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VOL. 128 | NO. 137 | Tuesday, July 16, 2013

Wharton Says Budget Challenges Continue

By Bill Dries

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After taking heavy criticism during the budget season from Memphis City Council members, Memphis Mayor A C Wharton Jr. is starting to take more criticism for the approved cuts that are rolling out first in the Memphis Fire Department.


And Wharton is responding, citing a 13.9 percent cut, excluding police, in the size of city government since he took office in late 2009.

“It’s so asinine for folks to say all (the city) does is raise taxes,” Wharton said on the WKNO-TV program “Behind The Headlines.” The program can be seen on The Daily News Video page, video.memphisdailynews.com.

The closing of a North Memphis fire station and other changes in how fire services are dispersed are part of the budget plan to lose 300 city employees through attrition. The benefits for the city budget’s bottom line are over two fiscal year beyond the current one that began July 1.

But all of the jobs that will be lost through employees deciding to retire and leave voluntarily without a buyout offer will be off the city payroll during the current fiscal year. They are spread across all city divisions.

Wharton insists they will not affect response times to fire calls or the level of service to Memphians.

“This is through attrition. This is through redeployment. This is through using different kinds of equipment,” Wharton said on the program hosted by Eric Barnes, publisher of The Daily News. “We’re going to keep the response time within acceptable standards. … People always think in terms of the fire department as being that place that has these big trucks that just run all day long putting out fires. Seventy percent of the calls are not for fires. They are for ambulance services.”

Wharton originally proposed a $3.51 tax rate that included a 15-cent property tax hike beyond an extra 25 cents on the tax rate to generate the same amount of revenue the city got before the 2013 property reappraisal in which city property overall lost value.

Instead the council approved a $3.40 property tax rate with the same 25 cents toward a new certified rate but a smaller 5-cent tax hike.

And some on the council thought Wharton should have been more aggressive than simply offering different budget options to the body.

“We rode the $3.51 horse until it broke all four legs. I stuck with $3.51,” Wharton said. “When you are running in a race and you see he has four broken legs, either you stand out there and get trampled or you jump on the next horse to come by.”

Meanwhile, a key element in the city’s plan to get its debt under control, a restructuring through refunding bonds approved by the council in June, has some problems.

Since the council approved the bonds, national financial conditions have changed and complicated the goal of the restructuring, which was to lessen the balloon note from pushing the debt further out.

Wharton said such municipal bonds haven’t fared well as Federal Reserve Bank Chairman Ben Bernanke indicated the government might be buying more as Bernanke contemplates an end to the quantitative easing policy of the Fed.

“We still may have a gap in the 2014 budget as a result of the fact that we won’t be able to net what we want to net on this refinancing,” Wharton said. “We may go through with it. But I don’t think we will get anywhere near the $9 million we were expected to clear on it.”

The result is Wharton will probably delay pulling the trigger on the restructuring to wait for better economic conditions.

“We may pull the trigger at some other time. … They haven’t made that call yet,” he said, referring to Bernanke and other national monetary advisers.

On another front, an overhaul of city benefits for employees and retirees will unfold on several levels, Wharton said.

The most obvious is probably from defined benefits to defined contributions for any future hires by the city.

“I can pretty much tell you that those who are hired in the future – they will be few and far between … but I can pretty well tell you they will not be going into a defined benefit program. That’s an easy one to deal with,” Wharton said.

More difficult are existing city employees with a distinction between those who are vested in the retirement plan and those who are not.

“You first have to deal with those employees who are vested. That’s where your big number will be,” he added. “Do you say, ‘All right, you will keep your defined benefits but you will pay more?’” Or do you simply say, ‘We’ll just leave that alone and we’ll deal with those employees who are not vested?’”

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