By Ryan Poe
Memphis is officially opposing a measure to eliminate the state’s controversial income tax on stock dividends and certain interest income, but Mayor Jim Strickland said the city could drop its opposition — if the state makes up the millions of dollars in lost city revenue.
Strickland, who briefed lawmakers on the city’s legislative priorities Monday at the Pink Palace Museum, said the city can’t afford to lose the revenue — about $14.8 million last fiscal year.
But if state Sen. Brian Kelsey, a Republican who represents much of East Memphis and Germantown, is able to make up the funding as he plans to do, that could change, Strickland said.
Kelsey, the sponsor of the bill to eliminate the Hall income tax, said he already filed an amendment with the Finance Committee to repay cities the five-year average that they received from the tax.
He said the amendment would give Memphis a little more than $14.8 million in revenue in the fiscal year after the bill’s approval. The Hall tax generated $303 million statewide in the 2014-15 fiscal year.
The state ended the fiscal year with $606 million more in revenue than was budgeted, which Kelsey said could be tapped to reimburse cities.
If that happens, Strickland said he could remove opposition to the Hall income tax repeal from the city’s list of legislative priorities in 2016. But he remained skeptical about whether the state could keep writing the reimbursement checks.
“I don’t know all the details of it, but if we could get the $14-$15 million somehow, that would be fine,” he said. “I don’t know you all’s budget situation. I don’t know how long that promise could be made.”
Strickland said he needed the revenue to cover the city’s annual pension contribution and to hire and retain police officers and firefighters.
“I will do everything in my power to cut out the waste in the city budget, but a $14 million hit, out of a $650 million budget, would be pretty big, and very difficult to overcome,” he said.
Gov. Bill Haslam and others have come out against Kelsey’s proposal because of the revenue loss to wcities and the state, but Rep. G.A. Hardaway said he doesn’t think the bill — even after the change — will be seriously discussed.
“I don’t see a lot of promise in that,” Hardaway said of Kelsey winning over new supporters for his bill.
Opposition to the Hall tax repeal was one of six priorities for the city, although Strickland said the list was compiled by the previous administration, and could change in upcoming months.
The city grouped several legislative goals under the heading “criminal law,” which was a focus of Strickland’s on the campaign trail. The city wants to stiffen penalties for violent criminals, work with local governments to toughen sentencing laws for violent crimes and repeat offenders, ask for longer prison time for crimes involving stolen guns, work to make multiple domestic violence offenses felonies instead of misdemeanors, and seek a state law to allow police officers to obtain protection orders at the scenes of domestic violence offenses.
The other priorities were that lawmakers amend the guns-in-parks law to clarify that allowing guns at public events is a “serious threat to public safety,” set open records rules for police body and dash camera videos; increase public library funds and fund anti-blight demolitions.
Rep. Curry Todd, R-Collierville, said the current guns-in-parks law, which he supported, already makes clear that guns aren’t allowed at public events.
In addition to the city’s priorities, Strickland and Shelby County Mayor Mark Luttrell presented lawmakers five pages of shared priorities. The one that drew the most attention was the recommendation that lawmakers allow cities to issue “social impact bonds” to fund experimental programs like Shelby County’s pilot project to reduce prison re-entries for some offenders. The county would pay back investors with the savings created by the project.
Luttrell said a handful of other cities have used the relatively new financial tool. Even if a program doesn’t work out — as in the case of a program to reduce the recidivism rate at Rikers Island in New York City — investors shoulder the risk, not taxpayers.
In addition to the city and county, other local municipalities and groups — like hospitals — presented lawmakers with their legislative agendas.