(WMC-TV) - It all started in late May when Tennessee Comptroller of the Treasurer Justin Wilson sent a warning letter to the City of Memphis warning city leaders that the Bluff City was headed toward a financial meltdown.
Comptroller Wilson warned the city that if it did not make emergency adjustments to its financial matters, the state would step in and take over the city's finances, which would result in tax increases.
The comptroller sent three letters to city leaders warning of a state financial takeover.
"We want the people of Memphis to solve Memphis' own problems," Wilson said in an exclusive interview with Action News 5's Justin Hanson.
The city council ultimately passed a budget, but Comptroller Wilson says the city is not out of financial danger.
"Don't think they're out of the woods yet. They're not. They have a continuing number of problems," he said.
Wilson says the biggest hurdles were balancing the budget and meeting the city's debt obligations.
He calls the city council's passage of the budget a substantial accomplishment, but he says there is a lot more work that needs to be done.
"There are long term obligations as in pensions, deferred employee benefits, and those sort of things that need to be addressed," the comptroller added.
Wilson found negative balances in four funds dating as far back as 19 years.
Council members were shocked to learn about these financial problems from the state.
Memphis Mayor AC Wharton says it is unclear how the negative balances could go undetected for nearly 20 years.
But, Comptroller Wilson is optimistic about the direction the city is heading and says a state takeover is not likely to happen.
"That the last thing we want," he said. "I do not hope we get there and don't anticipate that being the case. I think the elected officials will do the right things and that won't be necessary."
Comptroller Wilson said his office is in constant contact with the City of Memphis and expects to continue those discussions through the fall to work out the city's financial problems.
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