vibinc

And why that’s not such a big deal really

Its budget time again. A time of wrangling and posturing about spending and tax rates and the “appropriate role of government”.

In City Hall, the County Commission, and most importantly, the school board, politicians will be putting together numbers for the upcoming year.

The schools budget hasn’t been released yet, though it is expected on Tuesday, so a complete picture isn’t really available.

What we do know is thanks to a whole lot of economic factors outside of our control, and many more within our control (though few would admit it) we’re going to see a property tax increase in both Memphis, Shelby Co., and likely many of the municipalities that were once thought above such measures.

While we’re talking about an increase, Nashville Metro is talking about a small decrease in property tax rates.

Considering the overall economic climate, this may come as a surprise. I know I was surprised when I heard it. But the underlying reason Nashville gets a cut, while we’ll most likely see an increase goes to a whole lot of issues we, as a community have been unwilling to face. None of which, by the way, have to do with “spending too much”, though that is the most often cited reason.

Home Value and Property Taxes Comparison

Property tax is the single largest piece of the City and County “revenue pie”. As property values increase, the tax rate required to remain “revenue neutral” drops. As values decrease, the tax rate required must increase.

Almost no one wants to see critical services cut: Police, Fire and Trash Collection. Trash collection is its own thing, funded by a fee collected by MLGW, so tax rate has basically NOTHING to do with that (regardless of what Kemp Conrad says), but Police and Fire make up a huge percentage of the City budget. Law and order plays a big role in the County budget as well, though the impact is muted because the Sheriff doesn’t have to staff up the way municipal police departments do. The single largest issue the County has to deal with is education, which we’ll save for after the budget comes out.

The data in the above spreadsheet comes from the Census and from published tax rates and calculations listed in the budgets from each area.

There are a couple of things that should jump out at you immediately:

1. Value – The median home values in each area. As you can see, Nashville’s median value is much higher. This means they can collect the same amount of money without levying a higher tax rate. Shelby Co.’s median home value is one reason for our high tax rate.

2. Vacancies – Shelby Co. has a very high rate of vacancies compared to Nashville, and Memphis is an even higher percentage than that. High vacancy rates depress value and overall collections for two reasons: oversupply and weak demand brings down prices over time, and long-term vacancies not only mean lower collections from that home, but often many of the homes in the area as home values decline, especially if there is a high volume of vacancies in a specific area. (Note: Shelby Co. vacancies include Memphis vacancies, because, you know, Memphis IS in Shelby Co.)

None of this is new. We’ve known it for a long time. I’ll have to address why this is the way it is another day, but for now, lets just say both Memphis and Shelby Co. government have been chasing population rather than giving people a reason to stay. This is also reflected in outmigration information. Again, that’s a different post.

Tax Hikes – The Herpes of Politics

A lot of politicians believe that pushing for a tax hike is like getting Herpes. You might be able to manage it, but it will never go away.

This is due in part to politicians focusing on spending rather than what we get for said spending. Most people prefer a visible police presence in their neighborhood. Fully staffed and nearby fire stations bring down response times and, by extension, insurance rates, not to mention that your chance of survival if tragedy strikes is greatly increased.

Understand, we can’t have these things if we don’t have the money to pay for them.

At the same time, almost no one is talking about the conditions that play in to our tax rate, including oversupply, and vacant, often blighted homes. This depresses our ability to get the same level of service for a lower rate. Note, that doesn’t mean your tax bill will go down. Things still cost what they cost. It means the rate would be less.

The reality is, all this fussin’ about “tax rate” is double talk. Everyone with half a brain in their head knows you can’t field the same level of police or fire presence with substantially less money. It ain’t gonna happen.

But “tax rate” is the thing that fits on most political literature. It’s an easy sell. Its harder to explain to people that a series of policies you put into place helped raise home values.

So, in a sound bite driven world, what we end up talking about is what fits on a postage stamp, rather than the big things that actually play in to that “postage stamp” issue.

How Much Is This Gonna Cost Me?

For a homeowner with a median value, increasing the tax rate in Memphis by the proposed amount will cost $70/year, or about $6/mo.

If you’re fortunate enough to have a million dollar home, it will run you about $60/mo.

In both cases, its pocket change relative to the income one must have to own such things.

Of course, the County is most likely going to raise Property tax rates as well. Even still that’s an increase of about $14/mo. Hardly the oppressive increase that we are told it will be.

Tax Rate, Tail Lights, Total Baloney

When you talk to realtors, they give you a three main reasons people move: Crime, Schools, and Space…not necessarily in that order.

I’ve talked to a lot of realtors over the past several years, and none of them have said someone wanted to move out of Memphis because the tax rate is too high. I’m not saying there aren’t some people who do. I’m just saying its a tiny percentage.

Crime and Schools are the top two things that the City and County could actually tackle to keep people from moving (I don’t think they can do much about space) you have to ask yourself what have they done, and to what effect?

Here’s what they’ve done: They’ve inadvertently fed into the notion that neither are solvable problems.

How have they done this? In a couple of ways.

By threatening to reduce funds for public safety, and thereby planting the idea in people’s heads that the city will now become less safe because fewer police will be on the beat. If you’ve ever had your home broken into (and I have) this plants a seed in your mind that will eventually move you to action.

On the schools front, the lack of certainty, some of it real, some manufactured, and some imagined…along with low test scores and a general feeling that all is lost. This comes from leaders who choose to accentuate negatives as a political wedge to ultimately fund schools less in search of lower tax rates.

In both cases, this is about political rhetoric meant to shift blame from political leaders to “bureaucrats” in the various departments, or just any other political leader, rather than seeking real solutions to the County’s top two self-identified problems.

It’s baloney, pure and simple, and it shows a greater commitment to the four-year political cycle than the long-term health of our community…whether they mean to or not.

If we were really committed to addressing the long-term problems our community faces, we would redirect our efforts from the “Tax Rate Tango” to poverty cessation. 26% of everyone in Memphis lives in poverty. Another 36.6% is considered “working poor”. That’s nearly 63% of the total population of the City, or 410,000 people. Enough to fill the Liberty bowl almost 7 times.

High poverty means lower than average wages (about $7000 less than state household median), which translates to lower sales tax collections (less disposable income) and the necessity for lower housing rates (which means lower property values and less revenue per home).

This doesn’t mean the City needs to undertake a huge Welfare program. We already have that for Corporations…they’re called PILOTS. It means we have to do more to support efforts already underway by the Federal, State and County governments, as well as the litany of non-profits that work on these issues. It means we have to stop doing the same thing over and over again expecting different results.

Most of all, it takes a little “outside the box” thinking, and a commitment to correcting this issue.

How does that impact crime and schools? The short answer is poverty, crime, and low educational attainment are all intertwined. Poverty doesn’t cause crime or low educational attainment, but higher poverty rates correlate to them.

I’ll delve deeper into that in my next post.

Last night, among other things, the School Board who shall not be named voted to delay their search for a new Superintendent at the suggestion of national search firm Proact..

Who, in their right mind, would want this job?

Think about it: 23 members who can’t seem to come to a decision on anything. 16 of whom would be gone or at least on their way out by the time the new Super takes office. The chance that a vote on a new Super would involved a majority of the “leavers”, and a minority of the “stayer” is not only real, but likely.

Add to that, the litany of questions that have yet to be answered, and the search for a new administrator became too heavy a lift for the search firm.

The irony, yesterday we received a questionnaire from Proact about what we, as parents of an MCS child would like to see in a new Super.

Brilliant irony.

In addition to giving up on the search for a Super, the board took a vote on delaying the merger, which failed. The argument for delay has now come from both sides of the charter surrender vote, which is pretty interesting up to the point that you realize that state law doesn’t allow for a delay in the merger. The timeline is set forth in Norris-Todd, and affirmed by Judge Mays. Short a ruling on the constitutionality of the timeline provision, which is pretty solid honestly, delay isn’t going to happen, so let’s just stop talking about it and get on the to the business of actually getting ready for next year, mmmmkaaay?

The board did vote to approve outsourcing of custodial services to GCA. I don’t generally support this kind of action, but the question hasn’t been about whether or not to outsource for weeks. It’s been about who to outsource to.

I found out late last night that GCA also has a contract with Metro Nashville Public Schools, something that might have been reported before and I just missed. I’m asking my Nashville readers to report back. I know I’ve got a lot of teachers from Nashville that read. I want your perspective on their performance so we at least know what to expect. Hit me up on my contact page if you don’t have my email address or on the tweeter @vibinc.

Other things include transportation and school closings, though I think school closings is a bit of a distraction considering all the other things going on. Seems like we could have brought this up in July, after the approval of the new budget and the start of the next fiscal year, and that would have allowed more time to actually consider some of the open questions that are hindering the release of a proposed budget from Interim Supt. Hopson.

Maybe there’s something about a timeline that I’m missing here. I don’t really know.

In any case, I’m sure the County Commission and Mayor Luttrell are itching to get this budget, if for no other reason than to have something to practice hitting the wastebin from their chair. If the new budget comes in as expected at $1.3b (which is $40m more than last year) you can expect to see exasperated looks and Bugs Bunny style steam springing from the ears of folks, not to mention the normal hyperbole that has little if any basis in fact. I’m talking directly to you Chris Thomas/Wyatt Bunker/Heidi Shaffer.

The bellyaching will, no doubt, be more pronounced than the aftereffects of eating a raw pork chop.

In other action, the board approved a policy that would pay teachers based on performance rather than experience and educational attainment, an irony if nothing else. I get that “book learnin’” doesn’t necessarily make you a better teacher, but shouldn’t teachers, who are in the business of education, always be seeking more education? Isn’t that a valuable thing to seek? Apparently not.

I’ll be taking a deeper look at the whole teacher evaluation/pay issue later this week to hopefully better explain the policy that was adopted by the board last night.

So I guess we’re still in wait and see mode until the next meeting of that August body who shall not be named. Until then, there are a lot of questions to be answered. The largest of which begins with a b, ends with a get and has U all up in the middle of it.

Over the weekend, I was honored to give a presentation on school funding for Livable Memphis at Rhodes College.

Since the we don’t have a budget for the upcoming year yet, even though we’re just 60 days out, I talked about the budget from last year, and hoped to give a little insight as to how things are funded, how much we spend, and what’s coming down the pike.

45 min may seem like a long time, but with as much to cover as I had, there were lots of things I couldn’t get into…like enrollment, or drilling down into each system’s administration. That said, as budget primers go, I think it was alright.

As the school budget emerges, I’ll have more to add.

Below are the videos of the event.

When people think of the “silly season”, they typically think of political campaign time. These days, campaigning is a 24/7/365 affair. Think I’m wrong? Consider this photo of County Commissioner Steve Basar, taken by Commissioner Chris Thomas, who I ran against in the 2012 August election…at his first fundraiser of the season…last night (3/20/13).

Any Democrat thinking about challenging Basar might want to start getting their ducks in a row now. He’s a nice guy (that I happen to like personally) and pretty popular in many circles…but that doesn’t mean he should go unchallenged.

I don’t live in his new district, and don’t have any plans of running in 2014. Basar clearly does. If you’re not sure that you’re in his district, you can go here. He’ll be running in District 13.

If you are in his district and interested in running, drop me a line. I have some insights that might help you.

Basar’s decision to seek re-election isn’t the worst idea to befall Shelby Co. or Tennessee. Here are some of them, from the past three days. This sample is just the tip of the iceberg…

John DeBerry support “for profit” Charter Schools

The Tennessean reports that Democratic State Rep. John DeBerry is supporting a bill that would allow “for profit” charter schools in Tennessee.

DeBerry received $100,000 from the pro-charter, pro-voucher group Students First founded by former DC Superintendent and “education reformer” Michelle Rhee in his primary contest against former Rep. Jeanne Richardson last year.

Apparently, that was an investment well spent for the group.

State Run Inspections only for Memphians, Thanks to Mark Luttrell

Apparently, Shelby Co. Mayor Mark Luttrell doesn’t feel like he needs support from Memphians. In a Commerical Appeal article the inspections stations, mandated by an EPA agreement, and recently abandoned by the City of Memphis, will be taken over by the state rather than the County…even though the EPA now classifies the entirety of Shelby Co. a pollution problem.

The agreement with the State of Tennessee would exempt the 1/3 of Shelby Countians who live outside of Memphis from vehicle inspections for up to 6 years. Folks who live in Memphis will not only still be subject to inspections, but will also have to pay for them.

Way to take care of your largest constituency group.

Scenic Vistas Bill Dies in Committee

Yesterday, in the State Senate, the Tennessee Scenic Vistas Protection Act died in committee thanks to no members making a motion to hear the bill. Two Democratic Senators, Ophelia Ford and Charlotte Burks were noticeably absent when the bill came up.

The bill, sponsored by Sen. Minority Caucus Chair, Lowe Finney (D-Jackson), who I have a separate beef with, is a necessary reform if we want to keep the mountains that are a signature of our Eastern Division. Kudos to Finney for carrying the bill, even if he couldn’t muster a motion.

Video of the entire debate on the bill is included below. See also: King Coal Recasts Itself as Friend of Earth After Stomping Environmentalists in Senate

Pure Idiocy

State Rep. Vance Dennis (R-Savannah) thinks he has a way to stop the scourge of Obamacare in Tennessee.

Jeff Woods of The Nashville Scene eviscerates him, with an assist from J.R. Lind at Post Politics.

Sit down sir. The moving of your mouth is exposing your ignorance.

Ignoring the best advice in favor of a witch hunt

As bad as the electoral problems have been in Shelby Co., at least we don’t have a witch hunt going on over our voting rolls (at least not on this scale).

Davidson Co. Election Commissioner Steve Abernathy has taken it upon himself to investigate the citizenship of voters in the state’s second largest county against legal advice.

He says he wants to “Save America”. From what? No reporter had the stones to ask, but one might surmise from his rhetoric he wants to “Save” it from voters who don’t vote like him.

Brilliant! /sarcasm

Good Reads

Newscoma has a great post about local control that explores just how deep the State Legislature is willing to wrest control of local issues from local government.

A new tumblr account has popped up called iDemocrat that is collecting people’s stories about why they are a Democrat. You can submit your story here.

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I’m not sure if I’ll make this a regular series, but if you want to know what’s going on in the state on a daily basis, Subscribe to the Daily Buzz. News from around the state, in your inbox every morning.

I’ve been thinking about a lot of things since last week’s school board meeting.

That meeting sent me down a whole lot of rabbit holes. The analytical side of me wants to make a rational argument that supports my overall aim of improving life for all people in and around Shelby Co. While I think that’s important, I also know that no matter what I say there are some who are so bought in to their notions of reality, regardless of how little factual basis there is behind that belief, that nothing I can say, no matter how rational, will sway them.

One thing that I think we call can understand is the idea of respect.

Respect is something we all crave. It is a sign of accomplishment. It tells us that others believe we have done something positive with our lives.

The very definition of respect: a feeling of deep admiration for someone or something elicited by their abilities, qualities, or achievements even evokes an emotional response.

We instinctively understand it. Regardless of the facts surrounding the specific case.

The interesting case of Joe Flacco

Last night, when I was on my way home from work, I was listening to some Sports Talk guys talk about the contract that just got signed by Superbowl MVP and Ravens Quarterback Joe Flacco. Here’s the thing that really hit home.

Joe Flacco
via Wikipedia Commons

“It was never about earning the money and all that. It was about earning the respect,” Flacco said Monday at his press conference announcing the new deal. “Definitely about earning that respect and feeling that respect around here. The fact that we got it done and that they made me [the highest-paid player in the NFL] definitely makes me feel good about how we played and how they feel about me.” – Joe Flacco (Source)

No matter how you slice it, Flacco’s contract is a boat-load of money. But its interesting what he equates with respect in a capitalistic society…namely money.

Of course, Flacco is a highly valued employee of the Baltimore Ravens. Some might say he’s overvalued based on the sheer size of his contract in relation to his ability. But this is what they were willing to give. This is what he wanted to feel respected. In this situation, I guess everyone got what they wanted.

Earnings and Respect

I’m not sure how I feel about the whole idea of equating respect and earnings. There are people who make more and less than me who I respect. The converse is also true. But more than that, there are people who do things that I just wouldn’t want to do, and I respect them for having the intestinal fortitude to actually do them.

What’s interesting is, many of these folks don’t get paid that much. Some are more educated than others. But the value they bring to society far outweighs all that, including their cost…or earnings.

If the principles of simple supply and demand were at play, they would probably be paid far more than they are now. By filling a need that few people want to do, they provide a service to the community that demands our respect (as a group, if not as individuals).

What’s most interesting to me is these are the very people whose earnings have been under attack over the past several years.

– Teachers have been attacked by the State Legislature, not to mention local officials, despite the fact that they do a very difficult job, in difficult circumstances, and most of them do relatively well (it we honestly look at the circumstances).

– Sanitation workers and first responders have been under attack for being a drain on resources. In all honesty, I wouldn’t want to live in a city where these three groups of people were either absent, or in short supply.

– Most recently, the janitors with the school district have been under attack. Tonight the School board will vote on outsourcing janitors to a private company. This contract is said to save the district as much as $11.5m/yr even though none of the details of how this service would be rendered have been provided in the bid.

In all of these cases, people who are doing a job that is necessary for our society to function are under attack because they just happen to be public employees. This is compounded when politicians rate their performance not on what they accomplish, but how much of the tax rate they can cut.

Considering this measure of success, its not surprising that we’ve seen absolutely zero movement on the issues that truly impact our community. They’re not worried enough about those issues to actually tackle them. They’re too focused about the damn tax rate as if that is a panacea.

Putting the Money in Perspective

Now, $11.5m is probably more than I’ll make in my lifetime. Its a lot of money. A savings of $11.5m, if applied to our current tax rate, would mean about $18/yr for the median homeowner in Shelby Co. (for a home valued at $120k).

The way this money gets saved is by cutting $5000 – $6000 of pay a year from the average janitor.

The argument in favor of this idea says that the savings in taxes would provide jobs. I don’t know about you, but $18 won’t even get me a babysitter for 2 hours, so I don’t know what kind of jobs I’ll be providing.

Of course, they’re not talking about me, or even you. They’re talking about businesses with millions of dollars of assets. Based on my very rough estimates, it would take a company with assets totaling more than $850,000 to net enough savings to net even one minimum wage job.

That is assuming that they need to hire to expand their business. The money may just be pocketed in savings, which would actually hurt consumption, which hurts the economy, on top of hurting the 650 janitors currently working for MCS, making at least $5000 less a year and either having to work another job, or go on government assistance.

What about FedEx, AutoZone or International Paper? Our largest local employers already have tax deals called PILOTS (Payments in Lieu of Taxes) as well as other incentives that minimize their exposure to fluctuations in the tax rate, so no, it wouldn’t do one thing to cause them to expand their operations.

End result, not 650 jobs good paying jobs. Not even 1/10th of that.

Where’s the Respect?

What we’re left with is a decision. Is getting $18 (maybe a little more, maybe a little less) back a year worth putting between 650 to 1000 people in financial jeopardy?

These are people, not numbers.

How would you feel about an arbitrary $5000/yr. cut to your income?

How would that make you feel about your employer?

If you worked for a public entity (like the schools or the City or County) how would it make you feel about your community?

Would it make you feel respected to know that your economic wellbeing was being sacrificed for $18 a home?

Is that respect? Is that honoring human dignity? Does that make our community a better place?

I don’t think so. To me its a small price to pay for people to make a decent wage.

Now I’m sure someone out there thinks its totally acceptable to tell these workers that their economic livelihood is worth $18 a home in property tax savings.

I’m sure someone thinks its disrespectful to taxpayers to pay anyone 1¢ more than they have to.

I’m sure that someone thinks the private sector can do this job better, and that custodial work isn’t part of the “core functions” of the school district

But it is.

Providing a safe, clean place for children to learn is absolutely a core function of the school district. And paying people a respectful wage for their labor and their loyalty is something that should be a core belief of any community that isn’t diving into a pit of “eating their own”.

That’s what this has become. From the School Board, the City Council, and on up the tree of government to the Federal level. That doesn’t mean we can’t trim unnecessary things, it means we have to do it in a smart way.

Starting with low income workers in a town with a 26% poverty rate isn’t it…unless you want more poverty.

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I won’t hold my breath, but I hope the members of the school board will respect the people who have worked for the district enough to hold firm on their incomes. I don’t believe they will.

What I see is a group of people who are terrified a Judge might disapprove of their decisions and appoint someone to watch over them.

This decision won’t have a great impact on whether that happens or not.

This decision isn’t the hardest decision the school board has put off. But it might as well be. Because if this decision is indicative of the level of thought the School Board is putting into planning the next school year, we’re in a lot more trouble than even the folks wanting their own schools think we are.