finding
the backdrop to frame a
narrative about a supposed
war on Christianity. But in
the process, the prospective presidential hopefuls
are waging war on America’s history of progress.
Rekha Basu is a columnist for
the Des Moines Register. Contact her at [email protected].
NBA PLAYOFFS
Grizzlies maul Trail Blazers
Tony Allen leads the defense and cheerleading, and Memphis hits its stride. SPORTS, 1C
Reserve guard and “X factor” Beno Udrih gives Griz a shot of Udrihnaline. SPORTS, 1C
174TH YEAR I COMMERCIALAPPEAL.COM I MONDAY, APRIL 20, 2015
Case is
lawyer’s
defining
moment
■ Gay-marriage
★★★
$1.00
CA INVESTIGATION OUR FINANCIAL MESS
OUR DEBT
‘This is a monster breathing down our neck.’
battle is debut
before top court
By Michael Collins
[email protected]
202-408-2711
WASHINGTON — When Joseph F.
Whalen stands before the nine
black-robed justices of the U.S.
Supreme Court next week, the
case he will argue will long be
remembered as one of the deining events in the battle over
gay marriage.
For Whalen personally, the
moment will be memorable for
other reasons.
It will be the irst time in
his three-decade career that
he has argued before the nation’s high court. And no matter what the justices decide,
the case probably will go down
as the most signiicant of his
career.
Whalen is an associate solicitor general for Tennessee
and one of two attorneys who
will argue that the high court
should uphold state gay-marriage bans like the one Tennessee voters approved in 2006.
Whalen’s charge is to answer
the question of whether states
See ATTORNEY, 2A
Hundreds
may be
dead in
sinking
■ Migrant boat
flips near Libya
By Frances D’Emilio
Associated Press
ROME — A smuggler’s boat
crammed with hundreds of
people overturned of Libya’s
coast as rescuers approached
Sunday, causing what could
be the Mediterranean’s deadliest known migrant tragedy.
Italian prosecutors said a
Bangladeshi survivor lown
to Sicily for treatment told
them 950 people were aboard,
including hundreds who had
been locked in the hold by
smugglers. Earlier, authorities said a survivor told them
700 migrants were on board.
It wasn’t clear if they were
referring to the same survivor, and Premier Matteo
Renzi said Italian authorities
were “not in a position to conirm or verify” the death toll.
Eighteen ships joined the
rescue efort, but only 28
survivors and 24 bodies had
been pulled from the water by
See SHIP, 7A
MIKE BROWN/THE COMMERCIAL APPEAL FILES
A former lawyer and banker, city of Memphis Finance Director Brian Collins says getting the city’s finances in order may be painful but it’s doable.
“This is not what terminal illness looks like,” he said. “This is something we can treat and get through.”
NEXT IN THE SERIES
COMPARISONS TO DETROIT ARE GREATLY EXAGGERATED,
BUT MEMPHIS’ DEBT LOAD IS UP TO 4 TIMES HIGHER
THAN TENNESSEE AND NATIONAL MEDIANS
By Marc Perrusquia
[email protected]
901-529-2545
He calls it the rat. The devil. The disturbance in the force.
Brian Collins isn’t the typically buttoned-down fiscal manager who speaks
technically about numbers and trends.
He’s a gregarious, colorful guy, a former
lawyer and a banker who served as senior
vice president at First Horizon National
Corp. before joining city government in
2012 when Mayor A C Wharton hired him
as finance director.
Essentially, Collins’ job is to clean up
the financial mess at City Hall, and his
vivid descriptions are emblematic of more
than Chicago roots; they reflect the job he
inherited.
In the 15 years before his arrival, Memphis binged on building and borrowing
under Mayor Willie W. Herenton, tripling
its debt to more than $1.2 billion as the
Great Recession hit.
Interest payments, alone, now exceed
$168,000 a day.
For the six years before Collins’ arrival,
Memphis had not made adequate annual
contributions to its pension fund and
owed an estimated $682 million.
It owed another $1.3 billion to cover
health insurance promises made to retirees over time.
And, significantly, it faced a 2010 court
order to pay Memphis City Schools $57
million it didn’t have.
“This is the devil here,” says Collins,
his finger pushed against a colorful, foreboding line graph that depicts Memphis’
anticipated debt payments absent a new
refinancing now working its way through
Wall Street. Picture a contour of hills and
Pensions: Despite early
warnings, Memphis continued to offer lucrative deals
to its growing workforce.
“There are a lot of tapes of
me ... saying that this is not
sustainable,” said former city
councilman Jack Sammons.
“When all those legacy
American corporations were
having to unwind from (pension programs), that was
very telling.” Read it Tuesday
in The Commercial Appeal or
today at
See ANNEX, 4A
BIG PICTURE
The strategies,
circumstances
and personal
styles of the city’s
last four mayoral
administrations
swung borrowing
patterns wildly
over the past four
decades.
Wyeth Chandler
Richard C. Hackett
Willie W. Herenton
A C Wharton
Jan. 1, 1972-Oct. 1, 1982
Inherited large debt,
spent heavily on major
Downtown projects.
Dec. 8, 1982-Dec. 31, 1991
Conservative spender,
reduced debt.
Jan. 1, 1992-July 30, 2009
Borrowed for projects
in inner city, newly
annexed Hickory Hill.
Oct. 26, 2009-present
Inherited record debt,
which is inching down.
TODAY’S CA
FAIR IN ITALY
BRANCHES OUT
OKLAHOMA
ANNIVERSARY
CLEANUP ON
TENN. 385
MAKE WAY FOR
IMPROVEMENTS
Milan’s annual furniture expo is no longer
just about furnishings,
but about design as
an exploration of how
people live and work.
A ceremony Sunday
in Oklahoma City
marked the 1995
bombing of a federal
building there that
killed 168 people.
Collierville officials
fight trash along
highway; state picks
up litter and posts
signs warning of
steep fines.
Funding shift will allow
right-of-way purchases
for first phase of $250
million-plus project on
chronically congested
Lamar Avenue.
FEATURES, 1M
NATIONAL, 3A
LOCAL, 1B
LOCAL, 1B
70˚/47˚
More weather 4B
© Copyright 2015
4A » Monday, April 20, 2015 »
««
CA INVESTIGATION
NN
MIKE MAPLE/THE COMMERCIAL APPEAL
When Memphis Mayor Willie Herenton left office in July 2009, the city’s total outstanding debt was at an all-time high — $1.3 billion adjusted for inflation.
‘Atlanta became the New South. my
city, we stayed in the dark too long.’
LEGACY
from 1A
valleys that roll out into the future.
The “devil” is a deep trench that gives
rise to a towering mountain.
He traces a steep, ascending line:
$55 million more in debt payments this
year than in 2011. Another $16 million
by 2018. An extra $16 million on top of
that by 2022. In more ordinary terms,
these are the kind of balloon payments
that send homeowners into default.
That simple line graph evidences a
moment of desperation in 2010 when
city leaders paid the schools in what’s
now infamously known as a “scoop and
toss” reinance, deferring millions of
dollars in debt payments. It was like
making only interest payments on a giant credit card balance. Or, using one of
Wharton’s own homespun aphorisms,
pawning the family’s shotgun to buy the
baby medicine.
PERSONAL
PERSPECTIVE
“Our current financial
problems were caused by
a combination of the Great
Recession and several
serious misjudgments in
its wake. Our recovery will
be the result of hard work
and sound decision making.
There are no quick fixes.”
THOMAS BUSLER/THE COMMERCIAL APPEAL FILES
Memphis Mayor Wyeth Chandler raised the city’s general obligation debt 49 percent between 1974 and 1980 on expenditures including
the transformation of Main Street into a brick-lined pedestrian mall, as seen during construction in 1975.
DEBT COMPARISON
General obligation debt in Memphis and three comparable cities
City
Total
Per capita
Debt payment ratio to
general expenditures
Brian Collins, director of finance,
city of Memphis
Nashville
$2.2 billion
$3,350
21.3%
Read Collins’ essay only at
Memphis
$1.3 billion
$1,946
22.9%
Birmingham
$412 million
$1,943
13.6%
Louisville
$331 million
$356
8.9%
It’s not that he wanted to do it,
Wharton insisted, but what were his
options? Keep pushing a tax increase he
proposed just weeks into oice against
the will of a deiant City Council? Lay
of city employees who rallied him into
the mayor’s seat? Cut deeply into the
budget of the police department just as
Memphis was being impaled as the nation’s most dangerous city?
So, on a 9-2 vote, the council repaid
the schools by reinancing the debt,
“scooping” out principal payments and
“tossing” them into the future.
Welcome to the future.
A consequence of pushing the pause
button on those obligations, taking that
inancial breather, is that annual debt
payments have been exploding, climbing each year until an anticipated spike
of more than $160 million early next decade. At that point debt payments efectively would become the second-largest
line item in city government, more even
than operating the 1,600-member Memphis Fire Department.
Collins’ gambit, expected to close
May 15, is to delay those payments —
again — through another reinance. To
borrow time, literally, and take advantage of historically low interest rates.
“This is not what terminal illness
looks like,” he said. “This is something
we can treat and get through.”
To examine that diagnosis requires
a near autopsy of the city’s life cycle of
Source: Comprehensive annual inancial reports and e-interviews with city oicials
debt, its 25- to 30-year borrowing patterns that reach well back into the 1980s
when neither Collins nor his elected
or appointed peers were in control of
city government, when Wharton was
among the city’s best-known criminal
defense lawyers. It requires an analysis
of the city’s ability to shoulder record
debt — the highest since a similar peak
34 years ago when adjusted for inlation
— as its population and tax base shrink
and when more of its general fund revenues, 60 percent, are swallowed by
public safety spending.
“This is a monster breathing down
our neck,” said Councilman Shea Flinn,
who believes city leaders simply have
not heeded warning signs building for
years.
Using records amassed from public
libraries and the basements of government buildings, The Commercial Appeal examined four decades
of Memphis borrowing that spanned
the tenures of Wharton and his three
elected predecessors: aggressive spenders Wyeth C. Chandler and Willie W.
Herenton whose terms bookended a
self-described penny pincher, Richard
C. Hackett. The personal styles and
economic circumstances of those four
political administrations swung Mem-
phis wildly — from record debt exceeding $1.2 billion by the time Chandler
was elected in early 1970s (adjusted for
inlation) to half that by 1990, then back
into record territory, $1.3 billion, at the
end of Herenton’s tenure and spilling
into the Wharton era.
It’s an immensely complicated process to follow all that money: some
loans are paid of routinely; others are
reinanced and extended, sometimes
repeatedly. Together, this near mountain of paperwork reveals two distinctive stretches in which Memphis invested heavily in itself: the 1970s as the
city convulsed from the assassination
of Dr. Martin Luther King Jr., and again
during better economic times in the
1990s when Memphis poured money
into rebuilding the inner city even as
it aggressively annexed. Both form the
footings of the city’s current, fragile inancial condition.
Because of the popular, persistent
narrative that Memphis is destined
to follow Detroit into bankruptcy, the
newspaper’s evaluation necessarily
begins there, with a comparison of the
two cities’ debts. There are no objective
measures to suggest even remotely similar outcomes. To bail out its troubled
pension plan, Detroit borrowed more
in a single transaction — $1.4 billion —
than Memphis owes. It took some $8
billion of general debt into bankruptcy.
Detroit was even borrowing money to
fund annual operating expenses, according to an examination by the Detroit Free Press.
Some of the broad statistical measures are reassuring when evaluating
Memphis’ debt: we dug ourselves out
of a similarly deep hole in the ’70s as
Chandler sought to keep Downtown
from emptying out. At its worst, in 1974,
Memphis’ debt payments consumed an
amount equal to a third of the city’s annual operating budget — well beyond
today’s levels.
Detroit aside, a long list of major
American cities are considered less
creditworthy by Wall Street. Designated as Aa2, the third-highest of 21
possible tax-backed bond ratings from
Moody’s, Memphis ranks even with
Nashville and above St. Louis, Chicago, New Orleans, Cleveland and many
others.
But among the objective measures,
too, is stinging conirmation of the
city’s deep inancial challenges: Memphis is reaching its credit limit. It’s
burned through more than 92 percent
of what it can borrow under the city’s
debt policy, leaving it at last year’s end
with an estimated $100 million in borrowing capacity. Per-capita debt has
doubled in 20 years — to nearly $2,000.
And for all that angst over the crushing bills coming due, some of the city’s
most recognizable landmarks aren’t
even included in the debt calculus.
It’s not the $250 million that went to
build FedExForum last decade (a debt
being repaid largely by arena revenue)
that makes this such a fragile narrative. Neither is it the billion dollar-plus
investment at the now-struggling but
financially sound Memphis International Airport (built with federal
grants along with debt repaid by air-
line fees and related revenue).
The source of all that inancial stress
is twofold: Memphis owed record debt
for the mundane footings of the city
— streets, drainage canals, schools,
irehouses among other things — just
as the economy collapsed in 2008; and
by delaying payments two years later,
it dramatically intensiied an already
signiicant inancial problem.
“We could aford those things once,”
said former City Councilman Brent
Taylor. “But when the economy tanked,
that exposed who was swimming with
swimming trunks.”
n
Driving back to Memphis from Atlanta this winter, former mayor Herenton takes a phone call from a reporter
and grows relective.
“The growth here is amazing,” he
says in a familiar drawl.
“Atlanta became the New South. My
city, we stayed in the dark for too long.”
Now 74, the former Golden Gloves
boxer who ran Memphis for 17 years
until he retired in 2009 in the midst
of a ifth term is relaxed again after
being outside the roiling spotlight at
City Hall. But when the conversation
turns to the city’s soured inances,
suggestions of mismanagement and
overspending, the ighter re-emerges.
“We left the city in good shape,” he
says, pointing out how state comptroller Justin Wilson stepped in two years
ago to question inancial moves by his
successor, Wharton, but never challenged his administration.
“I never got a letter from any comptroller talking about our iscal condition,” he said, “even though I noticed
how this (Wharton) administration
wanted to say what they inherited.
What they inherited was a city that
was inancially strong.”
While there are many opinions
on Herenton, the polarizing 6-foot-6
school superintendent-turned-mayor,
there are some measurable facts that
surround his tenure.
Simply put, Herenton was an aggressive spender on a mission to recast his
hometown.
In a booming economy, he oversaw
an exposition of building and borrowing, simultaneously pouring millions
of dollars into the long-neglected inner
city and into new territory acquired as
part of the city’s decades-old strategy
of growth through annexation. He renovated schools, improved parks, paved
hundreds of miles of roads, and erected
libraries and community centers.
The city’s general obligation debt
tripled along the way. Even adjusted
for inlation to 2014 dollars (the city’s
latest complete iscal year), the debt
doubled, from $542 million in 1995 to
more than $1.1 billion eight years later.
Inheriting an 11-year annexation
battle started under Hackett, Herenton
signed a costly court settlement in 1998
to take in sprawling Hickory Hill, one
of a dozen annexations he completed.
The city agreed to $150 million of improvements in Hickory Hill, borrowing
heavily.
On a separate front in the inner city,
Herenton, a former school superintendent, pushed through a $100 million
bond issue to repair and replace deteriorating schools, many lacking air
conditioning — bold for a time when
school construction funding was largely the province of county government.
“With the era of Herenton came a focus on promise for the inner city,” said
former councilwoman TaJuan Stout
Mitchell. “We were probably the only
community making an investment in
the infrastructure of our schools.”
Simply maintaining a city is costly.
Memphis, like other cities, routinely
borrows money by issuing general
obligation bonds repaid with property
taxes to pave and improve roads, build
drainage systems, erect buildings and
purchase major equipment such as
police helicopters and ire trucks. It’s
currently on a diet of about $70 million
a year in capital spending inanced by
borrowing.
Yet, Herenton advocated capital budgets that at times required as much as
$150 million, even $180 million, in new
debt. Aging budget books at the public
library relect his imprint: $26 million
toward the Benjamin L. Hooks Central
Library; $11 million for the Memphis
Zoo’s Northwest Passage exhibit; millions more to expand and improve the
Memphis riverfront, widen roads and
repave streets — perhaps the most
TIME TO STORE
YOUR FUR
CA INVESTIGATION
NN
««
« Monday, April 20, 2015 « 5A
NIKKI BOERTMAN / THE COMMERCIAL APPEAL FILES
In July 2011, Memphis City School Board president Martavius Jones and Mayor AC Wharton work on a payment schedule after a 2010
court ruling that the city was responsible for funding to schools. Repayment of these funds has contributed to the city’s debt burden.
inner-city paving ever in Memphis,
Herenton said.
“We had to grow,” he recalled, believing it was the city’s role to stimulate growth in the region by improving
roads and extending sewers. His strategy: let growth blossom outside the city
limits and catch up with it later with
an eicient, consolidated city-county
government.
“We could have choked of growth
by not extending sewers. I mean we
could control that. I always felt that it
was great for a metropolitan area to
grow and that the city would beneit.
And so we allowed the development
to take place. Now, that was good and
bad. … My thinking was, at some point
we’re going to have a metro (consolidated government). So let the entire
metro grow,” he said.
He even ofered once to surrender
the city’s charter to force consolidation. But even at the top of his game,
during his widely popular initial two
terms, he couldn’t make it happen.
“I could never convince the establishment to have a metro government,”
he lamented. “I felt that our community
would reach fantastic heights in one
government. One police department.
One school system. One government.
(But) at that time the blacks didn’t want
the consolidation because it diluted a
growing political base. And the white
suburbanites didn’t want it. So it didn’t
happen.”
The irony is that while pursuing
that vision of eicient government,
Herenton not only ran up the debt,
he exploded the size and cost of other
parts of government.
Staing jumped 23 percent between
1997 and 2008, from 6,311 authorized
positions to more than 7,770.
Operating deicits accumulated over
three successive years, from 2003 to
2005.
At the end of 2005, the reserve fund,
money the city relies on to get through
tight times and emergencies, was $4.1
million in the hole.
Herenton left oice in 2009 with
Memphis’ total outstanding debt at an
all-time high — $1.3 billion adjusted for
inlation.
Though Herenton’s building and
borrowing binge helps frame the
city’s current inancial picture, he did
not veer wildly from precedent. The
city was in a similar position 30 years
earlier under Chandler, who like Herenton, borrowed heavily to invest in
Memphis. During his irst iscal year
in oice, 1972-73, the debt, adjusted
for inlation, was every bit as high as
it is now, nearly $1.3 billion. It’s unclear how much of that Chandler inherited; the newspaper’s analysis did
not extend back to the tenure of his
predecessor, Henry Loeb. In nominal
numbers at least, the often-brash Chandler raised the city’s general obligation
debt 49 percent between 1974 and 1980,
$35
increasing it to a then-record $319.3
million — about $920 million in 2014
dollars — though inlation-adjusted
numbers show a long and steady decline in debt until Herenton’s tenure.
Still, it’s clear: measured as a percentage of the tax base, Chandler’s debt
was higher than today.
The ratio of the city’s debt to assessed property value reached 16.4
percent — greater than Herenton’s
highest, 10.1 percent, or the current
11.1 percent.
At one point under Chandler, the
ratio of debt payments to general fund
spending topped 33 percent, dwaring
PERSONAL
PERSPECTIVE
“At some point in time
(spoiler: probably not
during an election year),
the city will be forced to
return to the balanced
approach that ironically got
us here. Only now instead
of giving each stakeholder
something, things must be
taken back.”
City Councilman Shea Flinn
Read Flinn’s essay only at
Herenton’s high mark of 22.3 percent
and the current 22.9 percent.
“We were trying our best to save
Downtown,” recalled Henry Evans,
who served as Chandler’s chief administrative oicer from 1975 to 1981.
In the face of runaway inlation, and
the devastating economic ripples from
King’s assassination, the city invested
millions to redevelop Beale Street, to
reinvent Main Street as a brick-lined
pedestrian mall and to create the $63
million Mud Island river park.
Though the City Council temporarily
halted Herenton’s expensive building
program in 2005 — alarmed by the exploding debt — some argue Memphis
would be far worse of if Herenton had
neglected those infrastructure needs.
“Right now they’re still in very good
shape,” said consultant Marlin Mosby,
who served as inance director under
Chandler and later advised the city
during Herenton’s buildup. “Some of
the worst cities I have dealt with in my
life were cities who were in trouble but
who could not, for state law — or would
not, because of their city councils, go
borrow money to improve their park
system or their streets.”
Through it all, Wall Street has considered Memphis a safe investment.
Encouraged by the city’s positive
steps, including reforms in 2012 and
again last year to help reill the depleted pension fund, Moody’s gives
Memphis an Aa2 bond rating, its thirdhighest score, meaning it has faith in
the city’s inancial health: It will pay its
bills and satisfy creditors.
Still, the question lingers: Did all
that borrowing position Memphis for
a inancial crisis?
In 1998, the city’s general obligation
debt was just 49.8 percent of the debt
capacity limit allowed by city policy.
By 2002, after years of heavy borrowing, it rose to 70.6 percent; to 88.8 percent in 2011. Though the total debt has
been more or less level the past few
years — Wharton is whittling away at
it — the debt load rose again last year
to 92.3 percent of capacity. The amount
of debt no longer is rising. But because
the property tax base is shrinking, the
debt becomes a bigger concern.
Memphis’ debt burden (debt divided
by total property value) is as much as
four times higher than the Tennessee
and national medians, according to
Moody’s, the Wall Street bond-rating
agency which, despite giving Memphis
a positive bond rating, now lists the
city’s investment outlook as “negative.”
n
It’s against this backdrop — the
record borrowing, the population declines, the aggressive annexation, the
shrinking tax base, the economic collapse — that Memphis heads back to
Wall Street for a do-over, a multimillion-dollar mulligan of the 2010 “scoop
and toss” reinancing, the deal mayoral
challenger Jim Strickland, a City Council member, deems the worst inancial
transaction in city history.
Replacement bonds should be sold
in weeks and with one stroke of a pen
another economic irony is written.
Annual debt payments fall by as
much as $24 million a year — avoiding that $163 million peak in 2022 —
though overall payments increase by
$12.7 million over time.
Without it, Memphis must ind huge
sums of new cash, and quickly, to keep
pace with those exploding debt obligations.
To understand, think again about
Collins’ inger on that ominous line
graph that depicts payments spiking
at $163 million a year.
“This is the rat going through the
snake.”
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174TH YEAR I COMMERCIALAPPEAL.COM I TUESDAY, APRIL 21, 2015
THE BIG PICTURE: PENSIONS
As the size of government exploded over 40 years, so too did the number of pension
beneficiaries (retirees and their survivors).
Richard C. Hackett
Willie W. Herenton
A C Wharton
Dec. 8, 1982-Dec. 31, 1991
Jan. 1, 1992-July 30, 2009
By Maria Ines Zamudio
[email protected]
901-529-2371
Wharton
ready to
present
budget
n Five issues to
watch for today
By Ryan Poe
[email protected]
901-268-5074
Last year, Memphis City
Council member Harold Collins said Mayor A C Wharton
“sounded like he was reading
from the obituary page” as he
presented a budget that knifed
city health care and pension
benefits.
Expect a much more cheerful Wharton — and a sharp
decrease in his storm metaphors — today, when he hands
the City Council his proposed
budget for the fiscal year that
runs from July 2015 through
June 2016.
Budgetary “dark clouds”
having moved on, the big
question Wharton will try to
answer is how the city should
spend the savings from the
cuts and from the new revenues generated by an improving economy.
Council member Jim StrickSee BUDGET, 2A
WHARTON
HACKETT
Wyeth Chandler
Jan. 1, 1972-Oct. 1, 1982
case against GMF
See GMF, 2A
4,892
CHANDLER
n City building
The city of Memphis has
taken steps to condemn several low-income federally subsidized apartment buildings
owned by the
Global Ministries Founda- inside
tion, Mayor Slumlord
A C Wharton failing in
“mission God
said Monday.
Wharton said has given.” 1B
the city hired
attorney Steve
Barlow to help build a case
against Cordova-based GMF.
Barlow is meeting with the
health department and code
enforcement oicials, and is
preparing the case for environmental court.
If the city can prove that
these apartments are uninhabitable, Shelby County
Environmental Court Judge
Larry Potter could sign an
emergency order authorizing
the city to move residents into
temporary housing.
The city has inspected the
Warren Apartments, which
has 248 units, and Goodwill
Village, with 200 units, and
$1.00
HERENTON
efort
begins to
condemn
housing
HHH
1,041
Population
1970: 623,530
1980: 646,356
Source: Annual pension valuation reports
1990: 610,337
2000: 650,100
2010: 646,889
Note: Line graphic reflects a trend from Jan. 1, 1972-July 1, 2014.
“There’s just something fundamentally wrong
when a 39-year-old can retire with a full pension.”
CITY PAYING THE PRICE TODAY FOR GENEROSITY OF PROGRAM YESTERDAY
By Marc Perrusquia and Daniel Connolly
Lt. Joseph Pearlman retired last year
from the Memphis Police Department
with a career full of crime-fighting
memories and a $40,794-a-year pension.
He was 44.
If the former robbery squad supervisor lives to be 82, the average life expectancy for a man his age, he will have
collected at least $1.5 million in pension
benefits from city government.
“I did what was asked of me,” said
Pearlman, now 45 and working in the
banking business in Miami. “The police
department was very good for me.”
Few could fault Pearlman for taking
the deal he got — a full pension, collectible immediately after working 25 years,
regardless of age. But it’s the cumulative
efect of scores and scores of retirees
such as Pearlman that contributes to the
city’s fragile inancial condition. Despite
recent reforms that restrict pension
beneits for newer employees and the
deep, painful cuts made last year to
health care beneits, the city’s pension
NEXT IN THE SERIES
‘DROP’outs: The cost and beneits
of the controversial DROP program
designed to create orderly transitions of key employees. “There was
always something wrong with it,”
said former city attorney Robert
Spence. “It was sort of like … giving
city employees golden parachutes.
It always felt that way. It just always
felt like a golden parachute sort of
justiied by the city claiming that
they needed it to know when people
were going to retire …”
See PENSIONS, 4A
Taint forces Blue Bell to recall all products
n ‘We are heartbroken about this’
From Our Press Services
BRENHAM, Texas — Texas-based
Blue Bell Creameries voluntarily recalled all of its products
Monday night after two samples
of chocolate chip cookie dough
ice cream tested positive for listeriosis.
The company “can’t say with
certainty” how the bacteria was
introduced to the manufacturing
line, Blue Bell’s chief executive
Paul Kruse said in a statement.
“We’re committed to doing
the 100 percent right thing, and
the best way to do that is to take
all of our products of the market until we can be confident that
they are all safe,” Kruse said. “We
are heartbroken about this situation and apologize to all of our
loyal Blue Bell fans and customers. We are committed to getting
this right.”
The first recall in the familyowned creamery’s 108-year history was issued last month after the
U.S. Centers for Disease Control
and Prevention linked ice cream
contaminated with listeriosis to
three deaths at a Kansas hospital.
See RECALL, 6A
TODAY’S CA
NUTS CRACK OPEN
WATER DEBATE
CIGARETTES MAY
COST MORE SOON
TEEN RUNNING FROM
DOGS IS HIT BY CAR
California’s water-loving almond crop riles
the public as the state
grapples with mandatory water cutbacks
during drought.
A bill to increase the
mandatory minimum
markup on retail cigarette prices in Tennessee is headed to Gov.
Bill Haslam.
A 17-year-old boy was hospitalized in critical condition Monday after loose dogs on James
Road chased him into the street,
where he was struck by a car,
according to police.
BUSINESS, 8A
LOCAL, 1B
LOCAL, 1B
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© Copyright 2015
4A » Tuesday, April 21, 2015 »
“You’re talking
about 30 years
of risking your
life ... about
a $36,000
pension.
I don’t think
that’s overly
generous.”
PENSIONS
from 1A
fund remains a half-billion dollars
in arrears, in part, because of costly
promises the city made to its employees despite repeated warnings from
inancial consultants decades ago, according to an examination of 40 years
of data by The Commercial Appeal.
At the end of January, the city’s pension rolls included 1,245 ex-employees
who retired in their 40s or earlier
thanks to a variety of generous pension options that, in addition to the
25-year plan, allowed numbers of political appointees and elected oicials
to retire with as few as 12 years of service and others even sooner because
of disability.
Those young retirees now are
costing $37.9 million a year — about
a fourth of the city’s annual pension
payout.
“I retired at 39. And I get a pension.
I feel like I earned my pension. But
there’s just something fundamentally
wrong when a 39-year-old can retire
with a full pension,” conceded former
city councilman Brent Taylor, now 46,
who left oice in 2008 after 12 years
and is collecting a $9,411-a-year pension.
“Now I’m not going to give it back.
But all that adds up.”
What it all adds up to for the city is
a massive pension liability fueled by
generous payouts and by the failure
of the city to make adequate inancial
contributions. Even as the value of
the pension fund’s stocks and other
investments bounce back from the
Great Recession, the huge liability and
low payments continue to cause deep
inancial problems.
Combined, those factors leave the
fund an estimated $533 million short
of meeting its obligations to retirees,
their survivors and active employees
headed toward retirement. That’s
more than three-quarters of an entire
city budget for a year.
And because state lawmakers grew
weary of cities, notably Memphis, not
fully funding those promises, a new
state law gives them ive years, until
2020, to make good on their IOUs.
For Memphis, the math is simple
and devastating:
Taxpayers owed the retirement
fund as much as $74 million a year for
the next 30 years.
Last year, before the new law, city
government contributed just $19.4 million. To bump that number substantially this year, to $44 million, it took
a range of steps, including reducing
the health care beneits of thousands
of retirees and pouring the resulting
savings into pensions. Now, racing
that state deadline and facing intense
inancial pressures elsewhere, Mayor
A C Wharton must ind another $30
million a year to honor the remaining
promises to retirees.
Just as it did by delaying debt payments, Memphis made its pension
problem much worse by not making
adequate annual payments. By ignoring the problem. By cutting property
taxes in 2008 even as the funding hole
widened. But the pensions themselves
are the underlying problem.
Simply put, Memphis added thousands of employees to the plan, even
as its population shrank, and promised them generous beneits.
The newspaper’s examination
found the number of retirees and their
survivors collecting payments has
grown nearly every year since 1964,
swelling sevenfold from 631 to 4,892
as of July 1.
Twenty years ago, the annual pension payout — the paychecks going out
the door to retirees and survivors —
totaled $54.1 million. Today, it’s more
than $160 million.
Even with reduced pension beneits in place, many thousands more
employees have locked-in rights and
will begin collecting their beneits in
coming years. Each will receive a ixed
payout until they die, and their survivors may be eligible for beneits too.
The current crop of retirees is
young. Most of the 3,779 retirees (not
including 1,034 survivors also receiving pension beneits) listed on rolls in
January retired far before the traditional American retirement age of 65.
Average age at retirement: 53.
Average current age: 67.
Former airport manager Larry Cox,
who retired last year, collects $176,754
a year.
Former police director Walter
Crews: $88,162.
Former library director Judith Drescher: $78,813.
In the main, city pensions, calculat-
««
CA INVESTIGATION
NN
WELL-KNOWN MEMPHIANS
AND THEIR CITY PENSIONS
A sampling of city pensions including the top two recipients, Larry
Cox and Larry Godwin
$176,754 $95,870
Larry Cox
Larry Godwin
airport CEO
police director
$87,148 $82,690
James Bolden
Alvin Benson
police director
ire director
ed through a formula of years served
times a percentage of salary earned,
aren’t nearly that high for most, the
median retiree and survivor pension
being $32,320.
It’s important to note, too, that city
retirees don’t receive Social Security.
But considering Memphis’ poverty
and low cost of living — the median
household income for all families,
working, unemployed or retired, is
about $36,800 — the city’s pensioners fare well.
“It’s overly generous,” said retired
businessman Joe Saino, a blogger who
studies local government spending.
“Somebody is working the system.”
Thomas Malone, president of the
Memphis Fire Fighters Association,
couldn’t disagree more. He said the
average police and ire pension is
$36,000, hardly commensurate to the
dangers of the job.
“You’re talking about 30 years of
risking your life. You’re talking about
a $36,000 pension,” said Malone, noting those pensions cost the city less
than if it made Social Security deductions. Many young public safety
pensioners retire with a disability, he
said, dealing with pain the rest of their
lives.
“I don’t think that’s overly generous.”
While the rigors of police and
ire work generally are considered
grounds to retire earlier than the
general public, the city extended that
same pension beneit — 25 years of
service, no age limit — to the broader
workforce decades ago.
In fact, among nearly 1,300 current
pensioners (retirees or their survivors) who retired at 25 years, a third
were general employees working in
the city’s libraries, in its auto garages,
PERSONAL
PERSPECTIVE
“The pension system that
is ALWAYS mentioned
as the problem is the
cheapest pension in the
country.”
Thomas Malone, president of
Memphis Fire Fighters Association
Read Malone’s essay only at
$78,813 $68,988
Judith Drescher
Rick Masson
library director
chief administrative oicer
$67,151
$61,166
Michael Gray
Yalanda McFadgon
deputy library director
deputy public services director
$34,961 $30,337
Jack Sammons
Dick Hackett
city councilman, interim CAO
mayor
Source: City of Memphis pension database
INSTANT FEEDBACK
The following are comments on commercialappeal.com about the city’s pension obligations.
■ Is this similar to the old tale about the fall of Rome? Memphis, no matter what these people
are saying, is headed to Detroit at a fast pace. Spending and promises will continue. Bet on it.
■ The difference between Memphis and Atlanta 30 years ago was that they started electing
businessmen, accountants and lawyers. Memphis has been electing funeral directors and
preachers whose only concern was feathering their nest and the nest of those who elected
them. It can be turned around, but it is going to take one TUFF mayor (not Wharton) to cut
expenses and run a tight ship, and a raise in taxes. If the economy holds up for 10 years, and
we have the right people running the city — then we might see this issue become manageable.
Right now it is still out of control.
its oices at City Hall or in other jobs
outside police work and ireighting.
Most private-sector companies
have discontinued the type of traditional retirement program the city
runs, including FedEx, Memphis’
largest employer. It converted in
2007 from a deined beneit pension,
in which a retiree receives a guaranteed income per month, to a deined
contribution plan, in which the employer contributes a set amount of
money into employee retirement accounts. Such plans protect employers
from market volatility of the sort that
decimated the city’s pension assets in
the recession, shifting investment risk
to employees.
Retirement funds invest in stocks
and other securities. When investment values plunge, owners of traditional pensions such as the city must
make huge contributions to make up
losses. In a deined contribution plan,
such as a 401(k), stock market shock
doesn’t force the employer to make a
big contribution to the fund. Instead,
the employee may simply receive a
smaller payout.
“Why shouldn’t they take the same
risk that we take?” Saino said of city
retirees. “Somehow, they think they
are diferent because they are public
employees.”
The city received admonishments
about overtaxing the pension fund as
early as 1971, according to the newspaper’s examination. A report that year
by actuarial consultant Alexander &
Alexander warned that young retirement ages allowed by the city “could
give rise to further cost increases in
the future.” Back then, police and ireighters were retiring at an average age
of 57 but general employees not until
an average 65.6 years. But, like today,
employees could retire much sooner,
so the consultant suggested setting
minimum retirement ages. That didn’t
happen for decades.
The average age today for police
and ire retirees (not counting those
receiving disability pensions): 53.
The average for all other retirees
with nondisability pensions: 57.
Warnings continued through the
1990s but prompted no reforms.
Ex-councilman Jack Sammons said
he often warned of the spiraling costs
of the pension, even suggesting the
city consider a 401(k)-style retirement
investment fund for employees.
“There are a lot of tapes of me talking about that and saying that this is
not sustainable,” said Sammons, who
now collects one of the city’s better
pensions — $34,961 a year, compliments of 16 years on the council and
a brief, three-month stint as interim
chief administrative oicer in 2009.
Picked by Wharton to return as CAO
starting May 8, Sammons will have
his pension temporarily discontinued,
but can expect to nearly double it if he
retires again after just a year.
“When all those legacy American
corporations were having to unwind
from (pension programs), that was
very telling,” Sammons said.
But rather than cut back, the city
grew its pension obligations.
The council voted in 2001 to lower
pension eligibility thresholds for ap-
CA INVESTIGATION
NN
««
« Tuesday, April 21, 2015 « 5A
An emotional
crowd of police,
fire and other
city employees
cheer for a
firefighters union
official who
spoke to City
Council last July.
Concerned city
workers crowded
into City Hall
to voice their
concerns while
the council tried
to address the
funding gap in
the city’s pension
and employees’
benefits.
JIM WEBER/THE
COMMERCIAL APPEAL
pointed and elected oicials.
In what’s now infamously known
as the “Twelve and Out,” the council
granted full pension benefits to appointed and elected oicials employed
for as few as 12 years — down from
a previous 15-year standard. Not only
did the council lower the years of service, it eliminated a requirement that
prevented many appointed and elected
oicials from collecting a pension until
their age and years of service added to
at least 75 years.
That’s how former councilman Taylor began collecting a pension at 39.
“I voted against it,” Taylor said.
In fact, none of the ex-oicials contacted for this story wanted to have
much of an association with Twelve
and Out.
“The council drove that Twelve
and Out even though a lot of people
in my administration benefited from
it,” said former mayor Willie W. Herenton. “But it was not a plan that the
administration pushed forward. This
was council driven.”
Among Herenton appointees who
benefited from it was former Memphis
State University basketball player
Kenneth Moody, who retired at 43
in 2009 after 13 years with the city.
The former director of public services
collects a $39,530 pension. Another is
former Herenton bodyguard Yalanda
McFadgon. Despite her felony conviction as a Memphis police oicer who
hid money for a drug dealer, she retired at 46 from her post as deputy
public services director and collects
a $61,166 pension.
Among council members who approved the plan on a 10-2 vote, seven
are receiving benefits today.
The council repealed Twelve and
Out in 2004 but not before a major
political fight.
“I tried to repeal it and everybody
got mad at me,” said former council
member Carol Chumney. “It was like a
revolving door. They said we need this
to recruit good talent. But what it was
really used for was for people to leave.”
The council repeal wasn’t retroactive and hundreds of employees remained eligible for the benefit. Still,
Chumney said the repeal saved the city
from a potential disaster.
“All those perks. People got upset
about stuf like that,” she said. “It
wasn’t reasonable. When people try
to take advantage of the system, that’s
when people get mad.”
PERSONAL
PERSPECTIVE
“It serves no one for
government to promise
pension benefits that it
can’t deliver.”
Joe Saino, president of
memphisshelbyinform.com.
Read Saino’s essay only at
Not until 2012, under Wharton, did
the city rein in the pension program.
But even then, it kicked many costsaving measures into the future. For
example, the city added minimum
retirement age requirements (52 for
police and firefighters; 62 for general
employees) but made the rule applicable to new hires only.
In a further tweak, the council voted in December to move employees
with 7.5 years or less experience into
a less-expensive plan that shifts some
investment risk to those workers. It’s
estimated the plan will save the city
$5.6 million in the first year.
“We hit (the problem) head on,”
Wharton said, pointing to other juris-
dictions where pension reforms avoided politically sensitive constituencies,
such as police and fire. “They didn’t
really hit it head on. We hit it head on.”
But Malone, the firefighter association president, contends the new rules
ultimately will cost the city more as
employees, trained at great expense,
flee to other jobs.
“Other cities are cherry-picking us,”
he said, pointing to other governments
that have sent recruiters to lure away
Memphis workers.
No matter what retirement benefits the city promises employees, the
system doesn’t work unless the government funds them. Here, the city’s
record is mixed.
The newspaper found Memphis
did a good job managing the pension
fund during the booming economy of
the late 1990s. In 1998, for example,
pension experts recommended a city
contribution was $5.2 million but the
city actually contributed four times
that amount — $20.6 million. The
fund was so healthy in 1999 no annual
contribution was required, yet the city
contributed $10.8 million.
Yet, that fiscal discipline faded, even
before hard economic times.
Facing a contribution of $22.7 million in 2007, the city, recovering from
a series of operating deficits, paid
just $14 million. The following year
it owed $24.1 million but paid only
$14.6 million.
When the recession hit, the shortfall
grew more massive. Despite a needed
contribution of $80 million in 2011, the
city paid just $20.1 million.
Exactly how the city intends to close
the current $30 million-a-year gap is
unclear. A Wharton plan approved by
the council in March to restructure
part of the city’s general obligation
debt is expected to free up millions
of dollars that otherwise would have
gone to pay long-term loans.
Wharton is not proposing a tax increase; he expects to find more money
through eiciencies and through further tweaks to health care, including
possibly raising deductibles.
Regardless of how the city closes
the gap, it’s important to fully fund the
pension, said Don Fuerst, senior pension fellow at the American Academy
of Actuaries. “If you only pay for 75
or 80 percent of the pension that people earn this year, what you’re doing
is pushing the other 25 percent onto
some future generation and making
them pay for it,” he said. “Eventually
someone has to pay for this, and if you
don’t pay for it now, you’re making
your children and your grandchildren
pay for it when you got the benefit of
the work that those people did. That’s
an issue that most people say is just basically not fair. That’s kind of cheating.
It’s kicking the can down the road.”
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tenn. abortion bills near approval
■ More regulations on providers,
two-day waiting period for women
By Richard Locker
[email protected]
615-255-4923
NASHVILLE — The state House approved two abortion bills Tuesday, imposing more regulations
on providers and a 48-hour waiting period on women seeking
abortions.
The Senate has approved both
bills, but the House added a routine “severability clause” on the
waiting-period bill that says if
any part is struck down in the
courts, the remainder remains
law.
That amendment sends it back
to the Senate for certain concurrence before the legislature ad-
Wharton
seeks hike
in spending
journs for the year this week.
Gov. Bill Haslam has said he
expects to sign both bills into
law.
The fi rst, Senate Bill 1280,
requires any clinic or doctor’s
office where at least 50 abortions are performed yearly to
be licensed and inspected by
the state as ambulatory surgical
treatment centers, which require
a higher level of inspections and
regulations. It won an 81-17 vote
and goes to the governor.
The second, SB 1222, requires
a 48-hour waiting period between a woman’s first visit to an
abortion provider and the visit
when the abortion is performed.
It also requires a series of six “informed consent” notifications to
be discussed with the woman on
the first visit.
It won House approval on
a 79-18 vote and returns to the
Senate for concurrence with the
severability clause amendment.
Those notifications include
the probable gestational age
of the fetus; that the baby may
be capable of survival if it is at
least 22 weeks old; that the physician has a legal obligation to
try to preserve the life of a child
prematurely born alive during
an abortion; that agencies and
services are available to assist
during her pregnancy and after
the birth, including adoptions,
the medical benefits and risks of
undergoing an abortion or continuing the pregnancy to term;
and a general description of the
See BILLS, 3A
boston MaratHon boMbing trial
Survivor speaks
■ Proposes $12.1M
increase in city’s
operating budget
By Ryan Poe
[email protected]
901-268-5074
Making a bold statement about city
government’s financial health, Memphis Mayor A C Wharton on Tuesday
proposed increasing spending $12.1
million over the current fiscal year,
mostly to pay for new public safety
measures and repave
streets.
The proposed operating budget Wharton
gave to City Council
would increase spending by 1.9 percent to
nearly $656.6 million
for the fiscal year beMayor A C
ginning July 1, comWharton
pared to the $644.5 million the city expects to
spend in the current fiscal year.
With revenues expected to rise 4.1
percent to $643.3 million, that would
leave a gap of $13.3 million which the
city would bridge by dipping into its
reserves.
Wharton said the city has emerged
“bruised but not broken” on the other
See COUNCIL, 2A
Suburbs
don’t like
school cost
JANE FLAVELL COLLINS/ASSOCIATED PRESS
A sketch from the federal courtroom in Massachusetts depicts Boston Marathon bombing survivor Celeste Corcoran on the witness stand
Tuesday, the first day of the penalty phase in the trial of bomber Dzhokhar Tsarnaev. “I remember hearing just bloodcurdling screams,”
said Corcoran, who lost both legs below the knees in the first explosion near the marathon finish line in 2013. Story on Page 5A
■ Sticker shock in
Lakeland, Collierville
By Clay Bailey
“It’s kind of a perverse incentive.”
[email protected]
901-529-2393
During the suburban march to
form municipal schools, questions
about increased taxes and future costs
routinely were met with the mantra
“whatever it takes.”
After two votes — a referendum in
Lakeland and a public-opinion poll
in Collierville — it apparently didn’t
take long to reach “whatever.”
A $50 million bond issue was
soundly defeated in Lakeland last
Thursday, while in an unofficial
survey last month, Collierville residents — by a scant margin — said
they weren’t interested in a 38-cent
property tax increase to build a new
$90 million high school. And other
suburban systems, such as Germantown, are looking at significant capital
expenditures.
The Lakeland and Collierville votes
See FUNDS, 2A
THANKS TO DEFERRED RETIREMENT OPTION PLAN,
1,557 CITY RETIREES GET GOLDEN HANDSHAKES
By Marc Perrusquia
[email protected]
901-529-2545
When Police Director
Larry Godwin retired in 2011
at 59 years old, he rode off to
Nashville with a $93,000-ayear Memphis city government pension to begin a new
career in state government.
He left, too, with a $283,177
lump sum, money the pension
fund paid into an account in
his name over three years
through an initiative called
the Deferred Retirement
Option Plan, better known
as DROP.
Combined with $143,000 in
annual pay, Godwin received
$712,798 from the city over
his final three years.
“Larry Godwin was a good
police director,” said City
Councilman Jim Strickland,
a mayoral hopeful, who wants
to reform DROP, a controversial program that allows employees with at least 25 years
of service to simultaneously
collect a salary and a pension
for up to three years.
“But we’re paying for
(DROP enrollees’) salaries
and pensions at the same
time. I don’t think that’s
good for the city or for the
taxpayer.”
Since it started in 1998,
DROP has paid more than
$93.7 million from the city’s
tightly stretched pension
fund into the pockets of employees transitioning from
work to retirement, according
to an analysis by The Commercial Appeal. That’s nearly
equivalent to one-fifth of the
pension fund’s half-billion
dollar shortfall.
But as cities such as Dal-
NEXT IN
THE SERIES
Operation Budget
Crush: The increasing
cost of policing streets
is a major contributor
to Memphis’ stressed
budget. “You can’t attract economic growth
and development if you
have a crime-ridden
city,” said former Mayor
Willie W. Herenton,
reflecting on his costly
crusade to strengthen
an “inadequate” police
force.
See DROP, 4A
TODAY’S CA
‘NO EASY FIX’: Socialmedia forums shine
light on teen mob
violence, professor
says. LOCAL, 1B
© Copyright 2015
JUSTICE PROBE: DOJ
opens civil rights
probe of Baltimore
police after man dies
in custody. NATION, 5A
TRIAL OPENS: Accused
mansion squatter
Tabitha Gentry takes
stand in Criminal
Court. LOCAL, 1B
GOLF COURSE CLOSES:
Cordova Country Club
shuts after years of
business struggles.
BUSINESS, 8A
The Commercial
Appeal
74˚/51˚
More weather
8C
4A » Wednesday, April 22, 2015 »
««
CA INVESTIGATION
NN
‘DROP’ OUTS
These six former city employees received the highest lump sum payments under the controversial
Deferred Retirement Option Plan program. Since the program started in 1998, total payouts exceed $93.7
million, averaging $104,961 per employee, according to an examination by The Commercial Appeal.
$529,735 $283,177 $253,014
Larry Cox
Larry Godwin
Donald Boyd
airport CEO
police director
deputy police director
$248,769 $241,427 $236,550
Ernest Dobbins
Gwendolyn Pritchard
Bobby Kellum
community enhancement
director
airport customer service
director
airport maintenance director
Source: City of Memphis DROP database
DROP
from 1A
las rein in their expensive DROP programs, the debate over the cost and
beneit of Memphis’ plan is still very
much unresolved, despite a special
task force appointed by Mayor A C
Wharton recommending reforms or
its elimination four years ago.
Advocates say the program has been
wrongly maligned by an overly skeptical public.
“It’s diicult to get across to people
that it’s not costing more, it actually
costs less,” said Rick Masson, who
served as chief administrative oicer
under then-Mayor Willie Herenton
when City Council approved DROP
in November 1997.
The thinking of pro-DROP advocates rests on three grounds: The
program helps retain hard-to-replace
employees who might otherwise leave.
It helps the city in its “succession planning” — anticipating when key supervisors and employees will retire and
then making plans to replace them.
And it costs less in beneits.
That’s right — less. The theory behind DROP is it saves the city money
by eliminating expensive, senior-level
beneits.
This is how it works: To qualify, a
DROP enrollee must have at least 25
years of service. When making an irrevocable decision to enter the program,
enrollees efectively retire. Though
they continue working and collecting
a salary for up to three years as the
pension fund simultaneously makes
monthly payments into an account the
employee then collects as a lump sum
upon departure. At the same time, an
enrollee’s pension beneit quits growing — the city stops making contributions (6 percent of wages) to the enrollee’s pension.
That’s where the savings are realized: If the city had to hire a replacement it would be making those 6 percent contributions to the pension fund.
“That (DROP enrollee) costs the
city less than a new person on that job
by the fact that you have to pay fewer
beneits,” Masson said.
Yet some experts who study DROP
programs nationally remain unconvinced of their worth.
“It’s simply an attractive perk to
employees who are on the verge of
retirement. It’s hard to see how it
could reliably serve some larger public purpose,” said Ron Snell, a retired
research director for the National
Council of State Legislatures, who has
studied public pension issues for years.
A critical shortcoming is that DROP
plans don’t necessarily work eiciently. While they may help retain some
valuable employees, they can also
pay out millions to retain mediocre or
subpar employees, Snell says. That’s
because plans like Memphis’ rely on
voluntary election: Any employee
who meets the minimum threshold,
25 years, is eligible.
“It’s kind of a perverse incentive in
that way. Not to be harsh, but it’s not
going to necessarily retain the people
you want to retain and discourage the
people you want to go,” Snell said.
And it doesn’t guarantee that an employee who signs on for a one-, two-,
or three-year enrollment is necessarily
going to stay that long.
Former ire director Alvin Benson,
51, signed on for three years but left
after just 22 months, taking a $155,072
DROP payout and an $82,690-a-year
city pension along with him in December to his new job as Shelby County’s
ire chief.
Among 1,557 employees who entered
DROP since its inception in 1998, 104
didn’t serve a full year, records show.
There is no penalty for employees
who leave before their DROP enrollment expires; they receive a lump sum
equaling the total monthly payments
paid into the account.
“There was always something
wrong with it,” said lawyer Robert
Spence, who served as city attorney
under Herenton.
“It was sort of like … giving city employees golden parachutes. It always
felt that way. It just always felt like a
golden parachute sort of justiied by
the city claiming that they needed it
to know when people were going to
retire …
“Why do you need to know two or
three years in advance that Robert
Spence is going to quit? Is what Robert is doing so unique that you couldn’t
replace Robert in 30 days? In 60 days?
Why do you need to know when Robert is going to quit? Why are you paying Robert to tell you?”
Looking out the window of his
Downtown law oice with a spectacular, panoramic view of the Mississippi
River, Spence characterized DROP as
one of those odd, public sector programs ripe for abuse.
“I don’t do it here. I wouldn’t do it
here,” he said. “So it’s like a golden
parachute for city employees that even
private business wouldn’t do.”
Begun in Louisiana, DROP programs caught on nationally among
state and local governments in the
1990s, initially as a way to retain experienced employees who were diicult
to replace, chiely police oicers and
ireighters.
But some plans became immensely
costly, the Dallas Police and Fire Pension System being the poster child for
runaway programs. That program,
which guaranteed enrollees an 8 percent annual return rate, has made
some participants wealthy while burning a $400 million hole in the pension
fund there as investments soured by
the economy realized much lower returns. According to The Dallas Morning News, one account had more than
$3 million in it in January; 13 others had
more than $2 million.
Dallas City Councilman Lee M.
Kleinman told The Commercial Appeal 300 DROP accounts now contain
“It’s a real problem,” he said, complaining of the drain DROP has placed
on the pension fund since the economy
soured. “They didn’t have a realistic
view of what their returns would
make.”
The Dallas fund’s board is closing
DROP to new enrollees. It also voted
last year to lower the interest rate, but
retirees sued and the issue reportedly
is expected to be tied up in the courts
for months if not years.
Memphis has avoided that quandary
with more conservative rates. By ordinance, DROP accounts are credited
each quarter with interest equal to 25
“my big
concern is
what does
the city
government
and the
taxpayer get
out of it?”
percent of the 90-day Treasury bill
yield. Yields on those bills currently
are running as low as .02 percent and
haven’t topped one percent since 2008.
Still, the cost of DROP led a committee of business and community leaders
appointed by Wharton to recommend
scrapping or retooling the program in
2011.
“This program should be replaced
with a more robust succession planning process or eliminate this program entirely,” the mayor’s Strategic
Business Model Assessment Committee said in a February 2011 report that
advised that changes should not be
directed at current participants.
City records released in March
show that over its 17-year existence,
DROP has catered to a relatively young
set of employees. The average enrollee
was 53 upon entering the program. At
least 353 enrollees were still in their
40s when they entered the program;
the youngest was 42.
The average lump sum totaled
$104,961. Listed payments over the
life of the program total $93.7 million, but likely have been much higher
because payout data was unavailable
for more than 350 enrollees who have
completed the program. Some 300
other employees are now enrolled and
will complete their DROP periods in
quarterly phases between this year
and 2018.
The City Council has retained The
Segal Group, a beneits and human
resources consulting irm, to review
costs and beneits of the DROP plan.
A report is expected this spring.
Fifty to 60 percent of the city’s
DROP enrollees typically are employed in police services.
Strickland, a lawyer, wants to limit
DROP to commissioned law enforcement oicers and ireighters excluding even civilian employees within
the police and ire departments. His
proposal, introduced last spring, not
only would limit DROP participation
to police and ire, it would reduce it
from the current maximum three
years to just one year.
“Our pension fund is in debt to the
tune of $500 million,’’ said Strickland.
“My big concern is what does the city
government and the taxpayer get out
of it?”
DROP arguably is money well spent
when it comes to replacing patrol oicers, particularly if they leave on short
notice. Training new oicers comes
at great expense; oicials budgeted
$5 million last year for a 90-oicer
recruit class.
“Outside of that arena, I don’t see
how the city beneits,” Strickland said.
Chief Administrative Officer
George Little said in February the administration is reviewing DROP but
has no speciic proposal at this time.
“We’re going to be looking at the
whole range of beneit issues,” he said.
“How much we’re able to bring all the
way forward this year (is unclear).
We’re deinitely looking at the whole
range of issues.”
Because city pension contributions
are discontinued for Memphis DROP
enrollees and its interest payments are
low, the plan largely is considered to
be “cost neutral,” meaning despite its
many large payouts its believed costs
don’t exceed the savings realized from
the discontinued pension contributions.
Still, even Masson the former CAO,
questions whether the DROP plan
should have been written more tightly to reduce expensive, senior-level
compensation beneits for the plan’s
enrollees.
Remember the $143,000 annual pay
Godwin collected over his three years
in DROP?
It wasn’t all base salary. Tucked
into the $429,621 in “gross earnings”
Godwin received between April 2008
and April 2011 while he was enrolled in
DROP were $30,795 in vacation leave
pay, $27,675 for college incentive pay
and $19,898 in deferred holiday pay.
“You shouldn’t be getting vacation
on the same time frame as somebody
who’s got 25 years of service because
you’re theoretically a new employee,”
said Masson.
For DROP to truly save money, Masson said an enrollee should be treated
like a newer employee who receives
fewer compensation beneits, such as
two to four weeks of vacation a year
instead of the ive weeks to which
Godwin was entitled.
“With police and ire there could be
longevity pay,” Masson said. “I hope
they didn’t get that.”
In fact, the newspaper’s analysis
shows they did. Godwin received
$6,165 in longevity pay — $2,055 a year
— while in DROP.
He wasn’t alone.
Former Airport Authority president and CEO Larry Cox, who got a
$529,735 payout last year — the highest in DROP program history — received about $1.1 million in earnings,
too, over his three-year enrollment, including some $6,500 in longevity pay.
“I don’t know whether there is a
great advantage with the DROP program except where you’ve got critical people and you want to incentivize them,” said Cox, 67, who worked 41
years for the airport and now draws a
$176,754-a-year pension. “Otherwise,
someone walks in and says, ‘OK, I’m
retiring tomorrow.’”
Godwin, 63, whose annual pension
now stands at $95,870 with cost of living adjustments, declined comment.
Given the many criticisms of DROP,
Masson wonders if the program is
worth it.
“In theory it costs less. In practice
and perception, it is problematic. The
perception is killing it. I don’t know if
it is worth the beneit.”
NBA PLAYOFFS
Memphis takes a 2-0 lead
Calkins: ‘The perfect representation of this quintessentially Memphis team.’ SPORTS, 1C
Game 3: After two victories at FedExForum, Memphis heads to Portland. SPORTS, 1C
174TH YEAR I COMMERCIALAPPEAL.COM I THURSDAY, APRIL 23, 2015
Health
fund
warning
for tenn.
THE BIG PICTURE: MPD SPENDING
MATA
reverses,
wants new
trolleys
■ City budgets
$32.2M for replicas
By Ryan Poe
and Thomas Bailey Jr.
Local transit oicials have
changed course on the future of
Memphis trolleys, deciding to
buy new trolleys instead of rebuilding the old ones that were
idled last year after two caught
ire.
The Memphis Area Transit
Authority could buy 17 to 19
modern vintage replica trolleys
if the City Council approves
spending nearly $32.2 million
over the next ive years — including nearly $11.3 million over
iscal year 2016.
The project was included in
the $55 million capital improvements budget Mayor A C Wharton presented Tuesday.
“We have decided to take a
diferent direction,’’ Ron Garrison said Wednesday. Garrison is
president and general manager
of Memphis Area Transit Authority.
See TROLLEYS, 2A
$132M
$132M
$123M
$229M
$220M
WHARTON
$99M
$135M
$184M
HERENTON
[email protected]
901-529-2348
HACKETT
By Kevin McKenzie
CHANDLER
Each of the last four Memphis mayors increased spending at MPD but none more than Mayor Willie W. Herenton
who added nearly 1,000 officers during his 17 year tenure. Figures are actual spending adjusted to 2014 dollars.
expansion is cause
See FUNDING, 3A
$1.00
■ Lack of Medicaid
Obama administration oficials are warning states like
Tennessee and Florida that
have failed to expand Medicaid
that pools of federal funding
for treating uninsured patients
should be drying up.
Following a letter sent to
Florida last week, the federal
Centers for Medicare & Medicaid Services telephoned Tennessee officials to highlight
principles that will be used in
considering Medicaid funding
pools. The Tennessee Hospital
Association reports such pools
provide about $1.3 billion a year,
which includes $452 million that
the state’s hospitals raise to win
matching federal funds.
Until a decision by the U.S.
Supreme Court in 2012 made it
optional for states, expanding
Medicaid under the Afordable
Care Act was expected to reduce
the need for special funding for
uncompensated care nationwide. But nearly half the states,
★★★
$236M
$230M
Wyeth Chandler
Richard C. Hackett
Willie W. Herenton
A C Wharton
Jan. 1, 1972-Oct. 1, 1982
Dec. 8, 1982-Dec. 31, 1991
Jan. 1, 1992-July 30, 2009
Population
1970: 623,530
1980: 646,356
1990: 610,337
2000: 650,100
2010: 646,889
Source: City Comprehensive Annual Financial Reports adjusted using U.S. Census Bureau data Population figures from U.S. Census.
“The community is up in arms.”
COSTLY: POLICING CITY AS BIG AS ATLANTA, ST. LOUIS, BOSTON AND D.C. COMBINED
By Beth Warren
[email protected]
901-529-2383
On a balmy spring afternoon, 14-year-old
honor student Lanetta King was chatting with
a group of girls on a stroll home from school
when a bullet tore into the back of her neck.
The lively Hillcrest High School majorette
envisioned a career as a doctor. She ended up
a somber statistic — one of 19 juveniles killed
in Memphis during 1994 — confronting Willie Herenton during his irst term as mayor.
“I think this incident will be the one that
makes a diference,” Rev. James Kendrick
told the 900 who attended the funeral, which
crescendoed into an anti-violence rally. “The
community is up in arms.”
But only 21 days later, Jake Joyner, 7, was
shot to death while perched in a South Memphis barber chair, the victim of a bungled
robbery.
Another funeral. Another tiny lowerdraped coin. Another devastated family.
While the wrenching details live in the
newspaper’s archives, the broader impact
of their deaths is underscored in an unlikely
place, in the stacks of long forgotten budget
books and annual inancial reports at City
Hall. The homicides of Lanetta and Jake and
others that year, combined with a series of
crime rankings that labeled Memphis as one
NEXT IN THE SERIES
The pain ahead: The
bloody battles over health
care and pensions may be
over, but Memphis still has
more than $1.2 billion in debt
and owes its pension system
That translates into possible
service cuts, changes in insurance beneits and sick leave
for employees.
See MPD, 6A
Garden series to mix styles, stars
■ Concerts range from Aretha to ZZ Top
By Bob Mehr
[email protected]
901-529-2517
CHARLES SYKES/ASSOCIATED PRESS
Memphis-born Queen
of Soul Aretha Franklin will perform in the
2015 Live at the Garden series June 26.
Aretha Franklin, ZZ Top and Hall
and Oates are among the big names
set to headline the 2015 Live at the
Garden series.
After a country music-heavy
lineup in 2014, the Memphis Botanic Garden-staged summer concert
program returns this year with a
genre-spanning, star-studded roster of talent.
The 15th annual edition of the
series will kick of with a performance by Memphis-born Queen of
Soul Franklin on June 26. Matchbox
20 singer Rob Thomas will follow
with a July 17 show. On August 15,
Texas rockers ZZ Top, who were inducted into the Memphis Music Hall
of Fame for recording hit albums
at Ardent Studios in the 1970s and
1980s, will perform. Country veteran
Martina McBride will take the stage
on September 4. The concert season
will close with a September 18 set
from pop hit makers Hall and Oates.
“It’s always our intent to cross
genres of music and expose people
to everything,” said Sherry May, codirector of Live at the Garden. “Some
years it works out, but it all depends on
See LINEUP, 2A
TODAY’S CA
MACY’S SPACE
ON MARKET
Real estate brokers
hired by retailer to
find buyer for Southland Mall property
in Whitehaven.
BUSINESS, 9A
FUEL TAXES
Memphis International Airport
pushes for cap on FedEx jet-fuel
taxes. BUSINESS, 9A
OUTRAGE FLARES
IN BALTIMORE
Tennessee lawmakers put off
measure until at least 2016.
Anger intensifies
against six officers
suspended after black
man’s death in custody. Black chief and
mayor feel heat, too.
LOCAL, 1B
NATION, 3A
DE-ANNEXATION BILL FAILS
63˚/53˚
More weather 6C
© Copyright 2015
6A » Thursday, April 23, 2015 »
««
CA INVESTIGATION
NN
LEFT: Albretta Campbell (left), mother of slain 14-year-old
Lanetta King, is comforted at the scene of her daughter’s
death by Frances Johnson, Hillcrest home economics
teacher and majorette sponsor. BELOW: Lanetta King was
shot to death June 1, 1994.
ROBERT COHEN/THE COMMERCIAL APPEAL FILES
Blood stains the floor by the chair where Jake Joyner, 7, sat on
a booster seat in June 1994. He was shot at a South Memphis
barbershop during a bungled robbery. “My baby would still
be here today if the kids who shot my son were locked up like
they should have been,” said his mother, Belinsey Moore.
THE COMMERCIAL APPEAL FILES
“You can’t attract economic growth and
development if you have a crime-ridden city.”
“A full-service police department
versus the ability of this city and most
other cities to be able to pay for it. That,
I believe, is a collision that is coming,”
said retired University of Memphis
criminology professor Richard Janikowski, a longtime partner with MPD
on data-driven policing.
MPD
from 1A
of the nation’s most violent cities,
empowered Herenton to pour more
oicers onto the streets and fueled a
sustained surge in spending that, years
later, creates major financial challenges at City Hall.
Decade after decade, the cost of
policing is increasingly consuming
Memphis’ massive annual budget. The
Commercial Appeal’s examination of
budgets since 1972 — a term spanning
four mayors and 11 police directors —
reveals nearly uninterrupted growth in
MPD’s spending to finance a war on a
persistent crime rate often double, and
at times quadruple, the national average.
While Herenton’s immediate predecessors, Mayors Wyeth Chandler and
Dick Hackett, boosted the police budget
most years, Herenton doubled down. His
aggressive pursuit of a “critical mass” of
uniformed oicers — financed by four
large property tax increases — catapulted MPD into a new era in which it
dominates city spending.
PERSONAL
PERSPECTIVE
“Declines in the number
of sworn oicers led us
to caution policymakers
and legislators about the
negative efects staing
reductions can have upon
public safety. Our concern
is driven by examples from
cities such as Oakland in
California that experienced
an astounding 24%
increase in violent crime
following the layofs of
police oicers.”
Richard Janikowski, retired U of M
professor; MPD consultant
Read Janikowski’s essay only at
“You can’t attract economic growth
and development if you have a crimeridden city,” Herenton said recently,
reflecting on his costly crusade to
strengthen an “inadequate” police force.
Herenton fell well short of his ambitious 1998 goal to hire 800 police oicers
in a four-year hiring blitz, setting a pace
for a legion of 2,600 by 2011.
Still, by the time he retired in 2009, after 17 years in oice, Herenton had added
nearly 1,000 oicers; payroll and benefits
more than doubled, increasing by more
than $121 million. When adjusted for inlation, that’s an additional $89 million
— or a 74 percent increase.
■
YALONDA M. JAMES/THE COMMERCIAL APPEAL FILES
Before the February swearing-in of Devere Hawkins and his classmates at the Memphis
Police Academy Commencement at First Baptist Church-Broad, the force was the leanest
it had been in years — with 2,110 officers. Another class is expected to finish in the fall.
And while the efectiveness of that
surge can be debated by criminologists
and a long line of highly paid city consultants — the crime rate remains among
the nation’s highest — its contribution
to the city’s fragile financial condition
is unmistakable. The single largest expense of city government, more than
$217 million this year, funds police officer salaries and benefits.
More than $11 million goes to overtime.
The 310 budgeted leadership positions, alone, cost $28 million.
MPD now devours 40 percent of the
city budget, up dramatically over the period examined by the newspaper.
Consider the financial impact of this
law enforcement arms race just during
the 26-year career of Memphis’ current
police director, Toney Armstrong, who
began as a patrolman and rose through
the ranks.
When Armstrong joined the force in
1989 — under Hackett — he was among
about 1,150 oicers.
Police spending: $66 million.
By the time he had a starring role as
a homicide detective and lieutenant in
the popular reality TV series “First 48”
— under Herenton in 2006 — MPD had
grown to nearly 2,000 oicers.
Now in command — under Mayor
A C Wharton — Armstrong oversees
about 2,150 oicers.
Adjust those figures for inlation and
MPD, just during the director’s career,
increased 98 percent. The newspaper
could not ind another department of
city government, including ire, parks,
sanitation or libraries, that recorded
even remotely similar increases.
Yet, it may not be enough.
Though Memphis faces several inancial pressure points — notably its
near-record debt and a pension system
underfunded by more than a half-billion
dollars — two key, politically charged
questions lurk over nearly every budget
season at City Hall: How many oicers
does MPD need and how many can it
aford?
With about 2,150 officers for its
653,000 population, Memphis appears,
on paper, similarly policed to peer cities
such as Detroit, Boston and Milwaukee.
But sliced another way, looking at police coverage per square mile, Memphis
fares poorly due to its 320-square-mile
footprint, the result of decades of aggressive annexation that makes it larger than
Atlanta, Boston, St. Louis and Washington, D.C. combined. Memphis has a violent crime rate higher than each of those
cities yet it has fewer police oicers per
capita and per square mile. Further complicating the calculus is the impact of
Memphis’ crushing poverty rate.
Armstrong has said he needs a minimum of 2,400 oicers to remain a “full
service” police agency.
For now, he and the mayor are united
in a goal of 2,480 oicers.
However, the department won’t be
able to recruit and train fast enough to
reach that target number until after fiscal year 2016, the mayor told the newspaper’s editorial board during an April
15 meeting. That’s despite a recruit class
now in progress and two more proposed
for next year.
Meanwhile, Wharton plans to resurrect a program using a small corps
of lesser paid and lesser trained copsin-training to respond to minor traic
accidents. His budget, which includes
money for oicer promotions, creates
positions for 30 police service technicians and adds about $4 million to
MPD’s budget.
Still, financial pressures have Armstrong and the mayor’s oice mulling
potential reforms designed to tame
spending over time, including whether
to stop sending oicers to all home and
burglar alarms and whether to shift the
responsibility of guarding City Hall to
private security guards — and shifting
detainees in need of medical treatment
to the sherif’s oice.
To understand MPD’s impact on the
city’s finances requires an examination
of a pivotal decade, the 1990s, and how
the intersection of two forces — Herenton’s election and a litany of highly
publicized violent crimes — prompted
an explosion in hiring and spending.
It’s a snapshot that epitomizes a common, budget-busting cycle in Memphis:
spikes in violent crime lead to public outrage and, in turn, pledges to increase the
force. Yet, routinely, those growth spurts
were reined in by ensuing lean budgets
and diiculty recruiting fast enough to
keep pace with retirements, firings and
resignations during periods when extra
oicer positions were authorized.
The decade began violently with homicides peaking at a record high — 207.
Memphis garnered headlines for
more murders per capita than New
York City. And, proportionally, more
Memphians reported being raped, having their homes burglarized or their cars
stolen.
On the campaign trail a year later,
Herenton, the ex-boxer from an impoverished South Memphis neighborhood
who had become the city’s first African-American school superintendent,
promised more foot patrols for vulnerable neighborhoods. As he punched at
incumbent Dick Hackett, in the months
leading up to the fall 1991 election, the
carnage on Memphis streets reinforced
a message that an undermanned MPD
was losing the battle: a 28-year-old pregnant woman was strangled, an 82-yearold widow stabbed to death.
A 16-year-old girl was slain by a bullet
meant for someone else.
So was a 15-year-old boy.
An errant bullet struck a 9-year-old
girl, who recovered. And one fired by
would-be car thieves tore into an oicer,
who also survived.
Taking oice in January 1992 as the
first African-American elected mayor,
Herenton’s tenure was marked by many
firsts — he pushed the city’s debt to record levels, spending reached an all-time
high on his watch, and he even famously
invited unhappy constituents to move
away — yet his legacy includes watershed changes for MPD that reshaped the
city budget.
“I was probably the most aggressive
mayor who supported increasing the
ranks of the police oicers — and better pay and equipment — than any other
mayor of recent times,” Herenton said.
“And I promoted more diversity in the
rank and file oicers.”
1992: 1,404 oicers.
Herenton inherited a violent crime
epidemic. Memphis placed in the top 10
that year for reported rapes and murders.
Add 39 cents to the tax rate to, in part,
CA INVESTIGATION
NN
add more oicers.
1993: 1,400 oicers.
The city set a homicide record — 213
— that still stands. Another first — 50
juveniles were charged with homicides.
Local and federal law enforcement acknowledged for the first time the city,
already besieged by drug turf wars, was
overrun with violent street gangs.
“We couldn’t get our arms around it
because they were recruiting so fast,”
recalled Herenton’s first police director,
veteran lawman Melvin Burgess.
Add 49 cents to the tax rate to, in part,
fund a Herenton pledge to add 75 oicers.
1996: 1,469 oicers.
From the year Herenton took oice
through 1996, violent crime and overall
crime were dropping across the nation,
but climbing in Memphis. Over a decade,
the number of homicides by juveniles
had more than doubled. Their victims
included Lanetta King, the teen walking home from Hillcrest High, and Jake
Joyner, the 7-year-old killed in the barber’s chair.
1997: 1,554 oicers.
National attention that had pointed to
Memphis’ high crime rate culminated
with a Money magazine ranking in the
bottom 10 of the largest 207 cities in
terms of safety.
1998: 1,795 oicers.
Herenton added 300 oicers over
the previous three years, expanding
the department faster than the national
average, but the ledgling, nonproit
Memphis Shelby County Crime Commission reported MPD was understafed
by 30 percent, a problem decades in the
making.
The mayor vowed to add 800 oicers
over four years.
Herenton ultimately retired, a decade
later, missing his goal, but still adding
nearly 1,000 oicers during his tenure.
Though determining the impact of all
those new oicers on the city’s crime
rate is diicult, their impact on the budget is easily quantifiable. MPD spent
$80 million the year Herenton took
oice, $212 million when he exited 17
years later. Adjusted for inlation, that’s
an increase of nearly $96 million or 70
percent.
The department wasn’t just spending more, it was getting a bigger share
of the city’s operating budget. It claimed
more than one-fourth of city money
when Herenton took oice. By the time
he retired, MPD took one of every three
dollars.
Now, it’s budgeted to spend 40 percent.
n
All of that spending, and its impact as
the city’s struggles to right itself financially, frames one of the next major City
Hall budget challenges. Even as Wharton plans to add two multi-million-dollar
YALONDA M. JAMES/THE COMMERCIAL APPEAL FILES
Police Director Toney Armstrong addresses the 118th Basic Recruit Class
commencement in February as 37 new
officers join the force. “We have a lot
of work for you,” Armstrong tells the
recruits.
recruit classes next year with hopes of
graduating a total of 120 to 140, his liaison with the police department and the
police director are looking for eiciencies to blunt the financial impact.
Armstrong has publicly cautioned
he can’t maintain a “full-service department” without more resources to
keep up with the increased expense of
everything from technology that guides
data-based policing to helicopter parts.
He declined repeated requests for an interview, but Wharton’s police services
point man, George Little, acknowledged
budgetary pressures will necessitate reforms.
“There’s got to be buy-in. And if people don’t want to buy-in on the changes,
that’s fine. Then the next question is,
‘OK, how are you going to pay for this?’ ”
Various consultants hired by the city
have disagreed on what constitutes an
adequate force, but have urged a heavier
reliance on civilians.
This isn’t a new concept.
Jerome Rubin, councilman from 19922000, was among a delegation that observed the change working well in San
Francisco and San Jose.
“Other cities have done that,” Rubin
said. “I’m at a loss to understand why we
haven’t pursued that here in Memphis
as a way to reduce costs and have more
oicers on the streets.”
MPD, on average, uses civilians about
half as often as other police forces across
the country. Nationally, they comprise
about 30 percent of all employees, com-
««
pared to 14 percent in Memphis, according to 2013, the FBI’s most recent data.
In Rubin’s first year in oice and amid
budget cuts, he helped win the battle to
preserve the full complement of Police
Service Technicians, specially trained
civilians who help direct traic and respond to fender benders.
Nearly two decades later, PSTs were
phased out under former police director
Larry Godwin.
The mayor’s budget for next year
includes a $1.5 million proposal for 30
PSTs. The traic accident investigators can be trained quickly and are paid
much less than oicers, whose salaries
start at about $45,000 then jump to nearly $50,000 after two years.
Memphis oicials are also evaluating
other ways to reduce time busters and
better use the existing workforce.
One idea involves limiting oicer responses to home and business burglar
alarms, which are often false.
Salt Lake City and Las Vegas shifted to
a “verified response” model, waiting for
private alarm companies to send security oicers to verify the break-in before
dispatching police.
But Salt Lake oicials have cautioned
to expect an initial push back from residents.
“I think we’ve got a tremendous public
engagement task before us,” Little said.
Again, this problem isn’t new or exclusive to Memphis.
City leaders have debated ways to reduce dispatching oicers to false alarms
for more than two decades, including a
divisive 1992 proposal killed after pressure from residents and alarm companies.
“Options like false alarm management or civilian technicians responding to traic accidents have been around
for years,” said Michael Heidingsfield,
director of police for the University of
Texas System, who formerly headed
Memphis’ crime commission. “Those
aren’t trends. ... They’re long established
principals of good policing.”
But with 90 percent of MPD’s budget
going to salary and benefits — a number fairly consistent over four decades
examined by the newspaper — the conversation about spending centers on that
single, politically charged question: How
many oicers does MPD need?
Talks of assembling a “critical mass”
of 2,600 have been replaced by a focus
on eiciency.
MPD’s ranks have diminished significantly since Herenton’s departure
as Wharton wrestles with a massive
unfunded pension obligation that is
due, in part, to MPD’s expanding workforce. A record number of oicers led
last year as the City Council, backed by
Wharton, sliced health care beneits and
shifted the resulting savings to the pension. And in recent labor negotiations,
« Thursday, April 23, 2015 « 7A
Memphis has rebufed union requests
for pay raises.
Regressing, the department started
the year with 2,110 — the leanest force
in years.
In turn, the city has stepped up recruiting eforts, including luring candidates from outside Memphis with
military backgrounds, and this week’s
budget proposal by Wharton includes
more than $7.3 million for two new recruit classes of 100, with hopes a total of
120-160 will graduate. That’s in addition
to a class that churned out 37 oicers in
February and one currently underway,
slated to finish this fall.
Armstrong told the February recruit
class, “We have a lot of work for you.”
That’s not an exaggeration.
Memphis’ crime rate was more than
quadruple the national average and nearly double the average of cities of comparable size, with 1,656 violent crimes per
100,000 residents in 2013, the most recent annual national data from the FBI.
That’s also higher than the rate of 1,499
in 1998, the year Herenton vowed to add
an army of oicers. The increase still
holds true when excluding rapes, which
are now classified diferently.
Still, the violent crime rate in 2013 was
lower than the rate of 1,991 in 2006, the
city’s most violent year of the past three
decades and the baseline year to measure progress used by Operation: Safe
Community, a network of more than 100
organizations united in a multipronged
attack on crime.
Yet despite recent dips in crime, public safety remains a critical problem as
evidenced by two recent drive-by shootings that killed a 7-year-old girl playing
with other children in a front yard and a
15-year-old girl sleeping in her bed.
“Generally, when you have a higher
rate of crime, citizens will require more
visibility and more involvement (from
oicers) because there’s a greater level
of fear,” Heidingsfield said.
“If the community steadfastly believes that every time they call 911 an
oicer should come to the door, what we
call ‘hello to hello,’ that has certain cost
consequences.”
E. Winslow “Buddy” Chapman, police
director for seven years under Mayor
Wyeth Chandler, said elected oicials
are trapped between serious budget
problems and voter sentiment.
“It’s pretty obvious it has to be a concern of the council that if they cut the
budget and it has a negative impact on
the delivery of police services, there
would be a tremendous fallout,” Chapman said.
Regardless, amid financial problems,
Memphians must re-evaluate what services are expendable, said Janikowski,
the retired University of Memphis criminologist.
“What is the new normal’?” he asked.
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NBA PLAYOFFS
Grizzlies make it 3 in a row
Things get uncomfortable in fourth quarter of 115-109 win over Trail Blazers. SPORTS, 1D
When Conley has to exit with injury, team does him proud, says Geoff Calkins. SPORTS, 1D
CA
$2.00
★★★
IN TODAY’S PAPER
$152.74
SUNDAY
174TH YEAR I COMMERCIALAPPEAL.COM I SUNDAY, APRIL 26, 2015
IN COUPON SAVINGS
Final day of a 6-day series exploring Memphis’ fiscal condition
THE PAIN AHEAD
Difficult choices loom if city’s going to shed record debt
By Kyle Veazey
[email protected]
901-529-2799
When a ireighter in Louisville wakes
up with a sore throat, something might
cross his or her mind before calling in sick:
Will it cost my co-workers?
That’s because the city’s ireighters
share sick leave hours in a pool. If they
make it to the end of the year by taking
less than an average of 48 sick hours per
ireighter, they’re rewarded with a bonus.
But if that average is higher than 96
hours, they give time back in the way of
lost vacation.
If financially strapped Memphis
switched to a similar model — and away
from the accrual system that piles up sick
leave over years — it could save the city
more than $4 million annually, according to research performed two years ago
by The PFM Group, part of a 180-page
study Mayor A C Wharton’s administra-
ENTIRE SERIES ONLINE
tion commissioned to identify potential
budget cuts. PFM hitched its savings to
an eye-opening inding: In 2012, the year
it studied Memphis, ireighters used an
average of 206 sick leave hours per year —
the equivalent of 91 full-time ireighters.
“It’s worked out pretty well,” said Brian
O’Neill, the president of Local 345 of the
International Association of Fire Fighters,
the Louisville labor union chapter. “Be-
Internet exclusives: In addition to offering all the articles from “Our Financial
Mess,” commercialappeal.com has a
photo gallery, animated graphics making the numbers easier to understand,
and a video showcasing Hyde Park
through the eyes of a resident of the
area hit by the city’s outward migration.
See PAIN, 6A
Bass Pro casts wide net
City officials are banking on the new Bass Pro to boost
a $3 billion-a-year area tourism industry that’s on the rise.
It’s a big part of our hook for
the next year or so. It’s one
of the new and exciting things to
do when you visit Memphis.”
City hopes
to attract
millions for
‘destination
experience’
By Wayne Risher
[email protected]
901-529-2874
Kevin Kane, Memphis Convention and Visitors Bureau
BASS PRO SHOPS AT THE PYRAMID
When it opens, the outdoor-goods retail store is expected to bring more visitors to Memphis every year than Graceland.
Like a shiny lure dancing on the water, daring
i sh to strike, Bass Pro
Shops at The Pyramid is
ready to reel ’em in: at least
2 million customers and
more than $100 million in
purchases a year.
The outdoor-goods retail store, attraction and
hotel opens with a starstudded conservation
fundraiser from 6 to 9 p.m.
Wednesday, capping a 10year expedition that some
skeptics believed would
come up empty-handed.
Memphis Mayor A C
Wharton called it “a oneof-a-kind, must-see, national experience that has
something for everybody. I
can hardly wait to hear the
‘wows’ from people seeing
it for the irst time.”
City oicials are banking on the new Bass Pro to
boost a $3 billion-a-year
area tourism industry
that’s on the rise. “It’s a
big part of our hook for
the next year or so,” said
See PYRAMID, 2A
WILLIAM DESHAZER/THE COMMERCIAL APPEAL
BEALE STREET
MEMPHIS ZOO
GRACELAND
Tennessee’s top tourist site attracts 4 million
visitors annually.
One million locals and tourists annually visit
the 70-acre attraction.
Elvis Presley’s mansion draws 530,000 visitors.
A new hotel could bring in 140,000 more.
Baltimore protest turns violent
Police report looting, assaults near Camden Yards
By Skip Foreman, Meredith Somers
and Juliet Linderman
Associated Press
BALTIMORE — A peaceful protest over
the death of a black suspect a week
after he was arrested descended into
violence Saturday night near Camden
Yards as fans converged to watch a
Baltimore Orioles game.
At least two people were hurt in the
mayhem. At one point, demonstrators
fought with fans at a bar before the
game. The Orioles game against the
Boston Red Sox went on as scheduled.
Protesters threw cans and plastic
bottles in the direction of police oficers. They broke windows at local
businesses and grabbed women’s
purses. One protester broke out the
window of a police cruiser, grabbed
a police hat inside and wore it while
standing on top of the cruiser with
several other protesters.
At that point, scores of oicers
rushed into the area, stopped and
formed a line, three oicers deep. The
protesters scattered but returned a few
minutes later and began yelling, “What
do we want? Justice! When do we want
it? Now!”
By 9:30 p.m. Saturday, police said
they had cleared protesters from an
intersection near Camden Yards, al-
“This is a
problem
that has
not been
solved.
When
there’s no justice, they
tend to want to take
matters into their own
hands.”
TODAY’S CA
CITY CLEANUP: Strangers unite to pick up
trash during Faith in Action effort. LOCAL, 3B
BUDGET NEEDS: Shelby County Schools to
ask commission for extra $14M. LOCAL, 1B
TRAGEDY IN NEPAL: Quake kills more than
1,800, triggers Everest landslide. WORLD, 4A
© Copyright 2015
The Commercial
Appeal
Malik Shabazz,
Black Lawyers for Justice
72˚/50˚
More weather
See BALTIMORE, 2A
inside »
TED EVANOFF: BASS PRO
REVIVES INTEREST IN
MUD ISLAND, 1C
MEMPHIS OFFICIALS TACKLE
BLIGHT ON DOWNTOWN
PROPERTIES, 1C
12D
6A » Sunday, April 26, 2015 »

CA INVESTIGATION
NN
PHOTO ILLUSTRATION BY JIM WEBER/THE COMMERCIAL APPEAL
“Simple arithmetic comes in:
Something’s got to give.”
PAIN
from 1A
cause most people, on the whole, they
might (use) one or two sick days through
the year.”
The potential change to sick leave
— a dry topic, but signiicant to a budget dominated by personnel costs — is
hardly a magic bullet for the city’s fragile inancial condition. But it is one of
many changes to the way Memphis does
business that consultants have suggested, and it demonstrates the caliber of
decisions city government may face as
it works itself out of a long-building inancial strain wrought by an aggressive
expansion of its borders, record debt,
exploding police spending and a pair
of costly inancial gafes.
Though hard-fought changes to the
city’s pension and health care systems
last year produced big-ticket savings,
and some rosy election-year budget
forecasts, Wharton and the 13 members of the council must still walk a
tightwire: Faced with largely static
property tax revenues alongside rapidly
rising annual commitments to its pension fund, the specter of governmental
austerity looms.
So do the raw political battles that any
cuts to services or employees prompt.
Noting the city’s debt load and property tax abatements for big business,
Memphis ire union president Thomas
Malone acknowledges the obvious:
“Simple arithmetic comes in: Something’s got to give.”
Consider what Memphis is up against
in the next ive years:
Last year, the city contributed about
$20 million to its underfunded pension. This year, it will contribute $44
million. By 2020, state law will force it
to increase that by about another $30
million.
Think about it this way: In the $650
million annual enterprise that is city
government, it must move almost a
tenth of its spending from one category
to another in less than a decade.
Even with a pending reinancing of
debt, backed by Wharton and approved
by the City Council in March, the annual payments are onerous. The city
paid $137 million this year just toward
general debt — more than 20 percent
of its operating budget. And while reinancing means those payments aren’t
going up soon — they also aren’t going
down soon.
■ Though a rebounding economy offers some hope, the particulars of Memphis’ budget temper that somewhat: The
city’s population and property tax base
are stagnant at best, and even the attrac-
THE SERIES: A LOOK BACK
In a special CA investigation, we explore Memphis’ fragile financial
condition. Here we take a look back at ‘Our Financial Mess’ in print
or read the entire series at commercialappeal.com.
INSTANT FEEDBACK
The following are selected comments on commercialappeal.com about
the city’s financial troubles.
■ Seems to me that unless the city can get the unions out of the deal or else
ignore them, there’s not a whole lot they can do. Every single idea is met by
union resistance or ridicule. With the limitations on revenue in Memphis, you
have to curb costs, and that means taking a heavy hand against the unions.
■ Memphis has some of the finest public parks, golf courses and museums
in the nation. Be very careful about shuttering or privatizing these assets.
We rave against the perception of out-of-control youth, while at the same
time whacked activities and opportunities for engaging them. Whenever I
drive past the fairgrounds, I just shake my head at the thought of the nowgone children’s theater, municipal swimming pool and amusement park. The
memory of teenagers working, and wearing those white shirts with the Park
Commission patches on the arm, comes to mind. But I see that consuming our
seed corn for short-term profit is the order of the day now. Stop being penny
wise and pound foolish!
DAY 1
Memphis blues: The comparisons to Detroit are unfounded, but Memphis faces
deep financial challenges.
Annexation: Outward migration’s impact is subtle. But
the cumulative effect of all
those residents leaving with
their wallets is evident in
Memphis’ financial struggles.
Population loss: Despite all
those annexations, Memphis
was actually shrinking as
residents fled the core city.
It’s as if a city the size of
Knoxville was erased from
the map.
DAY 2
Debt: The strain of record
debt. “We could afford those
things once,” said former
city councilman Brent Taylor.
“But when the economy
tanked, that exposed who
was swimming with swimming trunks.”
DAY 3
Pensions: Despite early
warnings, Memphis continued to offer lucrative deals
to its growing workforce.
“There are a lot of tapes of
me ... saying that this is not
sustainable,” said former city
councilman Jack Sammons.
DAY 4
‘DROP’outs: The cost and
benefits of the controversial
DROP program designed to
create orderly transitions of
key employees. “There was
always something wrong
with it,” said former city
attorney Robert Spence. “It
was sort of like ... giving city
employees golden parachutes. It always felt that
way.”
DAY 5
Operation Budget Crush:
The increasing cost of
policing streets is a major
contributor to Memphis’
stressed budget. “You can’t
attract economic growth
and development if you
have a crime-ridden city,”
said former Mayor Willie W.
Herenton, reflecting on his
costly crusade to strengthen
an “inadequate” police force.
tion of new employers often comes with
the trade-of of property tax forgiveness.
■ City employees have not had a raise
in years and labor strife becomes more
raw every year.
■ Combined city and county tax
rates give Memphis the highest property tax rates in Tennessee. That makes
the prospect of raising taxes — a sure
political hot potato in any city — especially toxic in Memphis. And property
taxes are the city’s largest single source
of revenue.
■ Speaking of hot potatoes: Twothirds of the city’s budget pays for ire
and police services. In a city so often
gripped by fear of crime, not only will
cuts there be diicult, Wharton and
police director Toney Armstrong want
more oicers — and Wharton’s 2015-16
budget follows a long-established trend
of increasing police spending year over
year.
Last year, Wharton and the City
Council approved major changes to
employee and retiree health care premiums. They also approved sweeping
changes to the way the city handles
retirement funding for the least-senior
employees and new hires. They sparked
a days-long work action, protests and a
hostile parade of citizens at City Council meetings — and they were one of
many suggestions consultants and iscal
hawks pushed. More changes that could
come at the cost of employees likely
would be met with even more angst.
Using the research of PFM, the city
administration identiied more than
two dozen targets to cut costs or raise
revenue. A few have been implemented:
High-proile changes to the city’s pension plan and health insurance last year
were in line with the PFM recommendations. Many other of those proposals
frame future debates as Memphis continues looking for ways to save money to
minimize potential tax increases.
■
Many of PFM’s proposals deal with
how the city treats — and thus, spends
money on — its employees, which account for about 73 percent of general
fund expenses. And since police and
ire make up the bulk of those employees, those divisions are a central focus
of consultants.
Privatize emergency medical services and the city could save more than
$3 million annually, PFM says.
Shift some police responsibilities
from sworn oicers to lower-paid civilian employees and PFM estimates about
$4 million in annual savings.
Changes to sick leave — and a larger
focus on how much it costs Memphis to
provide time of to its employees — are
potential storms on the horizon. Reduce
the number of paid holidays employees
receive from 13 to 10, for instance, and
PFM suggests the city could save about
$2.7 million annually.
“The city’s sick leave policy, the way
it’s currently structured — it’s certainly
not the current standard,” city chief administrative oicer George Little said.
“I’ll say that. It’s fairly generous.”
Sick leave costs are especially acute
in the ire department. Not only does
the department pay sick employees,
it incurs overtime for their ill-ins because of mandatory-staing levels. PFM
estimated $6.4 million in sick leave by
ire employees in 2011-12, a 39 percent
increase from four years prior.
The consultants estimated that
switching to a Louisville-like system,
which proponents argue would incentivize ireighters to take less sick time,
CA INVESTIGATION
NN
would move that average of 206 hours
of sick leave to 48.
Malone, who runs the ire union,
doubts that. “I don’t know how they’re
going to save money,” he said.
“There’s more issues to look at than to
say, ‘Oh, these people are using too much
sick leave,’” Malone said. “They want to
compare us to the private sector. To be
candid about the thing, nobody in the
private sector is out there working 24/7.”
Malone also doubts the potential savings that could come with privatizing
EMS. He doesn’t think the PFM report
took in the full scope of how the EMS
services are integrated into the ire department’s overall structure.
While encouraging further study of
the idea, during a March presentation to
the City Council ire director Michael
Putt expressed doubt whether privatization would work. Yet in a recent presentation to The Commercial Appeal,
Wharton and inance director Brian
Collins suggested a “focus on more eficient delivery of EMS” was on the table.
The city also says it will continue to
consider changes to health insurance
for current employees. “Our current
employee plan is the next step,” Collins
said. “We have got to take a deeper dive
on that.” Calling it a “Cadillac plan,” Collins said the city will further study options in the next couple of years.
The luxury car analogy grows from
the plan’s generous beneits: City Hall
still ofers its employees plans with $100
individual deductibles for in-network
services; $300 for families. By comparison, the Kaiser Family Foundation
and the Health Research & Educational
Trust, in a 2014 study of employee beneits, found the average individual deductible for employees nationwide was
$1,217.
And a raise for employees? It’s not on
the table in this year’s budget, and the
administration estimates every 1 percent
of across-the-board pay increase equals
between $4 million and $5 million annually — about what any single one of the
above-mentioned changes would cost.
Overall, personnel costs have more
than doubled since 1992, the year Wharton’s predecessor, Willie W. Herenton,
took oice. Even adjusted for inlation,
they’ve risen by nearly a fourth — from
an adjusted $351 million in 1992 to $430
million in 2014, according to year-end
reports.
n
Scattered throughout the city’s 320
square miles, they’re a visible, neighborhood-level representation of the city’s
sprawling infrastructure: community
centers, parks, golf courses and libraries
— the amenities any major city ofers.
They’re also often frequent targets for
cost-cutting.
Take Pine Hill Community Center, a
brick-and-block building with a small
««
The administration has no plans to propose any closures. But if it did, Pine Hill Community
Center, where Christopher Gardner dribbles a basketball, might be discussed. A study indicates the facility in South Memphis’ Longview Heights area is the city’s least-used center.
operate, but thinks shared costs would
mean only half of those savings would
be realized upon closure. And it only
suggested closing or consolidating two
branches. And the city’s golf courses?
They occupy prime real estate — think
Overton Park’s course — and lose money, but not as much as you might think.
The courses required a $1.5 million subsidy in the current-year budget.
Taken together, broad cuts to items
such as community centers, libraries
and golf courses could make a signiicant impact to the city’s iscal situation.
Little, the city’s chief administrative oicer, said the administration has no plans
to propose closures in the near-term.
The city has received interest in
having a private organization take over
management of two golf courses —
Audubon and Galloway — but not the
entire system.
Those are the two courses that make
money.
n
A report commissioned by the mayor’s office suggested that a change in the sick time
policy for Memphis firefighters could save up to $4 million annually.
domed gymnasium as a centerpiece.
Located on Alice Road just west of the
Midtown segment of Interstate 240, the
center serves a mostly walk-up crowd in
Longview Heights and other neighborhoods that surround the Pine Hill city
golf course.
The center’s director characterized
the facility as a force for good in the
neighborhood, especially when it comes
to keeping youngsters out of trouble. On
one recent afternoon, a trio of Hamilton
High students impatiently waited on the
basketball court to clear as smaller children played volleyball.
But in iscal year 2012, when PFM
studied community center usage, Pine
Hill was the least-utilized of the city’s
« Sunday, April 26, 2015 « 7A
24 community centers. That year, 23,252
people visited — roughly ive dozen a
day. If community centers become a
target for closing to cut costs, Pine Hill
would almost certainly be in the conversation.
But community centers also illustrate
the scope of potential cuts. They come
with considerable controversy and save
relatively little.
PFM recommended closing or outsourcing the three least-used community centers, but said with maintenance
and management fees, that would only
save about $400,000 annually — a fraction of a percent of the city’s budget.
Libraries are similar. PFM estimates
each branch costs $420,000 annually to
Collins, the city’s finance director, keeps at the ready what he calls a
“back-of-the-envelope” estimation of
the moving parts of the city’s budget
for the next ive years. In it, the money
the city sends to its pension fund rises
signiicantly each year until funded at
the state-mandated level, its annual
debt payments remain lat (thanks to
the planned reinancing), and general
spending rises slightly as does revenue.
The outcome as Collins envisions it: a
roughly balanced budget in 2020, a city
largely holding the line on spending and
enjoying some revenue gains during a
trying inancial time.
“What we are endeavoring to do is
keep every other aspect of city government either at or below current levels,”
he said.
The projections, though, are based on
walking something of a tightrope.
Collins thinks city revenue will grow
at roughly 1.3 percent annually, “a relatively middle-of-the-road estimate,”
he said. That means $42 million more
in revenue in 2020 than in the current
budget.
He acknowledges this accounts for no
major bumps in the economic road. It
doesn’t take into account the 2017 reappraisal of property, which may lead to
the irst growth in the city’s tax base in
four years. But a corresponding reduction in the tax rate, mandated by state
law, is designed to keep funding level
and not lead to a revenue windfall.
Two years ago, PFM estimated property tax revenues would climb 8 percent
in the wake of the reappraisal.
Collins also igures in about a halfpercent of growth in general city spending each year.
“We still have enormous challenges,”
Collins said, “but we are absolutely on
the right track.”
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6A » Tuesday, April 28, 2015 »

Viewpoint
Editorials
It’s time to shape
Memphis’ future
There are at least two possible views of Mayor A C
Wharton’s proposed $650 million budget as the City
Council begins its review of it today.
The election-year view: It’s a winner because it
proposes no property tax increase yet promises more
public safety spending and increases street paving.
The long-term, how-do-we-get-out-of-this-inancialmess view: Memphis still isn’t living within its means.
To pull of this bit of election-year budget magic,
Wharton proposes using $13 million from the city’s
reserve fund — the city’s savings account. Boiled
down to common language, the mayor wants to spend
more than the city takes in over the next 12 months.
That’s hardly the iscal discipline we were hoping
for after the previous budget year in which Wharton
and council members made painful but essential decisions to begin digging Memphis out of a inancial
hole decades in the making. But we won’t dwell there,
knowing election-year politics are going to pervert the
conversations this summer no matter our concerns.
The long view is far more important and should
dominate the mayoral and City Council campaigns
and, ultimately, where our new city leadership focuses.
The irst step is recognizing and understanding the
problem, and The Commercial Appeal has initiated
that conversation through our weeklong series “Our
Financial Mess,” which clearly identiied the roots
of Memphis’ fragile inancial condition. Underlying
our budgetary challenge is a grow-or-die annexation
strategy that over more than four decades stretched
our borders ridiculously as taxpayers led in horrifying numbers.
All the while, Memphis was spending increasingly
on public safety, doling out unrealistic beneits to a
growing workforce, and borrowing heavily.
Simply put, now what? We broke it, we own it.
The Commercial Appeal shares in this responsibility for having supported several annexations that
contributed to light and sprawl. We want to be part
of the solution by initiating important conversations
about what we should expect for our city, and from
our city, in the decades ahead.
Our problem isn’t whether a few pennies on the
tax rate might address the potholes along our massive street system. It’s how we attract people — taxpayers — into the city limits to share responsibility
for more than $1.2 billion of debt, a pension system
underfunded by more than a half-billion dollars, and
a police department swallowing 40 cents of every
dollar in revenue we generate.
Our challenge isn’t balancing this year’s budget.
It’s the crumbling neighborhoods left nearly vacant
by those leeing for safer streets, better schools and
jobs, and how the resulting depressed property values
contribute far too little to the tax base.
Memphis, like any business or household facing inancial problems, must continue reducing its expenses
through eiciencies and, frankly, by doing without.
But, ultimately, we can’t cut our way to prosperity.
We must grow.
The central budget question that faces this city
then isn’t about whether to dip into savings to fund
some election year pork. It’s much broader, much
more important, with a lasting impact on our city.
How do we become attractive enough that young,
well-employed people with money in their pockets
want to live within walking distance of our schools,
parks and entertainment zones? How do we become
that city of choice that we hear so much about?
That single question frames Memphis’ ultimate
budgetary challenge. What kind of city do we want
to be and how do we get there? How do we repopulate
our neighborhoods and increase property values?
It’s time to leave the consultants on the sidelines.
It’s time we — Memphians — agree on a bold vision
for our city and get busy.
Memphis Publishing Company, 495 Union Ave., Memphis, TN 38103
A JOURNAL MEDIA GROUP NEWSPAPER
The Memphis Commercial, 1889
The Appeal, 1841
The Avalanche, 1867
Consolidated July 1, 1894
LOUIS GRAHAM
JEROME WRIGHT
EDITOR
EDITORIAL PAGE
EDITOR
Contact Jerome Wright at 901-529-5830
or [email protected]
TODAY’S BIBLE VERSE
“Look, he is coming with the clouds,” and “every eye will see
him, even those who pierced him”; and all peoples on earth “will
mourn because of him.” So shall it be! Amen. Revelation 1:7
DOONESBURY
JEFF STAHLER/GOCOMICS.COM
Gas tax cowardice leaves roads in ruins
Get in your car and go
for a drive just about anywhere in the U.S. You will
be confronted with a transportation system desperately in need of a reboot.
I’m not referring to a full
upgrade to smart roads —
the sensor-driven intelligent system that promises
to move vehicles more
cheaply and efficiently.
Rather, I refer to essential
repairs: i lling potholes,
basic maintenance.
In the U.S., we have allowed a transportation grid
that was once the envy of
the world to become an
embarrassing wreck.
Since 1993, the U.S.
federal gasoline tax has
been 18.4 cents a gallon.
This money inances the
Highway Trust Fund. Adjusted for inlation, the tax
is about 10 cents a gallon.
It isn’t as if Americans are
overtaxed in this respect:
The U.S. has the thirdlowest gas taxes in the
world, with only Kuwait
and Saudi Arabia taxing
gasoline less.
Unlike most user taxes,
the fuel tax isn’t indexed
to inlation. According to
the Federal Highway Administration, about 70 percent of regular roadway
maintenance costs and 80
percent of capital spending
is paid for by federal gas
barry
ritHoltZ
COLUMNIST
More ViewPoint
online
Cass Sunstein: Marriage
bans violate the law as
segregation did.
Colbert I. King: No more
disrespecting the District
of Columbia.
Michael Gerson: The
baggage Hillary brings.
taxes, with state and local
municipalities covering
the rest. As costs for repairs have increased, revenue to pay for ordinary
maintenance and repairs
has failed to keep pace.
The roads in this country are aging, with the
Eisenhower Interstate
Highway System coming
up on its 60th anniversary.
Many of the bridges and
tunnels are years or decades past their expected
useful lives. Add to that
two consecutive brutal
winters that did signiicant damage to roads in
the Midwest and Northeast. Find a stretch of asphalt that’s more than a
few years old and chances
are it will be riddled with
potholes and buckled by
frost heave. The need for
repairs has never been
greater in your lifetime
than it is today.
And the Highway Trust
Fund? It will be broke by
July.
There are many forces
driving the fund toward
insolvency. First, the tax,
adopted in 1932, has never
been adjusted for inlation and has been raised
periodically by Congress.
Regardless of the need for
repairs and basic maintenance, even a modest rate
of inflation guarantees
that eventually the fund
will be exhausted.
Second, the simple fact
is that during the recession, Americans drove
less. Here we are almost
six years after the recession ended and total miles
driven by Americans has
finally surpassed precrisis highs. (By the way,
on a population- adjusted
basis, miles driven still
hasn’t reached the high
hit in 2005.)
Last, the U.S. leet of
cars is more eicient than
ever. Your fuel-sipping car
saves you money each time
you ill up, but as a result
you send less in tax to the
trust fund.
The solution is as obvious as it is rational: Raise
the gas tax so we can start
making the improvements
to our infrastructure today; and index it to inlation, so the fund can stay
solvent.
The reason we have not
done that yet is simple:
lack of leadership among
our elected oicials. Simple intimidation explains
much. Politicians have
become so fearful of the
Grover Norquist-type
antitax zealot that elected
oicials refuse to address
a significant problem
with a justiiable and historically successful solution.
Perhaps cowardly politicians are afraid to admit
they must raise taxes to
pay for things like roads
and bridges. So let’s shift
the rhetoric around on this
issue. Instead of calling it
a gas tax, let’s rename it.
I propose “usage fees on
America’s transportation
network.”
That’s not as catchy as
a renaming the millionaire’s estate tax a “death
tax,” though it’s certainly
more accurate. But at least
it’s a start.
Barry Ritholtz, a Bloomberg
View columnist, is the founder
of Ritholtz Wealth Management.
 LETTERS
Feroza Freeland, Memphis
lose their lives, and our state will
continue its trajectory down a very
dangerous path.
Haslam erodes
local authority
Tommy Crawford Jr., Memphis
Shame on you, Governor Haslam,
for not having the courage to do what
you knew was right by vetoing the
dangerous and unnecessary gunsin-parks bill (“Guns-in-parks bill is
signed into law,” April 25 article).
As a former mayor yourself, you
understand that local leaders know
what is best for their communities,
and they should have the autonomy
to ban guns in their local parks. But
instead of making the right decision
for Tennessee, you caved. You surrendered to the heinous gun lobby
and to the right-wing extremists occupying much of our legislature.
I understand there were political
pressures, and there was a possibility your veto may have been overridden. However, as the governor, the
highest-ranking oicial in the state,
you are the leader of the Republican
Party in Tennessee. At least, you
are supposed to be. Therefore, you
should be able to build a consensus
within your party to support your
actions and your agenda.
Governor, I speak for many frustrated Tennesseans when I say we
are tired of seeing our state being
controlled by an extreme faction that
does not represent the best interests
of the vast majority of us.
If you do not take a stand, if you
continue to sign deplorable legislation like the guns-in-parks bill into
law, then innocent Tennesseans will
New start, new name
With all the hubbub about renaming Mud Island, I totally agree a new
moniker is needed.
I submit a few choices for our government leaders to ponder: Aquifer
Isle, Hope Isle, Mecca Isle, Epicenter Island, Artesian Isle, Share
Island, Love Island, Irish Isle, and
probably the most appropriate one
— Sultana Island, after the greatest
maritime disaster in U.S. history; approximately 1,800 lives lost. What an
honor for those who died at the end
of the Civil War.
Janet Rudd, Memphis
Leave it to states
The U.S. Constitution does not address marriage; therefore, marriage
issues should be regulated by the
states. The First Amendment to the
U.S. Constitution does guarantee our
freedom of religion, and prohibits
the making of any law that impedes
the free exercise of religion.
If the Supreme Court forces homosexual marriage on our country,
Christians and other religions who
know homosexual marriage is wrong
will continue to lose their freedom
to exercise their religious beliefs in
MALLARD FILLMORE
their lives and businesses.
Marriage was instituted by our
loving God long before there were
any governments; in His wisdom, it
is to be between one man and one
woman. You can’t change it; you can
only support it to the beneit of society, or undermine it to the detriment
of society.
Jerry Schatz, Germantown
Changing colors
When my daughter was in grade
school, she and her friends would
speculate as to what type of animal
they might have been if they had been
born animals rather than humans. An
excellent choice for Barack Obama
would have been a chameleon.
The president quickly and frequently changes his position whenever it is politically expedient. His
conduct in regard to the Iran nuclear negotiations is proof positive of
this attribute. The latest example is
his complete turnaround on Iran’s
compliance with certain terms of
the framework agreement before
current sanctions would be lifted.
I would opine the president would
have been a jellyish, as both lack a
backbone.
E-mail letters to letters@commercialappeal.
com; fax to 901-529-6445; mail to Letters
to the Editor, The Commercial Appeal, P.O.
Box 334, Memphis, TN 38101; or click on the
“Submit a Letter” link on the Opinion page at
commercialappeal.com.

sunday - The Commercial Appeal

Transcription

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