Archive for January, 2016

Tennessee State Shared Revenue Review

Monday, January 25th, 2016

January 25, 2016

Tennessee State Shared Revenue Review

 

In this world nothing can be said to be certain, except death and taxes.

Benjamin Franklin

 

I have been investigating the state of Tennessee taxes collected in Memphis and Shelby County and then the portion returned to us by the state. Then I decided to compare the results with Metro Nashville. In the 2016 upcoming national election one of the big questions is a large versus small central government. Should we send our money to Washington and let them decide how much and for what purpose some of it should be returned to us (less their cut) or should the Federal government stick to the original intent of the constitution such as defend the Country, establish a system of currency, deliver the mail and protect individual rights.

 

Therefore I decided to look at our local taxes which are sent to Nashville and then a portion is returned to Memphis and Shelby County. Here is the latest state returned revenue comparison sheet showing Memphis, Shelby County and a comparison with Metro Nashville.

 

You will see the big ones below.

 

The local option sales tax (the 2-1/4% tax) over and above the 7% Tennessee sales tax. $299 million.

 

The next big one is the use tax (stuff you buy out of state and ship in). $48 million.

 

Then down the list: gasoline and motor fuel tax ($17 million), tva in lieu of tax ($14 million) and tourist development zone ($12 million).

 

The alcoholic and beer tax only amounts to $1.4 million so drink up.

 

Overall we got $456 million back from the state whereas Nashville got $505 million.

 

What does it all mean in the big picture? For all its’ problems I trust my local and state government a hell of a lot more than my federal government. What do you think? Let me know.

Who Is Responsible For The OPEB Debacle?

Monday, January 11th, 2016

January 11, 2016

Who Is Responsible For The OPEB Debacle?

The City of Memphis, The State of Tennessee and the active and retired employees of the OLD (no longer existing) Memphis City Schools woke up recently as there was a noise rattling around in the closet. When they opened the closet door out jumped the ghost of over $1 billion dollars of unfunded OPEB (other post employment benefits). (OPEB is the promise of furnishing retirees health care and life insurance at a highly subsidized rate without putting the money aside to pay for it).

Now everyone is saying the ghost doesn’t belong to me. Well here is the story which I have been pointing out for years.

Every politician has been ignoring the OPEB ghost for years. However some have been more responsible than others.

The most responsible people again have been Shelby County people, the old Shelby County School Board and the Shelby County Government. They recognized the problem after the 2007 GASB-45 (Government Accounting Standards Board) regulation. See the attached page showing the 2010 actions of the Board in reducing the unfunded OPEB liability from $548 million in 2007 to $242 million in 2009. They reduced the retiree benefit rules.

Now look at the old Memphis Board of Education report from 2010. They did nothing and the unfunded OPEB liability was $1.5 billion dollars. This is 6.3 times higher than the county but the active payroll of the city schools was only 2.5 times higher than the county school payroll.

Clearly the irresponsible parties are the Old Memphis City School Board, the Old Memphis School Administration and any politicians (City and County) who ignored the growing OPEB problem.

Now, how do we solve the unfunded promise? Unfortunately we have to do to the school system retirees what we had to do to the City of Memphis retirees and to a much lesser extent what the Old County School system had to do to their retirees in 2010. We have to cut their retiree health care benefits. Promises were made by elected people who should have known better or made regardless of knowing better and the chickens are coming home to roost.