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VOL. 129 | NO. 136 | Tuesday, July 15, 2014

Council Hears Alternatives to Health Insurance Cuts

By Bill Dries

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Memphis City Council members fielded several plans Tuesday, July 15, for alternatives to health insurance cuts approved by the council last month. But leaders of the police and fire unions were not among those making an alternative proposal at the committee session, the first in a series of what amount to public hearings.

At the main council session later Tuesday, Memphis Police Association director Mike Williams urged the council to put a city-wide referendum on the ballot this year to increase the local option sales tax rate by half a cent.

The Memphis City Council, pictured here at its July 1 meeting, fielded proposals from the public Tuesday, July 15, about alternatives to health insurance cuts.   

(Daily News/Andrew J. Breig)

"You put it on there and we'll go get it approved," Williams said.

There is no council item to put such a referendum on the ballot.

Most of the ideas in the earlier committee session questioned the use of tax breaks through payment-in-lieu-of-taxes incentives – or PILOTs – and several included property tax increases for Memphis property owners. None included a sales tax hike referendum that union leaders were reportedly working on last week.

The two-hour session featured a lot of give-and-take between council members and citizens.

Vic Raspa, speaking on behalf of what he termed a “grassroots” group that included city retirees, proposed a freeze on PILOTs.

Council chairman Jim Strickland questioned whether that was a freeze on granting any future tax breaks through the Economic Development Growth Engine of Memphis and Shelby County or a freeze on existing tax breaks already granted by EDGE.

“I’m not saying don’t give any more,” Raspa replied.

His group’s plan also included a 35-cent city property tax hike, which he argued most city property owners wouldn’t mind paying as an alternative to the health insurance benefit changes already approved and pension changes the council is scheduled to vote on in October.

“You have a pension,” Raspa told the council. “Would you want it taken away?”

Most of the 10 council members at the table began shaking their heads and otherwise indicating they don’t get a pension.

“I think most people don’t believe we ought to just do away with PILOTs. Most people believe we need to tweak or change it somewhat. I do think 15 years is too long for a PILOT,” Strickland said after the session. “The only idea that I heard that really could generate a lot of money is something I’m against, and that’s a property tax increase.”

Former council members Carol Chumney and TaJuan Stout-Mitchell formally presented their plan for a 10 percent across-the-board spending cut, a property tax hike of approximately 25 cents and seeking an extra two fiscal years from the state to meet the full annual required contribution toward the city’s unfunded pension liability.

“If you don’t set your own goals, the state won’t go for it,” Stout-Mitchell said of getting an exception to the state law passed this year that requires the city to start paying the full amount of the contribution in five fiscal years. She referred to a city plan that sets goals over the seven-year period as a “good faith effort” that could win the approval of state leaders.

But council members countered that every year the city delays getting to the full annual amount of $78 million, the liability builds and costs the city more.

Some on the council favor a two-year ramp-up to the annual required contribution.

Others on the council said the call for cuts outside of police and fire services ignores cuts made in most other areas of city government over several fiscal years while the number of employees and budgets of the police and fire departments have increased.

“There are individuals that say that we can’t cut them, but let’s find cuts in other areas. We’ve done that already,” council member Edmund Ford Jr. said. “I believe the best decision, even though it affected individuals, was made. Going back and starting over – that period is already over. We can look at what we can do next fiscal year right now.”

Council member Harold Collins, who was not present for the June vote on the health insurance changes, also raised the point about city increases in public safety spending and personnel, but in a broader way.

“What kind of city do we have, what does it say about us when we spend 62 percent of our income on protecting ourselves from each other?” he asked fellow council members. “What kind of statement does it say about our city when we pit our seniors … against the young people? What does it say about us when we as a collective unit have a discussion, but as soon as we have a discussion there’s a rebuttal? I’m concerned about the direction we are headed.”

Collins indicated he might offer some amendments.

“I’m not sure anything seen here would have made a difference,” he added.

“It seems to me that we have pitted citizens against one another in our community. We have pitted the retirees versus the active. We have pitted business versus employees. We have pitted some of us against each other in this process. And if we collectively don’t figure out that we’ve got to do this together in a shared responsibility, then I think this exercise we are doing is just an exercise.”

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