The Egregious Overreach

House of Pain
House of Pain
The Tennessee House passed HB779 in a nearly party line vote tonight 68-25.

The bill if approved, would allow as many as 10 previously and lawfully annexed areas of Memphis to petition for a referendum, which if approved by a majority of the voters in the area, would remove them from the City.

I watched the debate from the safety of my home here in Memphis. There was some impassioned debate, especially from Shelby County Representatives Joe Towns and Raumesh Akbari, though others including Larry Miller, G.A. Hardaway spoke against the bill, while Mark White, one of the bills sponsors, spoke for it.

Rep. Raumesh Akbari speaking on her amendment
Rep. Raumesh Akbari speaking on her amendment
While the debate was robust, there are still a bunch of questions that were left unanswered. Notably, whether or not residents who would leave Memphis would be liable for long-term costs associated with annexing their neighborhoods that aren’t included in City debt. Representative Carter, a former General Sessions Judge from Hamilton County, seemed confident that these questions were answered. But when questioned about future refunded debt (debt that cities refinance for lower interest rates or other benefits) Carter was vague, as if he didn’t really understand the question, or perhaps he was purposely trying to avoid the question.

The bill now moves to the Senate where, two of Shelby County’s five members are sponsors.

Egregious Annexation

There were some 17 amendments offered on the bill, only one, that didn’t “make” the bill was approved. This amendment was offered by Minority Leader Fitzhugh.

One amendment sought to remove the word ‘egregious’ from the bill.

Egregious was the word of the night. Rep. Carter used it repeatedly to make a process that for decades had been otherwise routine seem like some kind of assault.

Rep. Carter argued that keeping the word in created a legal standard for the kind of annexation the bill dealt with, and the kind it did not. This all seems unnecessary to me, since the bill spells out exactly what kinds, in fact, which specific annexations were offensive based on when and where they happened.

I didn’t know if egregious had some kind of special meaning in a legal sense, so I looked it up on FindLaw. Here’s their definition:

extremely and conspicuously bad.

That doesn’t sound like a rock solid legal foothold to me. I mean, who determines what’s a ‘bad’ annexation?

We’ll have to see what happens in the Senate with this bill. Hopefully, it will be held up, but I’m not holding my breath.

Falsehoods Abound

Rep. Curry Todd telling the floor of the House that Memphis runs a deficit
Rep. Curry Todd telling the floor of the House that Memphis runs a deficit
One of the things that characterized the debate on the actual bill is a falsehood about budget deficits run by the City of Memphis that was either first stated by Curry Todd or Rep. Carter.

The allegation was that Memphis has been running a 70 to 90 million dollar deficit every year, and paying for it with additional borrowing.

Now, I’ll be the first to admit that I haven’t been following Memphis’ budget hearings as closely as I once did in the past few years, but I’m pretty damn sure that if there had been a deficit that amounted to 10% to 14% of the City budget, I’d have heard about it.

The City has refinanced a great deal of debt over the past few years, taking advantage of their good credit rating, high values, and low interest rates. You can see all of Memphis’ General Obligation Debt here.

It may be that the City has used some of the savings, or even the high premiums that were paid by bondholders above and beyond the refinanced debt for operations, but that’s not borrowing to keep the lights on. That’s borrowing to get rid of old debt and coming out of it ahead.

I’m still not certain that this is what happened, but I know that doesn’t make it ‘deficit spending’, since, you know, Memphis has to have a balanced budget each year by state law.

Questioning the Money

Rep. Carter also questioned Memphis Mayor Jim Strickland’s numbers on the overall financial impact of the bill.

Carter says the City only mentioned $27 million dollars of financial impact in previous discussions.

That may be, but one has to wonder what version of the bill those numbers came from. See, this bill came before the House last year. At that time, the number of areas that could vote to de-annex was less, which means less financial impact.

I know from talking to people in and around the debate, that until very recently, the areas that were to be included stuck with last year’s bill. Its only in the last few days that anyone’s known about the new expanded version of the bill according to these sources.

So perhaps those numbers came from a prior version of the bill and Rep. Carter is ‘misremembering’. Or maybe he’s just following Rep. Todd’s lead and lying outright.

I can’t say.

Conclusion

Now it seems like we’ll just have to wait on the Senate to act…or perhaps, not act.

Earlier today, Governor Haslam questioned the constitutionality of the bill as well as what the impact might be on cities like Memphis, and Knoxville, where he served as Mayor.

All of that remains to be seen.

There’s one thing that’s sure. If this bill gets passed, it represents a two decade reach back in public policy. There’s no question its not fair, and a lot of question as to how constitutional it is.

Remember, two areas recently annexed into the city had been fighting their annexation in court, and lost. The courts have consistently upheld a city’s right to annex based on the rules of the game at the time. One has to wonder if those rulings will be overturned when this is litigated.

If so, no city in Tennessee is safe to plan for its future. The whims of the Tennessee General Assembly will be too great for any city to bear. And that will have a negative impact on their citizens, their ability to grow naturally, and their financial health.

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