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VOL. 128 | NO. 246 | Wednesday, December 18, 2013

Council Opens Unfunded Liability Plan Talks With Questions

By Bill Dries

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Memphis City Council members again rejected Tuesday, Dec. 17, an increase in the city’s monthly solid waste fee and affirmed a 2.1 percent hike in the Memphis Light Gas and Water Division water rate hike.

The reconsiderations of two items the council acted on in November topped the last council meeting of 2013.

Most of the council day at City Hall was about discussions in committee sessions of what is to come in 2014.

Those discussions were topped with the first discussion of the still forming administration proposal to deal with the city’s unfunded pension liability which the administration estimates is at $700 million.

Memphis Mayor A C Wharton Jr. told council members in the day’s executive session that he will ask the council to close the city’s defined benefits pension plan to new hires and those city employees with less than 10 years of service sometime in February or March and move those employees to a defined contribution plan that is similar to a 401k plan.

The retired city employees and those who are vested in the defined benefits plan with 10 years or more on the job would remain in the plan.

City human resources director Quintin Robinson said 3,707 city employees are currently vested in the plan. Another 2,428 are unvested. And approximately 3,500 city retirees are currently receiving benefits from the city pension plan.

Wharton distributed the broad outline of the forming plan last week to council members.

At their first public session with Wharton and his administration on the plan, council members questioned its use of the term “efficiencies” for measures the city would take to reach the $100 million annual contribution.

Most council members took it to mean budget cuts.

“Efficiencies can be a really pretty word,” council member Shea Flinn said. “Then it gives way to tax hikes.”

Wharton and Chief Administrative Officer George Little said the administration is committed to not increasing city property taxes to meet the goal. Little described the efficiencies as “low hanging fruit” in measures that the city has explored before.

The goal of $100 million amounts to 16 percent of the city’s operating budget of $623 million.

“How long do we have to put $100 million in the bank to cover a $700 million liability?” asked council member Lee Harris. “Why is it 30 years?”

The answers to those questions are to come at future sessions with the experts the city is using to formulate the details of its proposal.

Harris also questioned “How do we take half of our employees out of the mix and the liability remains the same?”

Council member Jim Strickland asked a related question about unvested city employees and new hires coming out of the plan that the vested employees and retirees are in. “They won’t be putting money into the pension plan, so where does it come from?” he added.

Over five fiscal years starting next July 1, the city would grow its annual contribution toward the unfunded pension liability by approximately $15 million to reach the $100 million annual contribution level.

The city would maintain that $100 million contribution level for 30 years.

In other discussions, Little told the council that the administration will have a plan for funding an extensive renovation of the Southbrook Mall in Whitehaven and is hiring a consultant to assess the structure of the mall.

Little said the Jan. 21 presentation will identify specific funding for a request pushed by council member Janis Fullilove that the administration was at most lukewarm to earlier this year.

Fullilove’s plan relied on the use of some left over federal funding being used for streetscape improvements on Elvis Presley Boulevard between Brooks Road and Shelby Drive.

But the funding couldn’t be used for the mall because of legal opinions saying the mall renovations would constitute a private use of the funding and could endanger all of the funding for the entire public use streetscape undertaking.

Little said the administration is exploring the idea that the mall could be used for a Memphis Police precinct or a night court site.

Little said the mall would be part of a larger economic development plan for Whitehaven to be overseen by city Housing and Community Development Director Robert Lipscomb.

The plan is due before the council for committee discussion on January 21.

In other action, the council voted down a special use permit for a convenience store-gas station at 4076 Jackson Avenue at South Brighton Road. The Land Use Control Board had recommended rejection of the permit because the business would not have been located at a major intersection as planning guidelines require. The business also drew opposition from the surrounding neighborhood.

The council approved on third and final reading an ordinance that drops the monthly dumpster fee for Downtown and Medical Center businesses with dumpsters in public right of ways from $500 to $200.

Also approved was $53,179 from the Mayor’s Innovation Delivery Team in funding from International Paper for computer lab centers at four Memphis community centers.

And the council approved a resolution concurring in the six suburban school system agreements and urging the dismissal of the Memphis Federal Court lawsuit contesting the suburban municipal school districts.

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