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VOL. 129 | NO. 118 | Wednesday, June 18, 2014

Council Approves Budgets, Stable Tax Rate, Health Insurance Changes

By Bill Dries

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Memphis City Council members approved a $600 million operating budget and an $84 million capital budget Tuesday, June 17, for the city government fiscal year that begins July 1.

And the council gave final approval to larger changes to employee and retiree health insurance plans designed to make long term changes necessary to right the city’s financial condition.

But the council faced a standing room only crowd of several hundred citizens who were a mix of angry city employees and retirees opposed to the changes and business leaders who backed the changes as necessary to avoid a property tax increase.

“This city is a ticking time bomb,” said Michael Williams, president of the Memphis Police Association. “The administration has created a false environment of economic distress. … You guys, for some reason, don’t want to support the citizens and you’re putting business before the needs of this community.”

“Our belief is that debt and tax increases are a major obstacle to recruiting companies,” said Dexter Muller Chief Operating Officer of the Greater Memphis Chamber which campaigned for the health insurance changes as well as pension changes the council takes final votes on next month. “We’re convinced that we have to have our financial house in order … in order for us to recruit jobs.”

The council gave final approval Tuesday to a stable city property tax rate of $3.40, changing the distribution of the rate from $2.29 to $2.31 toward the operating portion of the budget and the amount of the rate for debt service from $1.10 to $1.08.

The ordinances that would switch new hires and city employees with less than 10 years of service to a defined contributions retirement plan similar to a 401k were approved Tuesday by the council on the second of three readings. Third and final reading is scheduled for the first council meeting in July.

The health insurance changes eliminate the medical premium subsidy the city has been paying for Medicare retirees who are older than 65 and replaces it with Medigap or similar coverage. The changes also eliminate the subsidy for retirees younger than 65 but continues city subsidies for post 65 city retirees with partial or no Medicare coverage and their spouses as well as children of employees killed in the line of duty.

The council also approved a smoker surcharge increase to $120 per month per family in the city’s health care plan and carved out of coverage of the spouses of city employees who are offered health care coverage on their jobs.

The council amended the administration’s plan to increase total premium rates by 57 percent and instead approved a 24 percent increase that takes effect in October instead of the July 1 start of the new fiscal year.

Most of the council’s discussion was before approval of the operating budget whose bottom line was based on the proposed changes to the health insurance plan. And much of the discussion was questions about specifics of budget items.

The questions were fielded by chief administrative officer George Little, finance director Brian Collins and personnel director Quintin Robinson.

The absence of Mayor A C Wharton Jr. was noticed from the outset.

“Is the mayor going to address us at all?” council chairman Jim Strickland said after the council heard over an hour and a half worth of comments from citizens. “I would think with such a big issues, the mayor should be here.”

Council member Kemp Conrad later tweeted he was “disappointed but not really surprised” at Wharton’s absence.

Two hours later, Wharton replied by Twitter saying “over the past few weeks I have not only addressed ee’s but stood face to face w/them, took questions.”

Wharton was in his office at City Hall and later talked with reporters from there about the long council day’s events.

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