Wharton: Memphis is not Detroit - FOX13 News, WHBQ FOX 13

Wharton: Memphis is not Detroit

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Matt Gerien / FOX13 News Matt Gerien / FOX13 News
DOWNTOWN MEMPHIS, Tenn. (FOX13) -

As Memphis deals with its own budget challenges some are saying the Bluff City is the next Detroit.

Economists say that's not the case.

Residents worry if bankruptcy will better Detroit
http://www.myfoxmemphis.com/story/22881927/long-suffering-detroit-finally-turns-to-bankruptcy

A day after the Motor City filed for bankruptcy Mayor A C Wharton called a city hall news conference to take the issue head on. He said any suggestion that Memphis is headed down the same road as Detroit is off base.

Mayor Wharton says the evidence doesn't support the claim and economists FOX13 News talked to agree. They say Memphis has a solid economic base and it's affordable.
 
Here's the biggest difference, according to Mayor Wharton. He says city leaders know there are fiscal issues ahead and they're addressing them. During this year's budget talks, the Tennessee State Comptroller sent the city a letter urging leaders to get the fiscal situation under control.
 
Justin Wilson said the debt needed to be paid down, and city reserves need to be built up. When the council passed the budget in June they raised the tax rate, and made cuts to services.

Mayor Wharton said those moves show Memphis leaders are on top of this and the Bluff City is not the next Motown.

"We've shown we're willing to step up and take the tough medicine as opposed to just inevitably putting our heads in the sand and saying, 'No! What challenge?,'" the mayor said. ""We know there are challenges out there."

Mr. Wharton also outlined changes that Memphis is making to the city's pension program, things like the age requirement, the contribution levels from employees and the city and the unions agreed to form a joint committee to review an explore any additional changes.

But the city's pension plan is about 75 percent funded, which the mayor agrees with. He also outlined other areas of difference, he says Memphis still has a strong economy that's not dependent on one sector.
 
Detroit has about 50,000 more residents than Memphis, but its city budget was about five times larger than Memphis the mayor's office said.

Bottom line, Mayor Wharton said these are two different situations and he says the people who are making the comparisons aren't helping the situation.

Points Mayor Wharton made:
        

  • Although slightly below the national average (30.9%), we have twice the percentage of citizens with Bachelor's degrees in Memphis (Memphis -26% versus Detroit's 12.2%).                                                                                                         
  • Detroit currently has only about 50,000 more citizens than we do in Memphis, but their budget for city government is about 5 times the size of Memphis' budget. For instance, they have over 13,000 city employees compared to our 7,000 or so employees.
  • The city's pension plan is 74.4% funded as of our latest actuarial valuation date.
  • As of the end of FY2012, Detroit's rainy day fund balance was -12.9% of its budget compared to 12.6% for the City of Memphis. Additionally, a story that may have gotten overlooked in yesterday's big news on Detroit filing bankruptcy (I just received an email that a judge has stepped in to call this filing unconstitutional) is the fact that Chicago just had its credit rating downgraded by Moody's.  One quote mentioned the "formidable legal and political barrier to pension reform."
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