Memphis Mayor A C Wharton has an ambitious agenda that he laid out during his campaign, but one goal he set surpasses all of them for its audaciousness: To make Memphis one of the country’s best-run cities.

That is of course why he supported consolidation to correct the broken business models of both Memphis and Shelby County Governments, two governments which he has seen up and close and personal as the mayor for both.  In addition, he launched the “Strategic Business Assessment” process whose ambitious goal was to retool and reengineer city government from top to bottom, and as Mayor Wharton puts it, “create a culture of customer service.”

It couldn’t come at a better time.  This year’s budget hearings were challenging, but they are kid’s stuff compared to what awaits city government next year if it does nothing to shake things up.  We were hopeful that the Tennessee Supreme Court would recognize school funding for what it is: fundamentally unfair and inequitable for Memphis taxpayers.   As a result, city government is required to continue the funding for Memphis City Schools that was widely considered as discretionary for decades by everyone in city and county governments.

The court ruling set the hurdle for City of Memphis substantially higher and there are no painless options left, as shown in budget recommendations from the city administration and City Council members including Kemp Conrad and Shea Flinn.

Perfect Storm

With property taxes as the largest source of city revenues, any negative shift can be devastating, and right now, there a lot more than one.

There are high commercial vacancy rates, the epidemic of foreclosures has left 60,000 vacant houses (doubling in eight years), median household income has been flat since 1990; poverty is climbing, especially among children; consumer spending is halting so sales taxes are less than needed; the exits of middle class families and 25-34 year-olds with college degrees, and about $25 million in city taxes waived in tax freezes to business.

To top it off,  city annexation policy is now being questioned as the expected riches from new taxpayers are hard-pressed in the long run to backfill the increased costs of an urban core that is less dense, making costs there more expensive.

The convergence of these trends was already under way but the recession super-charged them.  Developing the city budget in the wake of all this has been like changing a tire on a car going 70 miles per hour, to borrow the words of Mayor Wharton  (or at least finding a way to change tires without spending $1 million a year to do it was done in one of the questionable contracts Mayor Wharton inherited from the Herenton Administration).

Principled Plans

As the budgetary process continues, there are several principles that seem obvious:

* There are no sacred cows.  Every part of city government is under the microscope regardless of political considerations and political support.

* City government is not a jobs program.  Ultimate loyalty is to taxpayers who pay the bills.  City Council members who act as if their responsibility is to keep any city jobs from being cut are well-intended but their priorities are misplaced.

* City government doesn’t have to do it all.  It should focus on its core business and consider new ways to deliver it better and cheaper.  This means that managed competition, right-sizing, and outsourcing have to be on the table.  We think Mayor Wharton was right on target with his statement yesterday: “I am not seeking privatization of any of the positions held by Members of AFSCME, Local 1733. I do insist, however, that 1733 sit down with my administration in an effort to identify areas of savings in a manner that would strengthen the financial future of the city of Memphis and its ability to sustain the delivery of quality services to all of our citizens and residents. I reiterated this position in my meeting earlier today with the leadership of AFSCME, Local 1733.”

* Strategic planning must move from an afterthought to a necessity.  Planning in city government has been haphazard, and better planning must be institutionalized and mandatory so there is a game plan for administrators and Council members as they set priorities for city funding.  Since taking office, the Wharton Administration has devoted more time to planning in 18 months than was devoted to it in the previous decade.

* Data and measurements are absolutely critical to make judgments about what’s working and what’s not.  The Wharton Administration’s plan to establish a set of Citistat-like data needs to be at the top of the to-do list.

Making the Right Things the Right Things

While we don’t blindly subscribe to the principle that government needs to act more like business, one thing is inarguable: In the marketplace, consumers are king, creating pressure to improve services and lower costs.  It’s a dynamic missing from the public sector and complicates what Mayor Wharton said is a top goal: finding ways to increase productivity and improve customer service.

Government has the tendency to reward spending, not results, and more prestige and higher pay largely come with a growing empire.  Budget systems track spending, not results.  Without a fully loaded cost of the service, there’s no way to make a realistic comparison of internal costs to outside options.  Of course, the nature of the beast – a monopoly – has done little in the past to restrain costs, because old methods, redtape and technology abound.  It is encouraging that a new vocabulary is being spoken and the right questions are finally being asked in City Hall.  As a result, it is possible for the first time in decades to hold out the reasonable hope that the toughest job of all — culture change — is possible.

It seems to us that progress starts with technology.  Everything that can be done at a counter in City Hall should be available online.  Every service and function in city government should look for ways that technology can be imbedded to cut costs.  City government should adopt a self-service attitude, looking for ways to allow citizens to conduct their transactions when they want to, not just when city offices are open.  The opportunity to consolidate a variety of citizen services and support them with web-based self-help tools and self-reporting of problems is dramatic, and it’s encouraging that Kerry Hayes in the mayor’s office has made this a passion of his.

Targets

As we wrote a year ago, the five broad target areas for City Hall are:

* Financial Management: Rigorous is the watchword from contingency planning so that Chief Administrative Officer George Lord and the City Council has exhaustive information in front of it when it makes its decisions on budgets and the impact of those decisions.

* Human Resources: Professional training for workers, transparent personnel systems and programs to identify and unleash agents of change inside city government

* Information Technology: Information management provides for involvement of departments and offers opportunities to eliminate turf wars.

* Capital Management: Sophisticated capital planning processes need serious five to seven-year plans, backed with data to inform the public.

* Managing for Results: Vision and core values that are communicated and inculcated throughout the entire culture of city government.  It’s also about getting citizen input and involvement.  It’s about taking pride in innovation and improvement.

In the end, how city government does things matter as much as what it does.  And that is why the new thinking about the budget is the right skill at the right time for City of Memphis.  What city government ultimately looks like hangs in the balance.