Caught in a brutal vise of too many kids, too little density, the capital costs of sprawl, and a broken tax structure, the people who head up local government here may not need to be mayors, but alchemists.
There are troubling trends taking place in Memphis, and they converge by necessity in the budget hearings of our governments. Because of it, acrimony and conflict are destined to continue unless we can dramatically change the key forces shaping our city’s future.
There’s the 20% bulge in children in Shelby County (and the entire MSA for that matter) when compared to Nashville/Davidson County and our peer communities. It’s a regional anomaly, and when converted into public costs, it amounts to roughly $180 million a year. In other words, if we had the same percentage of student population as Nashville, we’d spend $180 million a year less in education alone (not including the cost of services to poor, at-risk kids).
Not Dense Enough
Meanwhile, the costs of delivering public services are going up because of the decreasing density of Memphis neighborhoods. Density fell 21% percent from 2000-2005, accelerating a trend that began four decades ago. When compared to 35 other peer cities, Memphis is #5 in the greatest decline in density.
Today, there are 30% fewer people inside the city limits of Memphis as there were in 1970. Density is half what it was. While density is a key indicator of neighborhoods that work, it matters to taxpayers most of all. Public services are less expensive when they are serving high-density areas, and capital costs are almost 50 percent cheaper than low-density sprawl.
Contrary to conventional wisdom, Memphis does not have a soaring tax rate. Actually, the city tax rate is roughly what it was in 1993. Rather, it is the Shelby County Government’s climbing tax rate – 40% in 12 years – that gives Memphis the highest cumulative tax rate in Tennessee. Unfairly, about 80 cents of the county tax borne by Memphians is to pay off the bonds issued for the infrastructure that fueled sprawl and lined the pockets of politically influential developers.
That’s why the strongest champions for high-density should be our local elected officials. They need to use their bully pulpits to correct public misperceptions that higher density means lower property values; to persuade financial institutions not yet comfortable with funding urban-oriented construction; and to reinvent the local development standards that often discourage higher densities.
Upside Down Tax Policy
Finally, as a result of too many kids and too little density, we are paying the highest combined city-county tax rate in Tennessee. In the words of the Tennessee Advisory Commission on Intergovernmental Relations: “Memphis has the highest combined county and city nominal tax rate in the state…Total local taxes are regressive, since each of the three taxes (property tax, sales tax and wheel tax) is separately regressive. Regressivity refers to lower income persons paying a higher percent of their income for taxes than do higher income persons.”
Put another way, not only are our taxes too high but the poorer you are, the greater percentage of your income is spent on them. Families earning less than $30,000 pay 5% of their income; families making $30-40,000 pay4.7%; families making $40-50,000 pay 3.2%, and families making $50-70,000 pay only 2.8%.
Because of all these facts and despite relatively effective financial management, our tax rate is destined to remain high and the trends threaten to push it higher. For example, if we had the same percentage of student-age population as most major metros, our tax rate here would essentially be the same as the tax rate in Nashville, a city we regularly reject and covet simultaneously.
Getting Real About Change
The fact that a contrary public opinion is widely held is testament to the purposeful way that local government obscures information from the public. For example, we may well have entered a world of Web 2.0, but local government seems incapable of creating a digital environment that would have measured up to Web 1.0. It’s understandable that many people have concluded that the government websites here aren’t accidentally cumbersome and unhelpful, but they are a direct reflection of the governments that created them.
While the controversy du jour may get the headlines, they are mere distractions from the kinds of fundamental changes that should be made in city and county governments, starting with technology.
Every transaction, application and request that the public can make standing on the other side of a government counter should also be available online. Every report, every tax freeze given by government, and every study paid for by taxpayers should be posted on the Web. City of Memphis’ website is incomprehensible and even when you know the information is there, it’s ofcitizen-focused.
Transparency Is Not Just Campaign Rhetoric
If there’s a model for is kind of transparency, it’s the Missouri Accountability Portal or the Michigan Dashboard. They post detailed information on expenditures and measurements by agency, category, contract or vendor and salaries for state employees.
But there’s so much more that can be done here. For example, there are mechanic shops working on publicly-owned vehicles for various agencies all over Shelby County. Even within city government, most divisions have someone assigned to handle information technology rather. The opportunities for merging functions that are replicated over and over again – from purchasing to maintenance to human resources – can yield more than marginal savings. It contributes to the sense of teamwork and collaboration that are sorely lacking in local government today.
In a nutshell, the challenge for our mayors is to create high-performing governments based on and focused on performance – from budgets to salaries. Today, there’s just no real connection between a department’s performance and its budget and there’s no connection between an employee’s performance and salary.
We’re not saying this is about overlaying private sector models onto the public sector. As a Harvard study concluded years ago, government is too different for these simplistic notions – not to mention campaign sloganeering – about bringing business to government. (And the truth is that everyone is in favor of the government acting more businesslike until it affects them.) Despite this, the notion that performance can’t be applied to the public sector is outdated and flawed.
First and foremost, it requires for a set of outcomes to be defined and to link them seriously to budgeting, evaluation and salaries. To its credit, City of Memphis yearly (almost) conducts the Memphis Poll to understand the public’s priorities and opinions, but it’s connection to the budget process seem tenuous.
In the end, it’s about the kind of focus and accountability that can transform the culture of local government, because that’s really the overall objective. It’s also been called the equivalent of changing a tire on a car traveling 60 miles per hour.
No Waiting Room
To compound the challenge, a significant part of the public workforce are Civil Service employees who know that they can ordinarily wait out a person that sets out to change things, whether it is Kriner Cash, A C Wharton, or Mark Luttrell.
We can’t afford to wait anymore, and while getting the basics of government right, it’s even more about changing the trends that exacerbate all of this in the first place. That’s the toughest challenge of all, because it requires the repopulating of Memphis, and this won’t ever take place until the public feels that its tax dollars are creating value and the kind of city in which they want to live.