Archive for the ‘budget’ Category
February 8, 2016
ROI (Return On Investment)
Recently I asked for the following information from the Riverfront Development Corporation.
I received a prompt answer to these questions (with some delay due to my fault). You can look at the attached results.
They say the cost was $43.5 million with the Feds and State kicking $11.8 million, Housing and Community $1 million and the City $30.6 million. All of this is taxpayer money. Now we all recognize that parks, playgrounds, running and biking trails and other civic amenities do not pay a return on investment in a true business sense. However this restaurant/souvenir shop and boat landing should pay a better return than is shown by the landing operation income and expense sheet shown above. Except for the Foundation Corporate Grant of $75,000, it is losing money each month. Maybe the additional income generated by river boat tourists landings make up for some of this but could the landings have been done without this $43 million dollar project? Virginia McLean certainly thinks so. Here is what she told me recently.
Our new $43M taxpayer funded boat dock probably might make it easier (at the right water-levels) for passengers to board and has probably led to more business for our local daily excursion boat company, but I’m not absolutely certain about either of those points, and I can’t imagine that Beale Street Landing has had a serious impact on multi-state-city riverboat cruises. The boat companies appear to be promoting Southern history, food, and music as draws for cruises on the Mississippi River. They dock at Natchez, Vicksburg, Helena, Paducah, to name a few, and those cities/towns don’t have expensive new boat docks. The boats appear to just tie up at the shore (like they still do here at Greenbelt Park when water levels are low ) or dock at historic landings like in St. Louis on the old landing which is adjacent & beneath the plaza the Arch sits on or at basic, simple open-air ticket-sale type places like in New Orleans’s Woldenberg Park. Personally I think Mud Island River Park’s landing would probably beat out anything, including Beale Street Landing. When the boats docked over there and if it was being run properly visitors would have had access to restaurants, a music, pretty park, amphitheater, and via monorail or skywalk downtown city by foot.
I’ll stick with the idea that we didn’t really need it, couldn’t afford it, and now what do we do about running and maintaining it?
The Mississippi River is our greatest asset but it is huge and powerful and maintaining anything on the river always ends up costing more than expected. The Beale Street Landing will continue to cost us in the future to maintain it. We do not need the Riverfront Development Corporation to guide and lead changes to Mud Island River Park considering their past history. What do you think?
January 25, 2016
Tennessee State Shared Revenue Review
In this world nothing can be said to be certain, except death and taxes.
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.
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.
December 21, 2015
There was an interesting article in the CA on December 18, reporting on a large number of visitors to the Bass Pro Shops at the Pyramid. According to the article there were 2 million customers in the first 7-1/2 months. I am hopeful that this report will translate into enough sales taxes that will pay off the millions of dollars that we borrowed to pay for this development. Bass Pro officials didn’t say how the store is performing financially, but an official said the general store has sold 27 tons of fudge. “That’s a lot of fudge,” he said. Let us hope all that fudge will translate into revenue and not a bellyache.
$197 million in taxable and tax exempt bonds were issued for this project. These TDZ revenues to pay off these bonds are received in one lump sum payments from the state in September of each year based on incremental state and local sales tax collections in the TDZ zone by the state as of June 30 of that same year. The TDZ revenues in 2011 shows $12 million none of which came from Bass Pro.
The initial projected TDZ revenue for June 2015 was $20.2 million, an increase of about $8 million due to the Bass Pro Pyramid project. Obviously the delay in the construction of the project will probably cut that figure but I would like to know what the actual figure is for the year ending June 2015. I have asked for this information from the City of Memphis but to date I have not received an answer. Let us hope that that the fudge and moon pie sales and hopefully more expensive items will indicate that we have a bright future for this huge project. Believe me, I want it to succeed.
November 24, 2015
Oh No, A Water Rate Increase
As a former MLGW board member, I have a history of praising and criticizing the Division. I follow and read the Division’s annual financial reports. The latest report is for the calendar year 2014 which ended December 31, 2014. The 2015 year report will not be out until well into 2016. However I am sure the Division knows what will be in the report.
Division President Jerry Collins went before the City Council to ask for a 22% water rate increase. He said that the rate increase is necessary to keep the water division from recording its second straight year of negative net income at the end of 2016. A state board is required by state law to step in and set rates after two straight years of negative net income. He said the board has consistently favored higher rates, including a 42 percent increase in Bartlett’s rates.
I have looked at the past financial reports and the Water Division has had a very slim margin (changes to net assets) in 2013 and 2014. Apparently they know that 2015 they are going to show a decrease in net assets (a loss) and without an increase they will lose more in 2016 due to losing a large customer, Cargill Corn Mill. Two years of losses would bring in the state board to dictate an increase in water rates according to state law.
The usual suspects on the City Council refuse to study the facts as they demonize the Division as heartless and cruel. Facts do not make any difference to them as they play to their voting base. Another fact is that the Water Division has been paying $2.5 million dollars per year due to the City Council agreement to finance the FedEx arena. The agreement is effective through the year 2028. During 2014 the Water Division was authorized and directed by City Council, per City resolutions, to make an additional annual $1.9 million transfer payment each year through fiscal year 2017. Transfer payments to the City for 2013 as compared to 2012 increased due to a City resolution authorizing and directing an additional payment of $1.8 million in exchange for the release of any rights the City may have had to receive water from the Water Division free of charge during 2013 under the MLGW Charter.
The MLGW has a history of being fiscally responsible and being run mostly by professional management. Their employees are well trained and do a tough job. However the City Council would be well advised to look in to areas such as MLGW’s OPEB program. They should bring their rules concerning the cost and availability of retirees and their spouces health care to match the same rules as Shelby County Government retirees. Shelby County has these rules in effect since 2007. The MLGW pension and OPEB funds are in good shape due to funds paid for by MLGW’s customers’ utility rates. Compare their pension and OPEB funds to those at the City paid for by property, sales and other taxes.
As a final note I have been informed by President Collins concerning Sewer Rate Fees. “Sewer fees are governed by Public Works. To the best of my knowledge Public Works is not planning a sewer fee increase.” MLGW is just used as a collection agency for 1) Sewer Charge, 2)Solid Waste Fee, 3)Mosquito/Rodent Control Fee and 4) Storm Water Fee.
November 13, 2015
Bass Pro Pyramid Review
Local ABC 24 called and asked me to comment on Bass Pro after 6 months from opening. http://www.localmemphis.com/news/local-news/final-hurdle-remains-for-bass-pro-and-pinch-district
It so happened that I had just spent all day several days previously touring Rhodes College, St Jude and Bass Pro so naturally I am an expert. It was a Wednesday when my wife and I and several out of town visitors did this tour. I must say that Rhodes was outstanding and beautiful. My visitor was a retired orthopedic surgeon and his wife a retired nurse. (He is on the board of Westminster College in Missouri (the site of the famous Winston Churchill speech on the iron curtain). This was before the disastrous University of Missouri incident.)
After visiting Rhodes we went to St. Jude and it was wonderful. Very heartwarming to see the work that they do. Then we went to Bass Pro. As I said it was on a Wednesday at about 2 PM, not exactly prime time.
We toured the ground floor and I was very impressed with the multiple selections of Moon Pies. Also I shopped for camouflaged underwear and pajamas. My wife told me that there was a good selection of women’s clothing (groan). We paid $10 each to ride the elevator to the top and had a good view of the river. We had already had lunch earlier elsewhere but we looked over the menu and it was the typical selection of sandwiches and salads that you could get at dozens of places all over Memphis. The food selection definitely did not match the view.
Now to the financial details. The City of Memphis, through the Memphis Center City Revenue Finance Corporation issued bonds to the tune of $192 million dollars for Warm Lit Shell ($20M) Seismic Retrofit ($25M), Landlord Contribution ($33M), Convention Center Acquisition ($67 M) Pyramid Acquisition ($3.2 M), Lonestar Acquisition ($15 M) and debt reserve and transaction cost of $$28.8 M).
This is to be paid back by increased sales tax revenue over and above a base which will be paid from the State of Tennessee’s sales tax collections for principal and interest. See a distribution report that I obtained from the state of Tennessee on past TDZ zones. Then look at the RKG Associates financial analysis and you will see that they are projectioning an increase in the first full year of $8.1 million more over and above the current level. Keep in mind that each year a new base is set. Also note that ½% of the sales tax goes to the School system.
I sincerely hope that the projections are correct or even underestimated but it will be several years before we know for sure. In the meantime Mayor elect Jim Strickland should publish information on existing City of Memphis financial obligations to the bonds issued by the Memphis Center City Revenue Finance Corporation showing the amount of the outstanding loans and the payment history of each of the obligations. The public has a right to transparency on this financial obligation. The taxpayers are on the hook for these debts even if ad valoren taxes are not. All other taxes collected by the City are obligated.
October 29, 2015
Big Time Bet By The Shelby County School Board
As you have read, the SCS System has filed a massive lawsuit to take the funding out of the hand of the taxpaying public and their elected representatives and put it in the hands of the various school boards across the state of Tennessee. They want to determine how much is required to do the education job and then the taxpayers must come up with the money. The proposition is “MORE MONEY EQUALS BETTER EDUCATION” and they know best how to do it. They just need the resources.
I filed an open records request with the SCS System and asked what the estimated total future cost of the lawsuit would be and asked how much had been billed to date. They responded promptly and said that there was no estimate of total future cost but that they had been billed for $106,775.35 in four monthly billings. This is just the beginning.
Next year there will be an election at the national level for President, for the House of Representatives and for 1/3 of the Senate. If some fiscally responsible people are elected in a majority I hope they will consider the elimination over time of the Department of Education at the Federal level. This department was created by President Jimmy Carter in 1979 and has grown like most of the Washington establishment. Look at what President Obama has requested for this failure.
In his budget proposal, the president has requested $69.8 billion in discretionary spending for the Department of Education, a $1.7 billion increase over last year’s funding level. This is in addition to $13.3 billion in additional mandatory spending for Pell Grants, bringing the total budget request to $83 billion—a 40 percent increase from Fiscal Year 2008.
No one can claim any success from this monumental failure in educational spending. Let us not repeat this kind of failure at the local level.
September 29, 2015
Shelby County School Job Positions and Salaries
Nothing is more important than education. We hear all the talk about programs to combat poverty, workforce development, skill training, etc. etc.
The real solution starts with a caring family that is determined to see that their children get the basics, love, discipline, encouragement and the ability to read. The parents must take an active role in these basics.
The next step is education and this is where the debate rages. Do we need more money as most public school boards claim or do we need a 21st century model.
A recent article in the Wall Street Journal states, in part, the following.
Whatever your measure—the reading and math proficiency of high-school graduates, the skills gap in the nation’s labor market, or the real value of college—there can be little argument that America’s schools, as a whole, are failing to prepare students for the 21st century.
There are countless explanations why, but here’s a significant contributing factor: Until recently, we simply didn’t know how to use technology to make teachers and students happier, better engaged and more successful.
Think about it: In every field of human endeavor, from manufacturing to knowledge work, we’re figuring out how to use technology to make humans more successful—to raise the quality of their work, if not their measured productivity.
But the same can hardly be said of teaching. In education, the overwhelming majority of students are still learning as they always have, in classrooms dominated by a one-to-many lecturing model in which teachers inevitably leave some students behind while boring others. That model has barely changed in a century.
Parents, educators and especially taxpayers need to get involved and have an open discussion about how our education taxes are being spent. As a result of my recent open records request, I have attached a complete list of Shelby County School System employee names, job titles and annual salaries. If you do not have Microsoft Excel You can click here for a PDF copy of the salary list. I have decided to list the names only for those making $70,000 per year or more. The total annual salary for the listed year is $581 million for 16,664 employees. Add to this another 20% for benefits. This is around 75% or more in the budget for salaries and benefits.
I think we need to have a public discussion of the Shelby County Education model and ask the question of whether the School Board should be suing for more tax money or should we update the education model to the 21st century.
September 8, 2015
Massive Lawsuit By The Shelby County Board of Education
In case you have not noticed, the Shelby County Board of Education just filed a lawsuit to compel the taxpayers of the State of Tennessee to fund whatever the state school boards feel is necessary to educate all children to what they feel is adequate education. It does not matter if the taxpayers can afford their idea of what constitutes an adequate education.
I must say on the front end that I want all children to get a good education. However I am a proponent of parental choice, good charter schools and parental vouchers. Let the money follow the child. They say that lack of money is the problem. I say that there is no proof that more money solves the problem. I say that the basic problem is the dissolution of the family structure and that this family structure problem started in the 1960s war on poverty and has gone downhill since then. This is a debate that I welcome.
However I just want to alert you to what is going on and I have several questions that I feel should be answered by the Shelby County School Board and I intend to ask for this information in an open records request. I encourage you also to ask for this data.
- What is the projected future cost of this lawsuit?
- What has been spent so far?
- Will all future legal bills be promptly put on line for the public to see?
- Will all payments in connection with this lawsuit be promptly put on line?
- Will all the cost of SCS legal and administrative work in connection with this lawsuit be recorded and put on line?
What they are asking is a blank check for education with the school boards able to write in the amount.
DO YOU AGREE? LET ME HEAR YOUR OPINION AND LET THEM KNOW YOU OPINION.
Here is the lawsuit and I have listed some of the highlights below.
August 17, 2015
Pilot Promises! Are They True?
There was an editorial in the CA August 16th about Pilots and attached tax breaks. This is a subject that is up for discussion and debate. On one side is EDGE (economic development growth engine) led by Reid Dulberger. On the other side is many of the local unions and other groups who wonder where is the promised benefits of EDGE’s website.
If you look at EDGE’s website you will see $711 million dollars in projected new tax revenue. WOW!! Boy do we need that. No future pension and retiree health care problems. We are on easy street.
But looking back on City and County revenues for many years I don’t see any such massive flow. Revenue just seems flat but with some inflation increases.
What we have here is a lack of facts. Here are some problems and suggestions that I would suggest could shine some light on the PILOT discussion.
If you look at Shelby County Trustee website (currently under David Lenoir) you will see a list of annual County Pilot reports. In those reports is a section entitled Contracts Aged by Expiration Date. This section shows how much the property should pay in Shelby County property taxes and how much they are in fact paying under the Pilot reduction.
In order for the public to have some basis for confidence in the pilot program, some entity should look back at the expiration date of each pilot and determine if after the pilot expired, did the property pay the full amount in the future or did they get an extension, a reduction, or did they leave town or whatever. This does not sound too hard but it is beyond my resources.
Another problem is that the City Treasurer (the City equivalent of the County Trustee) does not publish a similar report. We are talking millions and millions of dollars in abated taxes. Once the pilot expires, are we getting the full amount or not? I say Prove it.
Joe Saino 901-7540699