VOL. 129 | NO. 73 | Tuesday, April 15, 2014
Wharton Takes Budget to City Council
By Bill Dries
Memphis Mayor A C Wharton Jr. takes a budget proposal to the Memphis City Council Tuesday, April 15, that is supposed to be a departure for an administration that, since 2010, has come to the council with options instead of a total budget plan.
Wharton has said he will make concrete recommendations for the council to vote up or down for dealing with the city’s unfunded pension liability and upping the city’s annual required pension contribution from the current $20 million to $100 million over five fiscal years.
The council meets at 3:30 p.m. at City Hall, 125 N. Main St, and Wharton’s budget address is the first order of business.
Follow the meeting on Twitter at @tdnpols.
Two weeks ago, Wharton’s administration had what looked like the first $15 million in increased funding toward the five-year pension contribution ramp-up, with an identified $20 million in savings from changes to the other post-employment benefits, or OPEB, city employees receive after retiring.
But several council members remained vocal that the administration wasn’t being specific enough or bringing enough efficiencies and cuts to the table quickly enough.
The administration is back before the council at Tuesday’s 2:30 p.m. executive session to talk more about possible OPEB changes, specifically health care costs for city retirees.
Retirees have been watching the recent council-administration discussions closely in recent weeks as the time nears for any decisions on that and other financial fronts the city might make to take effect in the next fiscal year.
The administration could propose that retirees 65 and older go on Medicare or that retirees pay the whole premium or buy health care insurance in the open market.
While the city cannot cut pension benefits to vested city employees and retirees, the city does have such options when it comes to health care insurance.
In March, Wharton formally presented a proposal to change the pension plan to a 401(k)-style defined contributions plan for new city government employees and existing employees with less than 10 years on the job.
The set of three ordinances would not take effect until the fiscal year that begins July 1, 2015.
No vote on the ordinances has been on the council’s agenda since the March 19 presentation, nor is one scheduled for Tuesday’s council session.
The council, so far in its relationship with Wharton, has not hesitated to take apart the budget options and create its own. That started shortly after Wharton took office in late 2009 and proposed a property tax increase to generate the funding the council cut from the then-Memphis City Schools budget, leading the school system to file a lawsuit, which it won.
The council rejected the tax hike with little debate, and Wharton still points to the rejection as an element in the city’s ongoing financial problems.
Those problems spiked last year with a Tennessee comptroller’s report threatening to withhold the city’s ability to refinance its debt unless the city took steps to meet its annual required contribution and restore fund balances in several city accounts the administration had used to move funding around for various projects.
Meanwhile, state Senate Republican leader Mark Norris announced plans for a state law that would require local governments statewide to make the annual required contribution through a five-year ramp-up process starting in fiscal year 2015. Norris also included a provision pushed by the city that allows for exceptions when a local government makes a strong enough case to state leaders.
That bill has passed in the state Senate with a vote scheduled by the state House.
Norris and House cosponsor Ron Lollar also had a bill setting a process for a “financially distressed” home rule municipality to work through an improvement plan with the Tennessee comptroller and the state funding board. That bill was withdrawn.
Also on Tuesday’s council agenda is a vote on a resolution calling for the Wharton administration to find $1.5 million for a renovation of Southbrook Mall. The nonprofit group that owns the Whitehaven mall wants the money to repair the roof and heating and air conditioning systems.
But Wharton has proposed a broader overhaul of the mall and the surrounding area into a “town center” that would move some city government functions into the mall.
The group that owns the mall, however, said earlier this month that it opposes those plans and wants city funding for renovations the city attorney’s office has said would amount to public funding for a private use that is prohibited if federal funds are used.
Council member Myron Lowery said Monday he will move for reconsideration of the council’s April 1 vote to do away with the city’s weights and measures department.