- (female announcer) Production funding for Behind the Headlines is made possible in part by the WKNO Production Fund, the WKNO Endowment Fund, and by viewers like you, thank you.

- Tax and spending priorities in the county budget, tonight, on Behind the Headlines.

[intense orchestral music] I am Eric Barnes with The Daily Memphian.

Thanks for joining us.

I am joined tonight by county mayor, Lee Harris.

Thanks for being here again.

- Sure, absolutely.

- Erika Sugarmon, County Commissioner from District 12, thank you for being here.

- Thank you for having me.

- Along with Bill Dries, reporter with The Daily Memphian.

We're moving towards a budget vote on trying to finalize a budget for the county June 23rd, given the reappraisal year, every four years there's a reappraisal.

The state came back and I think the certified rate went from $3.39 down to $2.69 was the number, Bill's nodding, that was proposed.

You had put forward a budget, Mayor, that was $2.73, so, you know, within that range.

That's kind of the lay of the land.

But let me start with you, Mayor, your priorities for this budget and then we'll dig into all of them.

But give us the quick snap.

- Sure, so one of my priorities is reducing the tax rate.

Right now our tax rate is $3.39.

We've got an opportunity to bring that down.

As you said, I've already proposed a budget that brings it down by 66 cents.

At the same time, Erika Sugarmon has proposed a $40,000 minimum in Shelby County Government.

That's for all full-time employees.

And so getting that done and funded is another priority.

We've got a 3% raise for all of our employees and to get the budget done by June the 30th, that's critically important.

So I think those are kind of the big picture pieces.

We also are hopeful that we'll be able to have paid parental leave and childcare and a host of other things that deliver on some promises we made to the employees.

- You've advocated for the $40,000 minimum.

Would that be taken everyone to salary or that's the hourly rate works out to be 40?

Is that kind of the math?

- Correct, the hourly rate rate would be $20.77, which is based on a study done by MIT, 'cause according to the study in Tennessee, the living wage is $20.77.

So we did a study and the study came back and showed that the employees were underpaid for their work.

And so this would raise the minimum wage to a living wage for employees who were working two jobs.

And some of them even told me they were receiving food stamps.

- Yeah, with the tax rate, which everyone's really focused on, the City actually this week passed its budget and went, the City of Memphis went what?

$2.58 down from $3.19.

All of that is based on the reappraisal.

The state certifies that number.

For somebody whose house value went up, their tax rate has gone down, but what they are meant to pay is the same amount they paid in the past.

So I know there's some pushback, I dunno where you all stand on that, that it's the tax rate is going down.

I mean, that's clear, but the amount that most people are paying in taxes is unchanged at this current proposal.

- That's correct, and so you have a negative correlation.

So for example, when the appraisal value goes up, the tax rates go down.

So initially they're paying the same amount, so it's really not a decrease or increase.

However, if the Commission or the mayor decides they want to raise taxes, which I do not support property tax raises, then that's another issue.

But right now with the certified tax rates, it's going to equate to same level as previous years.

- Okay.

- That's correct.

- And I don't support raising the tax rate either.

- Okay.

- The tax rate is currently $3.39 and I support cutting it at least 66 cents.

It's at the discretion of the Commission, how much to cut it.

And the certified process is really about determining whether or not a super majority vote is required by the Commission.

The Commission is fully empowered to set the tax rate wherever it wants, $3.39 or anywhere else.

- And before we go to Bill, the full operating budget is what, give or take?

- It's at $1.7 billion give or take.

- And then the capital budget is?

- Well, right now it's $150 million.

- Okay, all right, Bill?

- Mayor, there's a 4 cent difference though between the state certified rate and what you have proposed.

So technically that's a tax hike.

- No, it's not, the state certified rate is not a thing.

Again, that is only a procedure so that you can be able to compare the tax rate from one year to the next in a reappraisal year.

In other words, the County Commission is required to have a super majority vote requirement if they generate more than a certain amount of revenue.

And in order to know when that super majority requirement kicks in, you've gotta be able to compare last year's tax rate to this year's tax rate.

And that's where the certified process comes in.

There's no such thing as windfall.

That's not mentioned in any law.

There's no such thing as truth in taxation, that's not mentioned in any law.

The certified process is about notice and being able to compare one year to the last year.

- But at least theoretically, the state certified rate is a rate that guarantees the county gets the same amount of revenue.

If the county property tax rate is 4 cents over that certified rate, county government's getting more revenue.

- Again, that's mythology.

There is no evidence of any of that anywhere.

In fact, in my view of the economy, cutting the tax rate produces more revenue because the further you cut the tax rate, the more economic investment and economic activity you generate.

And so in my view, cutting the rate, which is what I've proposed, generates economic activity, particularly investment in real estate and more revenue.

- And so your proposed tax rate stands at $2.73?

- That's what I proposed.

- That's what you're recommending, all right.

Commissioner Sugarmon, there's also a $5 increase in the wheel tax that is part of this budget.

You've called that a regressive tax in the past.

- Can I explain that real quickly?

- Sure.

- So progressive taxation is based on income or your ability to pay.

So the more money you make, the more you pay in taxes, such as a property tax.

A wheel tax as a flat rate where everybody pays the same thing regardless, like, you know, sales tax for example.

And so the wheel tax has gone up and so I do not support an increase of $5 or any dollar amount on the wheel tax because it's regressive.

You already had an increase on the city side and the wheel tax and people are being taxed to death.

So let me say this for the record, I am socially liberal, okay?

But fiscally conservative.

So I do not support an increase in taxation whatsoever.

Especially now that, you know, the federal government is making so many cuts, people are suffering.

And one thing I wanna say about the Commission, if you look at the ordinances and resolutions that we passed, they're to support disadvantaged and marginalized people and now we're going to really support affordable housing and I'm gonna have a meeting with the mayor later on, hopefully next week or this week about that.

But we have to have affordable housing.

People are housing insecure, food insecure, and it's no, you know, you know, that's why crime's going up, you know?

And as people become more and more desperate, crime's gonna continue to go up.

So we have to deal with poverty, we have to deal with the shortage of housing.

And I believe the housing, last time I looked, was we're short 40,000 units in housing.

That's huge.

Then also we lead the nation as far as people being evicted from their homes or their apartments.

That's a huge issue, those are huge issues.

- I think you came out, Mayor Harris, with Mayor Paul Young, City Mayor Paul Young and others to talk about this idea of using the County Land Bank.

So properties that, you know, they go into tax delinquency and end up owned by the county, trying to jumpstart getting those properties back into circulation and use, in part because of this big gap in affordable housing.

Do you want to talk about that?

I mean, is that a proposal you think is on the front burner?

Is it a kind of more over time something that you would hope that the county and city move toward?

- Well, the land bank, I think the most recent innovation in terms of the land bank properties is on the city side.

I think in the last couple years, the city has created their own land bank.

And so they're able to reorient properties and put them in a position for development.

Obviously the county controls almost all of the properties that end up in foreclosure as a result of taxation.

But we are great partners with the city.

And so to the extent the City Land Lank identifies properties that it wants to take out of the County Land Bank, we formulated a good relationship over these last couple years where the city can get access to any of those properties.

And so that's what's going on with land bank right now.

- Commissioner mentioned crime that- - Oh, can I real quickly?

- Yeah, yeah.

- Okay, and so I'm sure that Mayor doesn't know that, he may know this, but we have been working on the Commission as well as City Council an ordinance.

Have you heard of the Homestead Ordinance?

Well, we kind of revised that.

And so it's now called Building Homes Ordinance.

MR supports it, the City Council support it, and most of the commissioners support it.

And basically what it does is allows developers to come in and to develop homes.

Because right now they're saying, you know, especially with areas that have a huge number of land bank parcels, like in District 8, they said we cannot go in there because there aren't any comparables.

And so we're working on an ordinance and it should pass the next reading on the Commission as well as on the city side.

And then I know, understand that there's some City Council members who are already trying to support developers to come in and develop.

And I'm gonna be reaching out to the mayor, so on the county side we can do the same thing.

- So that would basically take those parcels of land, especially in District 8, which I think has the largest number of parcels in the land bank.

And those parcels would go from the land bank to the Division of Planning and Development for use as affordable housing?

- That is correct.

And having said that, if they do not develop those parcels, there is a claw back.

So we'll get them back.

So, so many times people or individuals or organizations or nonprofits will take these parcels and do nothing with it.

And so this ensures that there is a claw back.

Also, they're required to go out into the community, what type of community do y'all want?

You know, do you wanna a mixed-type neighborhoods or community or what have you.

So we're actually going out into the community to see what people want in their areas.

But having said that, Shelby County, and I'm so proud of Shelby County, we are one of five counties across the nation that were selected by NACo, NACo, the National Association of Counties to do a project.

And this is part of the project and what we're doing is we're going to areas and we trying to find out what are the barriers, so that we can figure out a way to go around those barriers or correct those barriers, whether zoning or what have you.

And that's how we came up with the Building Homes Ordinance.

And so we're working with NACo as well as we've been working with the city, nonprofits, et cetera, across the county for about almost a year now.

And so yes, the idea is to provide affordable housing or investors, apartments, et cetera, whatever the community wants.

- You mentioned crime.

I want to circle to the proposal for a new jail.

More and more elected officials at least have been coming forward and saying, "Look, the jail is outdated.

"The locks were broken.

"There's all this deferred maintenance.

It's a 50-something year old building."

Most people have said it's gonna be at least $1 billion, it's gonna take at least 10 years.

And a study came out, I think the Commission had hired or maybe the mayor's office to propose some ideas around a new jail that could be out near Shelby Farms where there are other county buildings, the old Firestone site.

Mayor Harris, you've said you don't think that should be a priority right now in terms of spending money on a new jail, why?

- Yeah, that's exactly right.

I think we need to stop the pipeline of individuals who end up in jail.

And the best way you can do that is invest in education.

And so our schools are far older than the jails.

And so we've got kids that are in classrooms where the roofs are literally caving in on them.

We've got HVAC systems that don't work.

So kids are too hot or too cold, can't focus on learning, can't raise the window and other problems.

And so I think we have a responsibility, in Shelby County government to first prioritize the kids and families and schools.

And the jail, I mean, I think that it is a priority, but it's not as important as the schools.

- And Commissioner Sugarmon, your take on a new jail, and it- - We definitely new a new jail.

Having said that, the state had a proposal, a one cent tax increase on sales tax for eight years to build a jail.

It failed.

I don't know if you all visited the jail.

It's horrible, it is horrible.

- I thankfully have not.

- Oh, please do and try the food too.

It's horrible!

And so saying that we have a responsibility.

You know, every time you turn around, you're hearing about a death in the jail.

And remember, these are people who are waiting to be adjudicated.

They have not gone through the trial and been found guilty or anything.

So again, while we're holding these individuals, thirty percent have mental health issues.

And so there's been exasperated and they cannot go before the judge until they're stabilized.

- So, and you would propose, I mean, would you like to see county funded, given the state didn't pass that law to increase the sales tax toward it, I mean, would you like to prioritize it in the short term for county budget?

- Well, to Mayor's point, you know, I think that right now we're strapped.

And so I would love to work with the state next year as far as general assembly and talking to 'em, sitting down talking, why?

Because that was a bipartisan issue.

- Yeah, right, right.

- So yes.

- One more from me here real quick, because we talked about schools and we've got tons, tons of turmoil and changeover at the schools and lots of kind of uncertainty about what the state might do.

But one thing that seems clear over the last couple of administrations is, and most people it seems like I talked to, this is not scientific understand there are many schools that really are gonna have to be closed, that the facilities are too old to repair.

They don't have any, they have a very small, if any population of students in them.

What would you, Mayor, like to see in terms of school closures, which can be very hard on communities and very hard on neighborhoods, but at some point some will say you gotta pull the bandaid off and close a pretty significant number of schools because the amount, the billions of dollars, Laura Testino on our staff has done analysis of this on Daily Memphian, they're not gonna be repaired.

And again, there's not a need for many of them in certain areas.

- Well, I think that's the wrong way to talk about that issue.

I think instead we should be talking about investing in new school construction and bringing new product to neighborhoods.

And so for too long we have neglected neighborhoods and under-invested in them.

And so one of the ways that governments can reactivate a neighborhood and bring new families into a neighborhood that has been devastated is to build more schools.

And so I think it's not so much a closure of old schools that are dilapidated; it's making sure that all kids get a first-class learning environment.

And that means investing in new schools.

- But don't some have to, I mean, otherwise they're gonna sit blighted.

There are ones that are empty.

They are harming the neighborhood in the sense that they are sources of criminal activity, people pulling the pipes out, you know, you've got homeless people.

I mean, I'm not saying that's every school, but at some point, certain schools that are underutilized, don't they have to be closed and torn down?

- I am totally fine with old schools where there are students, you know, us moving into new schools with students.

- Okay.

- I mean, I think that's the Frayser Project.

We'll get Trezevant students to move into the new Frayser build and Trezevant, we'll use that for something else.

The schools that are currently empty, I think there are several schools that are currently empty.

I'm totally for and have pushed for Memphis-Shelby County School system to give those properties to the city and county.

And some of those deals have worked out and we need see more deals like that.

- And other uses by either private developers- - Absolutely, 100% - Let me bring Bill in, about 10 minutes left in the show.

- Commissioner Sugarmon, you are a teacher.

- Yes, sir, 26 years.

- In the Memphis-Shelby County School system.

What do you think about this?

Does the system of schools need to be rethought, reconfigured?

- Yes, I am old school and I think there should be community schools and I would like to work with the superintendent and the school board in the vision.

I do not wanna see these box schools built.

Also, when I talked to the superintendent, we talked about workforce development as far as the CTE program, vocational programs, and he's really focused on that.

I would love to double that as well as the dual enrollment programs.

I'm working with TCAT, I'm working with the correctionals officer, Chief Alexander, et cetera, et cetera.

Because these kids, these young adults need a vocation.

They need a skillset.

We're now have all kinds of construction going on and construction companies saying they're bleeding out because they're having to bring people in from all across the country.

And so we also have an ordinance that we're working on as the workforce development chair.

I've been working on this for several months as well.

And it's a construction apprenticeship program where construction companies can get a certain kind of an advantage in the bidding process.

We haven't figured that part out yet, if they have an apprenticeship program, so we can have a pathway into a viable workforce.

- All right, Mayor Harris, construction is underway now on the new Frayser High School.

Aside from the impact on Frayser, which will be considerable, what kind of effect has that had on kind of opening the gates on new school construction?

- Well, I think the, yeah, the gates are wide open.

I think the new superintendent is very open to new projects.

So we had meetings with his top facilities person recently to talk about a location for the new Cordova, which is kind of hindered a bit.

And we wanna try to get that through the pipeline.

And I think there are other opportunities.

We're gonna do a ribbon cutting in the next several weeks around reorienting the old Vance Middle School.

Of course the superintendent knocked down that facility, the last superintendent knocked down that building.

And so that building is now poised to operate a sports field.

Shelby County government is gonna partner with a nonprofit to create a sports field there.

And we're gonna cut the ribbon on that really, really soon.

So there's a whole lot of opportunities now with the new superintendent and some of the stabilization with the Memphis-Shelby County School system.

And I should also say, just to go back to the detention for a little while.

Remember it's not just the jail.

We also have the penal farm.

And the penal farm is under the administration.

The penal farm is over 100 years old, some of the buildings.

And we're still able to make sure that everyone is safe and that there are programs for rehabilitation and a lot of workforce training programs.

And we're about to build with this with the Commission's help.

We're out to about to build a high school within that campus.

And so here we've got 100-year-old facility, much older than 1980s that we're talking about with the jail that is able to still do the work.

And so I just wanted to make sure we mention that, because again, it's really about prioritizing the work.

And I would prioritize schools, I would put the jails a a little bit below that and I would really focus on the 2026 election, because I think there are gonna be some candidates, and I think Commissioner Sugarmon knows this as well, there can be some candidates that articulate a vision for how to stabilize the jail and stabilize what's going on in the jail.

And I would just ask folks to just listen intently to that because there may be ways to solve some of that problem without spending $1 billion.

- If this budget proposal is approved on the 23rd, becomes the budget for the county, when is work going to start on Regional One Health's new campus?

- So the first part of that process is, of course, land acquisition.

And so the land acquisition has just culminated, I mean, in the last few days because it is very, very tough to put together that number of acreage in the center of our Downtown Medical District.

But we've been able to accomplish that.

And so now we've control vast amounts of land where the old Commercial Appeal building is.

And then from there, there's two years worth of planning in order to have the construction specifications for a first-class academic medical center.

So this will be silent for a while as they go through the very careful technical two years worth of planning.

And so that's where we are as part of the process.

I know there are other ideas on the table, but those other ideas are in effect to close down Regional One such that it no longer exists.

And so the question for this community is if these kind of ideas are gonna continue to be thrown out there, then the question from the community is, do you want to engage in a discussion like that when we're poised to really transform our community, increase the tax revenue over $100 million a year, increase the grants and all the recruitment, all that comes with a new hospital.

Do we want to have a conversation around just stopping and doing nothing?

I think Memphis and Shelby County's done that too much, the do-nothing attitude and I think we should continue.

So planning, two years worth of planning.

- Let me switch gears.

We were talking about investment, is xAI, the city mayor, Paul Young, is out with a op-ed in The Daily Memphian this morning has been recorded on Thursday pretty vigorously and pointedly criticizing the critics of the project saying that it's a good investment for the city and the county and key points in that column too, fourteen million dollars in tax revenue in the first year that would go to the county.

And that number increasing as xAI puts more investment and then moves forward potentially with a second site in Shelby County.

I'll start with you, Commissioner Sugarmon, are you in support of what xAI has done and where it wants to go?

- What I'm not in support of is this cloak and dagger because for example, when xAI came in, they made deals with certain individuals, organizations, et cetera.

They didn't go to the City Council or County Commission or the health department.

And so there's concerns there.

Number two, then also you hear about the pollutants in the environments in a disadvantaged area.

There's some concerns there.

Also, the zoning has not been updated since the 1950s.

So, have been diligent working the ordinances and zoning, things like that.

And they're all in the legal right now to vet, but there needs to be some things in place so that, for example, let's say that the water, the aquifers are damaged or something like that.

There needs to be some type of accountability and oversight.

Right now there's basically nothing.

And so that's my concern.

- Mayor Harris, is it a good investment for Memphis?

- Well, I'll say that I think Erika Sugarmon is right, that the only way to do something about it if there really is public sentiment is to change the rules.

I mean, land use rules is really the place to go.

I mean, the Shelby County land use rules are not necessarily gonna do anything, but obviously City Council has a process for that if you wanted to change something.

I also say for background, because there's a lot of misinformation out there.

I've never met with xAI, I've never met with the Chamber of Commerce about xAI.

So it's impossible to be in a deal when you've never talked to any of them about any of that.

And obviously I don't trust Elon Musk and no one does, but I do trust the health department and I do trust Michelle Taylor.

And so I think the process is gonna work itself out.

- Couple minutes left, Bill.

- Commissioner Sugarmon, how do you think this is going to go?

The budget, speaking of that, is gonna go on the 23rd?

- A long night.

[all laughing] - Do you think the budget will change significantly?

- Yes, there'll be some cuts.

- There will be some cuts?

- Yes.

- Mayor, do you know about those cuts?

I think there's a set of 13 amendments.

That was the last count.

- Well, you've been doing this a long time.

So have I. I don't think there are gonna be any cuts.

So we'll see what's been put on the table.

I don't, you know, all the Commission meetings, obviously everything is voted yes, everything is added to the budget.

So I've never seen anybody cut anything.

I've seen a lot of additions and certainly I think there may have been $75 million worth of additions yesterday or this week by the Commission into the budget, so- - And counting.

[laughing] - So that's $75 million in additions.

So, you know, it's hard for me not to smile when someone talks about cuts.

- Well, and obviously Bill will be covering this throughout the next few weeks.

Let me do this as we have about a minute left here.

You are 13 months we think from ending your, you'll be termed out as county mayor, you've been on City Council, you were up at the State House.

One is, what's next for you?

- Well, we had a lot of big objectives at the beginning of my administration.

So seven big objectives, we've accomplished all of them is things like make Shelby County one of the best places to work.

It's, you know, make access to healthcare.

It's build a high school in Frayser.

So we've accomplished almost all of 'em.

I've got one left, which is Protect Our Aquifer.

So I'm kind of setting my sights on that.

So I've got a another year to make sure that we've made a transformative change, change in terms of protecting our aquifer.

- And will this be the end of your political career?

I mean, you've been in these different offices or are you looking at other offices?

- Oh, I think it's most likely the end.

Although I'm not gonna close the door, anything's possible.

- Okay, and you know, I won't ask you to endorse, it's the time of year where every other day someone's coming out declaring for county mayor.

But for you, you'll be a voter.

You'll be voting for the next county mayor.

What are the kind of criteria that you're gonna emphasize having had been in this office so long?

- Well, I like everyone.

I particularly like Harold Collins.

Obviously I've worked with him closely.

I think he's got the experience and I think he understands all the priorities and the importance of the priorities and continuing them.

And so we'll have to see how it plays out.

It's way too early to say how this is gonna play out.

I've worked with a whole lot of the candidates and I like a lot of them.

- Okay, thank you both for being here.

Appreciate it very much.

Thank you, Bill.

And thank you for joining us.

If you missed any of the show today, you get the full episode at WKNO.org, YouTube, or the Daily Memphian.

You can also download the full podcast to the show wherever you get your podcasts.

Thanks very much and we'll see you next week.

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