It appears that the Health Department answered the wrong question.

It’s not how much would the department lose in state and federal money if Memphis City Council eliminates city funding of $14 million. Instead, the real question is: would be any cuts in state and federal money if Shelby County Government replaced the $14 million and wouldn’t this be fairer to Memphis taxpayers?

We’ve always been impressed by the Health Department’s ability to summon up apocalyptic forecasts of the future at any time a change in its funding is mentioned. About a decade ago, City of Memphis government suggested that it might reduce its funding, and the Health Department said it would no longer be able to provide rat control programs and mosquito spraying.

Master Stroke

It was a masterful political maneuver and instantly froze city government in its tracks, conjuring up images of children in urban neighborhoods sharing playgrounds with rats and mosquitoes buzzing around the heads of students on their way home from school. No elected officials wanted to appear soft on grime.

Of course, the truth was that the Health Department could have cut the funding from myriad line items, but nothing was as certain to enflame grassroots concern as rats and mosquitoes. So, it was no surprise that in response to Memphis City Council’s proposal to eliminate Memphians’ double taxation for the Health Department, the prognosis for the future was dire and portentous. It said that the city cut in funding would result in $57.3 million in state and federal money.

Some say that Memphis City Council acted precipitously. We beg to differ.

20 Years In The Making

For 20 years, city government has been asking for a serious intergovernmental discussion about tax equity, one that could lead to the elimination of the dual taxation of Memphians and one that levels the playing field so that city residents do not pay a disincentive to live here, largely because they are subsidizing the zoo, the museums, and other amenities for the rest of the region.

For 20 years, city government has gotten lip service and no action. So, finally, this Memphis City Council – in a burst of political courage – said enough is enough and forced the issue. First, they eliminated double taxation for schools, and this year, they served notice that they want to eliminate double taxation for health services.

As a result, there seems to finally be some movement toward the kinds of discussions that can bring about fundamental change and reform on the tax issue. That’s not to say that we weren’t disappointed, as we wrote at the time, when City Council eroded some of its high ground last year when it funneled a significant part of its school cut into city operations.

Walking The Walk

It was a missed opportunity – the chance to make real progress in lowering the Memphis tax rate to a level commensurate with the largest municipalities in Shelby County.

Ultimately, that should be the end goal, and unless and until the City Council can prove that its intent is to use these health department reductions to cut the city tax rate, it will find the public reluctant to rally around it. However, the wonkish aspects of tax policy finally seem to be attracting some attention, and like it or not, it never would have happened without the Council’s bold action.

There are of course some people who just don’t get it. Shelby County Commissioner Joyce Avery, in response to the Health Department’s report on the impact of budget reductions, said the county can’t afford to pick up the city’s tab without a tax increase and said the city is “playing with people’s live.” Actually, the dual taxation is already disupting people’s lives and taking money out of their pockets twice for the same service or program.

Through The Nose

The overwhelming majority of citizens in Shelby County pays taxes to a municipality, and every one pays taxes to county government. At the heart of the problem is the lack of coherency in county tax policies.

Shelby County’s rationale for service delivery has been schizophrenic since its restructuring 30 years ago and confusing to the people who pay its bills. For example, county government delivers some services countywide, such as public health and criminal justice. For some cities, it provides fire protection and law enforcement. In others, it provides ambulance service. Outside of Memphis, Shelby County Government pays the total cost of education, and the towns pay nothing. Outside of Memphis, it has entered into partnerships with cities to help fund major road projects.

This is especially graphic when it comes to joint city-county agencies and construction projects. On the many projects in which Memphis and Shelby County split the costs, Memphians do much more than pay their share. They pay all of the city government’s portion, and then turn around and pay about 65 percent of the county’s portion. This means that overall, on these joint projects, Memphians pay 83 percent of the total.

Making The Main Thing The Main Thing

Put another way, older sections of Memphis are subsidizing their own decline.
Perhaps, some are right in that this issue is headed for court, where it can join the tin-eared lawsuit filed by Memphis City Schools against City Council for cutting its funding. It is said by some that a court judgment is the wisest way to resolve this issue. But that position fails to recognize the obvious fact that this is not about contractual obligations and 50-year-old legal agreements.

More to the point, it is a question of equitable tax policy for Memphians. Surely, no one in county government would argue that it is fair that Memphians pay twice for services and that city taxpayers – who have lower median incomes – should pay a greater percentage of their incomes in taxes than taxpayers outside Memphis – who make higher median incomes.

Leveling The Field

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

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

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

No Time Like Present

As long as the playing field is so uneven for Memphians, who pay twice for services like schools and health while taxpayers in other county cities pay for them once, our city has a high barrier to attracting and retaining the middle class and talent. It’s not that these cities and county government are more efficient. Their lower tax rates are simply the result of Memphians paying for services that are in truth more regional than municipal.

Memphis and Shelby County have talked for two decades about negotiating a tax structure that is fairer and a tax burden that is equitable for all Shelby Countians. There’s no reason it can’t be done now.