With non-essential businesses shut down in Memphis, the city is facing a major shortfall in sales tax revenue—the second largest source of income for the city. On Tuesday, Mayor Jim Strickland presented a budget to the City Council taking this into account. The Daily Memphian’s Bill Dries spoke to WKNO about the city's finances in a time of COVID-19.
WKNO: Bill, let’s start with some sticker shock, what kind of shortfall is the city facing?
BD: It is an estimated $80 million in lost revenue overall [for the fiscal year that begins July 1]. Now, that’s from sales tax and other revenue that you might not be aware of unless you just follow the budget closely, including the mixed-drink tax, the beer sales tax—all revenue streams directly affected by the COVID shutdown of non-essential businesses.
WKNO: So keeping this in mind, the mayor sort of presented a budget on Tuesday and sort of didn’t. Explain what happened.
BD: Well, there’s still uncertainty. So he explained three possible budgets here. The first and the most dire is a $630 million city budget. That's [with] the $80 million in lost revenue factored in that would lead to significant cuts to the city’s core services.
The second: a $711 million budget—same as this year. This assumes that the city receives some federal and state relief money from the federal CARES act.
The third option is what is called a continuation budget. In this scenario, the city keeps operating probably through July and August with the current city budget in place until it becomes clear if the federal government is going to offer some more money to local governments,
WKNO: It’s unclear what kind of federal help the city might receive?
BD: Yes, Strickland says the city will get some federal aid, but there’s uncertainty about just how it can be used.
WKNO: So we don’t know if that money is just for COVID-19 related expenses or whether the city can use it for say, lost revenue?
BD: The city is unsure, but there is hope that Congress will take up a second CARES act next month when they go back to D.C. There could be more federal relief specifically for cities in that round.
WKNO: Did the mayor say what cuts will be made if the aid doesn’t come through?
BD: No, he's not saying what specifically is on the table. What he did say is that police and fire are the priorities at the top of the list of what stays, followed by solid waste and sewers.
WKNO: There are some things that are certain though, right?
BD: I wouldn’t look for pay raises like we saw last year. There is already a hiring freeze for non-public safety jobs in the city.
You can read Bill Dries' full coverage of the budget on the Daily Memphian.