The state comptroller on Monday issued a stern warning to Memphis officials about the city’s fiscal condition, reports the Commercial Appeal. He focused concerns on a debt refinance plan the city wants to undertake that defers debt to about 2025.
State Comptroller Justin P. Wilson called such fiscal moves “scoop and toss” because they defer debt years down the road.
The comptroller late Monday released copies of a letter and financial report he sent to Mayor A C Wharton and City Council members earlier in the day that reveal officials have been in discussions with the state’s chief fiscal compliance officer for several weeks about Memphis finances.
In the letter, Wilson outlined several corrective measures the city must take before he will sign off on the municipal bond refunding plan — designed to defer obligations to 2025 and free up more cash flow for current obligations — but Wilson said those steps are more technical in nature and the city needs to address its underlying fiscal problems of low fund reserves, a declining tax base and budgetary imbalance.
In the letter, the comptroller wrote that “It is critical that Memphis change its course to reverse” those trends. “Tough decisions are necessary to change that direction. Failure to make the decisions could have very serious consequences. I pledge our support.”
In a brief interview later, Wilson said that the city’s “financial reporting is good. And Mayor Wharton to his credit recognizes they have a serious problem that if not corrected, could lead to real disaster. I think they’ve recognized this can’t go on forever. Apparently this has been building up for a long period of time.