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VOL. 128 | NO. 110 | Thursday, June 6, 2013

Budget Reset Talks Lead to Fresh Drama

By Bill Dries

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The Memphis City Hall budget drama turned from a budget reset into a political thicket Tuesday, June 4, as Memphis City Council members debated getting involved in the details of changing employee and retiree benefits.

Memphis City Council members faced new budget realities and plans this week as Mayor A C Wharton Jr. unveiled a new budget plan.

(Daily News File/Lance Murphey)

The details are the bones of a new city budget proposal from Memphis Mayor A C Wharton Jr. that leads with a 15-cent property tax hike above the recertified rate he has proposed.

“That provides for the ongoing operations,” said chief administrative officer George Little. “The 15-cent increase over the equalized rate, $10 million of that would go for debt, $5 million would go back into reserves. There are no new programs that are proposed.”

Municipal union leaders showed up in committee sessions Tuesday to mount vocal opposition to Wharton’s plan to lay off employees and cut or otherwise rework pension and health benefits in the coming fiscal year and future years as the long-term budget adjustment.

That adjustment is the second-stage response of Wharton to a state comptroller’s office report that focuses the city’s efforts on paying down debt and funding future pension obligations.

The council is scheduled to take final votes on a city operating budget and the city property tax rate ordinance at its June 18 meeting.

Council members are contemplating whether they can or should get involved in the thicket of retirement, pension and health benefits changes that are Wharton’s long-term path to right the city’s financial condition.

The details of the existing benefits are in memorandums of understanding between the city and the unions.

“The administration or the city or the union, if they get together – they can amend the MOUs by consent,” said Deborah Godwin, attorney for the Memphis Police Association.

“But not us?” asked council member Kemp Conrad.

“No. Not unilaterally,” Godwin said.

“The council has a role through the impasse process in these sorts of matters and ultimately has authority relative to the budget,” Little said, referring to the three-member council committees that by city ordinance resolve labor contract disputes that reach impasse. Most of the unions representing city employees went to impasse this year on contract negotiations.

Little said the proposed changes in benefits were a possibility the city mentioned in the talks with the unions and shouldn’t be a surprise.

Union leaders, already upset and suing the city over a 4.6 percent pay cut from two years ago, argue that they negotiated in good faith.

City Council members are not sure how deeply they should get involved in what amounts to terms of employment even if they are the pieces of a budget compromise.

“We’ve got to be careful that we don’t begin to be used as a tool to negotiate benefits and packages for our employees,” said council member Harold Collins.

“We’ve got a month. We need to get it done now,” Conrad argued.

Council Chairman Edmund Ford also has a notice ready to call a special council meeting after the June 18 session, if necessary, to complete council approval of the budget and tax rate by the end of the month.

And council budget committee Chairman Jim Strickland appointed a three-member subcommittee to act as a sort of tentative middleman between the unions and the administration.

The new fiscal year at City Hall begins July 1.

“I think it’s time for us either as a group or as an individual for us to figure out what’s going to happen in the next 14 days,” council member Shea Flinn said.

“We are all going to be stuck here with our thumbs up our butts.”

The combined tax rate of $3.51, the city’s property tax rate in 2009, was unveiled in a Tuesday council committee session.

The 15-cent city property tax hike proposal debuted the day after the Shelby County Commission approved a 6-cent county property tax hike ordinance on the first of three readings.

In April, Wharton had proposed a recertified tax rate of $3.36 with no tax hike beyond what he said was needed to produce the same amount of revenue for city government.

In making fixes recommended by the administration specifically to address the concerns in the state report, the council used $11 million from the city’s reserve fund and replenishing that amount is part of the second tier of considerations.

Collins warned the next decisions could take the council closer to administration actions that many on the council are openly hostile and opposed to.

PROPERTY SALES 83 405 4,276
MORTGAGES 104 424 4,814
BUILDING PERMITS 148 883 10,151
BANKRUPTCIES 53 264 3,149