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VOL. 128 | NO. 115 | Thursday, June 13, 2013

Comptroller Urges Council to Act on Fiscal Problems

By Bill Dries

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That didn’t take long.

An ad hoc committee of Memphis City Council members trying to find common ground between the administration of Memphis Mayor A C Wharton Jr. and the city’s municipal labor unions met for less than an hour Wednesday, June 12, before calling it a day.

The failure of the session to prompt further discussions about employee concessions Wharton has outlined in longevity pay, college tuition, health care coverage, paid leave, vacation and sick days is the clearest indication yet of a deepening labor impasse.

Meanwhile, state comptroller Justin P. Wilson in a letter Wednesday to council chairman Edmund Ford Jr. emphasized that the council has to take some action this year on the fiscal problems Wilson outlined in a May report that prompted the reset of the city’s budget for the upcoming year.

“It has to act on these financial issues now,” Wilson said of the council. “They are only going to get worse unless decisive, difficult decisions are made.”

He also emphasized that the council should take at least “a significant first step” in paying down debt and employee benefit liabilities as well as reserving funds that were at the center of his report critical of city finances.

“It is the council’s responsibility to make the most basic decisions about the city’s finances; what services the city should provide and how it is going to tax its citizens to pay for these services,” Wilson wrote. “The council should decide the city’s priorities. If the council does not do this, someone else may end up doing this.”

To further make the point, Wilson added, “This budget may well be Memphis’s last clear chance to determine its own future.”

At least one council member, Kemp Conrad, referred specifically to that line in the letter at the afternoon committee session, saying if the council doesn’t act on a budget proposal by the end of the month, state government will.

The intent of the meeting was for the ad hoc committee to work as a middleman between the administration and the unions on the measures Wharton proposed last month in response to the state comptroller’s report, which was critical of the administration’s handling of financial matters, and to council members who wanted to look at the options.

Without them, Wharton has proposed a 15-cent property tax increase above the new recertified city property tax rate of $3.36. The current city property tax rate is $3.11.

The 15-cent tax hike would cover a $10 million increase in the city’s debt payments due in the new fiscal year, which starts July 1. That increase is the result of a 2010 refunding bond restructuring of city debt mentioned in the state report.

The tax hike would also restore $5 million to the city’s reserves. That would partially cover $11 million from the reserves the council approved at Wharton’s request last month to replenish three city accounts the comptroller’s office said had to be replenished.

Wharton proposed the changes in employee benefits as well as the layoffs of 300 city employees and the buyout of another 100 as reductions that would diminish the amount of the tax hike or eliminate it entirely.

Union leaders immediately sent a letter to Wharton, saying the benefits changes would change contract items the administration and the unions had already agreed to or that had been decided by City Council impasse committees.

“To unilaterally cut wages or benefits, after the finalization of the impasse process through the budget process or otherwise, will result in additional litigation and ultimately in the requirement that the city pay back any cuts with the additional unnecessary costs and expenses of litigation,” reads the letter signed by six municipal union leaders.

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PROPERTY SALES 119 482 10,051
MORTGAGES 119 497 11,811
BUILDING PERMITS 268 1,056 21,366
BANKRUPTCIES 50 263 6,700

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