VOL. 129 | NO. 135 | Monday, July 14, 2014
Wharton Courts Alternatives in Benefits Dispute
By Bill Dries
Memphis Mayor A C Wharton Jr. says any alternatives are welcome to the coming health insurance changes for city employees and retirees.
But delaying the roll out of those changes in January is not an option. And neither is reopening the city budget or the city property tax rate.
“I don’t think reopening the budget could work.”
–Memphis Mayor A C Wharton Jr.
“I don’t think reopening the budget could work. The budget has been confirmed,” Wharton said on the WKNO-TV program “Behind The Headlines.” “Can some changes be made in the various ways we implement these changes? Yes, and that’s the kind of thing we are talking about.”
The program, hosted by Eric Barnes, publisher of The Daily News, can be seen on The Daily News Video page, video.memphisdailynews.com.
Wharton commented in advance of Memphis City Council committee meetings Tuesday, July 15, at which the council is seeking alternative plans from any citizens.
Wharton would not talk about any specific proposals discussed last week in private talks among the administration and leaders of the police and firefighters unions. But he said a delay is not an option given the November open enrollment period that is approaching for the Affordable Care Act. The health insurance plan changes approved by the council in June take effect in January.
“To the degree that individuals are moved off the legacy city plan and onto the exchange, there’s a window there. We’re kind of in a bind there,” Wharton said. “What we are saying across the board is not even for one day will any employee or retiree be without health care.”
Beyond the open enrollment period that is approaching is what Wharton says is the next step by state officials who remain concerned about the city’s funding of its health care liability, estimated at over $1 billion, as well as the city funding its $551 million unfunded pension liability.
A state law passed this year requires the city to start making its full annual required contribution on the pension liability in six fiscal years starting with the current fiscal year that began July 1.
The savings the city realizes from the changes in the health benefits go toward the pension liability and also serve to reduce the city’s health care benefits liability.
“The only place where there was a pool of money was in the retiree health care,” Wharton said, saying the alternative was raising property taxes or cutting fire and police services. “That area was chosen because there are alternatives to that. There are no alternatives to police service. There are no alternatives to keeping your libraries open.”
Wharton also ruled out some reduction or redirection of tax breaks used as the primary incentive for economic development locally.
The leaders of the police and fire unions have made the payments-in-lieu-of-taxes (PILOT) program of tax breaks the target of much of their campaign to change the benefits proposals.
“I am not just deeply in love with PILOTs. But it’s the only thing we have now when we compete with Mississippi. It simply is not true that were it not for PILOTs we would have the money to take care of this,” Wharton said.
Beyond that, he said last week’s discussions in private had a more immediate topic.
“The key focus has been come back to work. We don’t want to set a precedent of anybody who has a grievance with the city walking off the job,” Wharton said. “And saying, ‘I’m not going to come back to my desk until you give me what I want’ – we cannot open that door. The city would fall apart if we do that.”
Wharton made the comment as July 11 figures showed renewed evidence that the blue flu job action by police officers has leveled off, at least for now.
“We’re watching the numbers. It is stressing and straining us. But we’re keeping response times within acceptable ranges,” Wharton added. “Can we go on forever like that? No, we cannot. But I am not going to draw a line in the sand and throw down on that.”
On proposed pension change proposals the council is scheduled to vote on in October, Wharton said the outlook is less urgent. Those changes in whatever form would take effect a year from now with the start of the next fiscal year.
“This process is working beautifully. … I have not precluded anything. The only thing I will not negotiate on is – I’m not going to have people come back to me and say this is not that serious. Folks, this is serious. It is a state law,” he said. “As long as someone puts a reasonable proposal on the table whether it’s a hybrid or whatever that gets us on a trajectory to meet the state law, I am open to that.”