VOL. 129 | NO. 117 | Tuesday, June 17, 2014
Council to Vote on Insurance Changes, Budget
By Bill Dries
Most of council day at City Hall Tuesday, June 17, will be devoted to closing out most, but not all, of the city’s budget season.
The Memphis City Council should make final decisions Tuesday on a stable city property tax rate and approve operating and capital budgets for the fiscal year that begins July 1.
And the council has some critical decisions to make on the resolution that would essentially get the city out of the business of health insurance for retirees and dramatically increase the cost of health insurance for retirees and city employees.
“It basically transitions retirees who are Medicare-eligible or Obamacare-eligible onto those other plans,” said council Chairman Jim Strickland Friday, June 13, on the WKNO-TV program “Behind the Headlines.”
City Finance Director Brian Collins, on the same program, said Memphis Mayor A C Wharton Jr.’s proposal includes allowances for loopholes.
“We are going to sponsor supplemental plans that the city is going to pay 25 percent of the premiums on so that we cover all of the loopholes around Medicare. There is Obamacare now for the folks who are pre-65,” he said. “We have tried to find every possible category of retirees … to make sure everybody has access to affordable health care. In a lot of cases, that’s going to be more than they are currently paying. But part of the reason it’s more than they are currently paying is because today they are paying such a small rate.”
The city’s savings from those changes, estimated at $25 million in the coming fiscal year, funds much of the increase city leaders hope to make in annual payments to reduce the city’s unfunded pension liability.
The council meets at 3:30 p.m. at City Hall, 125 N. Main St.
Follow the meeting on Twitter at @tdnpols, www.twitter.com/tdnpols.
Before the scheduled votes at the afternoon session, council members meet in an 8:30 a.m. committee session to talk over the health insurance proposal and take a nonbinding test vote of sorts.
That is followed by a 9:30 a.m. budget committee session with final votes on amendments to the operating and capital budgets and any new proposals or amendments. Among those up for discussion in committee are council member Janis Fullilove’s proposal to fund a Cooper-Young parking garage to the tune of $3.6 million and council member Wanda Halbert’s proposal for $14 million in capital funding that would be allocated equally among the seven single-member council districts.
Meanwhile, the ordinances that would change city government’s pension plan to a defined contributions plan for new hires and city employees with less than 10 years on the job are up Tuesday for the second of three readings, and the ordinance that would change the terms of the city’s Deferred Retirement Option Plan is up for third and final reading.
“We have really bad choices ahead of us,” Strickland said on “Behind the Headlines.” “We’ve got to cut expenses as opposed to raising taxes.”
And city leaders will likely have to do the same thing next budget season. If the council approves the health care changes and an amended budget with $12.5 million more in cuts by council members also directed toward the city’s annual pension liability payment, that would leave about $23 million needed to get the city to its $78 million annual required contribution toward the liability.
The Wharton administration originally proposed a five-year ramp-up to get the annual required contribution to a sustainable level. But that was when it estimated the contribution needed to be $100 million. But Strickland and council member Kemp Conrad both said the lower amount of $78 million could be, and should be, done in two years.
“We want to do this now. We want to do it next year so the people know where people stand on this issue,” Conrad said on Friday’s “Behind the Headlines,” pointing to the 2015 city of Memphis elections. “What we shouldn’t do is a bait-and-switch and get past the election and election year and then have a big tax increase. … There’s no reason that we need five years. … You really don’t need 10 years to fix a business.”
Conrad acknowledged municipal union leaders will make the case that the changes mean city government is going back on promises made to retirees when they went to work for the city.
“What we have to balance is doing right by our 6,000 employees and by our retirees,” Conrad said. “But we also have to do right by 600,000 people that live in the city of Memphis that are paying for all of this.”
“Behind the Headlines,” hosted by Eric Barnes, publisher of The Daily News, can be seen on The Daily News Video page, video.memphisdailynews.com.