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A Budget of Resurgence

A Budget of Resurgence

Mayor Jim Strickland
Presentation to the Memphis City Council, April 25, 2023

Thank you, Chairman Jones, and members of the Council.
Each year at this time for the last seven years, I have come to this body to present the City’s proposed operating and CIP budgets for the coming year. This will be last time I do that, and I wanted to take a moment to thank you for the many years of partnership and collaboration. We have faced some difficult times, which required difficult decisions and

difficult financial choices. But through it all, we have persevered, and the City of Memphis continues to make progress and gain ground, not only in our employment and tourism levels, but also in significant capital investments in every neighborhood across this great City.
Each budget cycle, I try to title my presentation to reflect the status of our city and its government operations.
In FY 2020 – it was a Budget to Accelerate Our Momentum – it included a 3% pay increase for public safety employees, and a 1% increase for all other employees, an increase in funding for the City’s youth, and funding for a new Frayser Library and funding for a new fire station in Whitehaven.
In FY21 – it was a Budget of Resiliency, which occurred at the beginning of the pandemic and all the uncertainties

that surrounded our City: uncertainties regarding our operations, our employees, and our Citizens. It was the year of CARES Act funding, but a tightening of the belt for expenditures for City operations. It also included the planning and onset of the revolutionary project that became known as “Accelerate Memphis”. The execution of this transformative program also brought about the issuance of the first social bonds in the state of Tennessee.
FY22 was a Budget to Stabilize. Together we developed a budget that was designed to navigate the pandemic and provided a unified approach to limited increases in the operating budget while planning and executing on unprecedented federal funding under the American Rescue Plan Act. Even amid our stabilization, we provided a 2% increase to MPD, and a 6% commitment to MFD (3% for two

years). We also worked in collaboration with the associations to design a program for a 9% retention bonus for police officers and fire fighters through funding provided by the Public Safety Tax Referendum. Because of the significant growth of the local sales tax dedicated to this Fund, it was determined that the program had ample and sufficient funding to promote a five-year public safety employee retention program and provide secured funding for Pre-K through 2027. With ARPA funds, we invested in our youth by expanding Boys & Girls Clubs from one high school to 11 and creating a program to connect opportunity youth (those youth aged 16-24 not in school and not employed) to all the great career opportunities that exist in Memphis. Also with ARPA funds, we expanded our second chance programs to give those adults who have stumbled in

life an opportunity for a good paying career. Bottomline, in the midst of the pandemic, we offered specific programs and hope in a time of despair.
Last fiscal year I presented a budget titled A Budget of Renewal. We were able to take a look back at how we operated through the pandemic, and for the first time in a couple of years take a look forward with actions that surpassed “survival” and “stabilization”. The budget revenue increased as we continued to reap the benefit of the ARPA funds, the substantial increase in revenues from sales tax, and a return to more “normalized’ post-pandemic operations across our City. We completed the 3% commitment to MFD and initiated a 10% pay increase commitment for police officers (5% in FY23 and 5% in FY24), provided for a 2% increase for the general

employees, and a 1% Cost of Living Adjustment for our retirees.
We also initiated a financial commitment for tackling blight caused by illegal dumping and, after decades of discussion, added a dedicated funding source to MATA for the first time ever by the creation of a Transit and Mobility Special Revenue Fund. When I took office with some of you in 2016, funding for MATA was a little more than $23 million. We knew this was insufficient. Over the years and in partnership with city council, we increased this funding by 43 percent to almost $33.3 million in FY23.
My proposal to you for FY24 is $33.4, which is a 45% in eight years and when you include CIP dollars, the increase is 48%. This is the largest increase in MATA history and the largest percentage increase of any city division.

In the FY23 CIP budget, we dedicated funding to our Capital Improvement Program that allowed us to maintain our basic core functions, but also align with Accelerate Memphis, ARPA, and one-time use of fund balance to promote impactful continued economic and community development. We began delivery of a new Lester Community Center, a renovated Audubon Park and Audubon Golf Course, the Harbor Docks project, and the architectural planning and design for a long overdue Mt. Moriah Police Precinct.
Together we have accomplished this and so much more, and to date, we have achieved these goals all without a property tax increase. And the final budget I present does not include an increase in property taxes to be paid by our citizens.

Today, I am presenting to you an operating budget of approximately $792 million. The $42 million increase is primarily possible due to growth in the Memphis economy, growth in sales taxes, a moderate increase in interest on investments, and use of savings from the last few years put in assigned reserves to pay for the 2023 city elections.
We are prepared to meet the second 5% pay increase for our police officers agreed to last year, and a 5% increase for our firefighters, both in cooperation with the public safety employee associations. Also included in my proposed budget are the Council initiated increases from last year for some of the City’s other associations. I am also proposing a 2% increase for the general employees. In addition, we experienced a $2.5 million increase in our pension costs,

called the Actuarially Determined Contribution (ADC), and a $6 million increase in the employer healthcare premiums. Here’s a quick summary of those expenditures for you:

5% MPD $9,130,000
5% MFD $7,209,000
Crafts & Other Assn $1,500,000
2% Non-represented $2,200,000
ADC $2,500,000
Employee Healthcare $6,000,000
That is $28.4 million just in personnel cost.

As you know, providing our young people with meaningful activities when they are not in school is one of the determining factors between them choosing the wrong path or the right one in life. That’s why this year’s budget

• Continues our increased programming at libraries and community centers, which doubled youth attendance before the pandemic and is increasing since the pandemic, but we have still not reached those earlier numbers
• Continues Play Your Park where employees are assigned to parks (15 for FY23 and 20 for FY24) all summer to work with children on activities
• Continues or summer jobs program, MPLOY, which has doubled its opportunities to 2,000 teens
• Expands our summer camp enrollment by 33% (from 1,500 to 2,000 – still free of charge)
• Continues our summer camp field trip program

• Almost doubles our Family Fun Nights offerings (four nights to seven nights) and adds capacity for another 3,000 attendees
• Expands the TeenFest to a larger venue with a headliner and increased prize offerings (expected crowd of up to 5,000)
• Offers scholarships to the Nike Junior Golf Camp
• Continues to offer free golf for any Memphis resident 17
and under (greens fees)
• Increases the number of sites for summer swimming
from seven to 10 (depending on lifeguard availability).
• Provides four Movies in the Park
• Host more than 5,000 youth and families at the second
annual Liberty for All Fourth of July Fireworks Show at Liberty Park

As you are very keenly aware, Memphis like many other large cities, is experiencing unprecedented challenges in recruiting and retaining talent for public safety. We have worked tirelessly to develop new and innovate methods and enticements for recruitment and retainment. And it seems that our steps forward are met with an increased competition from other agencies for talent.
Even with a two-year commitment of a total 10% pay increase, it is difficult for us to stay competitive in base salaries for police officers. Likewise with a two-year commitment of a 6% pay increase for firefighters, and a 5% increase for FY24, we also find it difficult to stay competitive in base salaries. Bottomline, even with those increases, we do not have the highest salaries in our area.

But, when you count the 9% retention bonus, our police officers and firefighters are the highest compensated
To remain competitive and gain ground on that issue, I have collaborated with our partners at MPA and IAFF to devise a plan that we believe collectively will give Memphis the much-needed enhancement to the base salaries for our police officers and fire fighters.
We are collectively and jointly proposing, with the State Comptrollers approval, to convert the current 9% police and fire two- to five-year retention bonuses to a permanent salary increase. Remember, the 9% retention bonus is being funded by the Public Safety Sales Tax referendum passed by the Associations in 2019. The public voted for this sales tax increase to help recruit and retain these public safety employees. We are confident that based on the revenue

trends for the Public Safety Tax Referendum Fund, that this permanent change in classification is not only sustainable but will also provide a necessary and essential element to recruitment and retention of public safety employees.
If executed, it would bring a 14% base salary increase for these employees on July 1, and for the first time in many years, Memphis city police officers and firefighters would have the highest salaries in the area.
In addition, as we previously announced, we have collectively and jointly agreed that the funding within the Referendum offers the ability for a police officer or a firefighter to choose his or her desired participation between the 1978 Pension Plan or the 2016 Hybrid Pension Plan.

These actions positively address one of this City’s top priority needs for combating crime – qualified and fully staffed public safety departments.
With respect to the Capital Improvement Program, we have continued to provide a CIP budget that aligns with and supports our capital needs for successful improved operations and one that continues to promote economic and community development.
For FY24, I am proposing that we remain vigilant toward our budget policy constraints, and that we hold steady to work within the parameters of our current debt funding ability. To that end, I am again proposing a CIP Budget of $96 million.
This budget maintains the basic funding for operations and coverlines; It has been structured to accommodate the

architect design and engineering for a new Raines Station Precinct, a new library to replace the old Levi Branch Library, as well as a commitment to the Whitehaven STEM project, and the Red Zone (Opportunity Zone).
I am also proposing a five-year public safety initiative that bundles hardware, software, accessories, equipment, and training programs that are designed to equip officers and the public with the solutions needed to address compliance, safety, and transparency. This solution would provide new Body-worn cameras for all officers (the ones used currently are now almost eight years old), automatic sensors, complete in-car camera systems, and outfitted camera and recording systems for every interview room— all coordinated with the Real-Time Crime Center.

This is a $55 million five-year investment in the future of law enforcement, public safety, and transparency in field operations. MPD will provide full details of this initiative during its CIP budget presentation.
In preparation of the much-anticipated debt cliff of FY26, I have commissioned my Team to develop a strategic and long-range capital plan for the City. Divisions have been working with the Office of Planning and Development and outside consultants to perform building and capital assessments for all assets within our City.
This plan is similar in nature to the Memphis 3.0 Plan in that it will take into consideration the current status and assessment of City assets, with a systematic forecasting plan that will enable the City to move forward with new investments, prioritized renovations, and the development

of a fully funded maintenance plan to ensure the safety and longevity of its assets and facilities. This plan will be developed to ensure placement of adequate resources within operational funds and capital funds.
You have probably heard me state that I will be jealous of the next Mayor that will be in office when the debt cliff arrives (as a reminder, the debt cliff will result in around $50 million more in annual operating funds to spend beginning in FY27), and I am sure that some of you join me in that sentiment. You have been here through the tough economic and financial times; you have joined me in making hard and sometimes unpopular decisions with the limited resources that were available to us. But we should take pride in the fact that we have maintained responsible budgets, held our capital spending within debt capacity limits, improved our

bond ratings, progressively and now fully funded our annual pension costs, and we have set the stage for our future generations to gain from our dedicated work, commitment, and sacrifice.
We have treated our employees with the respect and gratitude they deserve. We have provided our Citizens with an improvement in basic services and an expansion of amenities.
We have worked hard to balance the limited resources we have with the almost unlimited needs of our employees, our programs, and our community, and I believe we have left it better than we found it.
Since 2016 (and not counting my proposed FY24 budget):

• MPD salaries have increased between 16.75% and 18.75%
• MFD salaries have increased between 13.5% and 16%
• General employee salaries have received a 7.5% increase
• We have completed a $200 million renovation to our Convention Center
• We have implemented and are executing on the $200 million Accelerate Memphis project with investments in every neighborhood across our city
• We have increased paving. $82.1 was spent on paving during the previous seven years before we took office in 2016. Over the last seven years, we have spent $133 million—that’s a 62% increase.

• We created a dedicated funding source to MATA
• We adopted Memphis 3.0 – the first comprehensive
City plan in over 40 years
• We have built new libraries, community centers,
and fire stations
• We have expanded our park and library operations
• We created Liberty Park – and just opened the $70
million Memphis Sports and Event Center
• We have significantly expanded programs for the
youth of our communities
• We created and funded a universal needs Pre-K
• And, we worked to receive the largest single one-
time cash investment from the State to a public

entity ($350 million) in our state’s history for our
stadium renovations project
We have left it better than we found it in countless
I appreciate each and every one of you, and the budget I
am proposing is intended to expand on the progress that we have made and ensure the continued fiscal accountability of our operations. It has been my honor and pleasure to serve the last seven years as the Mayor of Memphis. We look forward to the budget hearings.
Thank you for your consideration and thank you for your service to our City.