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VOL. 129 | NO. 120 | Friday, June 20, 2014

Battle Lines

Council budget vote creates divide over city’s financial condition

By Bill Dries

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The city’s operating and capital budgets are just about set for the new fiscal year next month. Hard decisions made about health insurance for city employees and retirees Tuesday, June 17, are unlikely to be revisited by the Memphis City Council.

The city of Memphis finds itself at a dividing line over its financial condition following the City Council’s budget vote earlier this week. Decisions made will continue to have political ripples well into 2015.

(Daily News File/Andrew J. Breig)

And votes to come at the council’s July 1 meeting, including a proposed conversion of city new hires and those with less than 10 years of service to a defined contributions retirement plan, will likely end the budget season at City Hall.

But the decisions made will continue to have political ripples probably well into 2015, which is a city election year.

For the Greater Memphis Chamber, next month’s vote on pension plan changes are the bookend to the health insurance changes. Pushing for both marks the chamber’s return to political involvement.

Chamber leaders rallied several business leaders to speak in an audience that included a number of city employees and retirees who are opposed to the changes.

The day after the council vote, retired city employees who are members of the Association of City Retired Employees (ACRE) met privately to discuss next options, which could include suing the city.

And some of the retirees also talked of organizing a boycott of the businesses that supported the health insurance changes.

The City Hall turnout by city employees and retirees was expected by many on the council. The reaction from business leaders was more of a surprise.

Past involvement in political issues by the chamber has been sporadic and usually through phone calls, emails and letters to council members on such matters.

The last major campaign along those lines was against a payroll tax the council considered in the 1990s, which FedEx and the chamber heavily supported.

This time, the two factions showed up at City Hall.


“There’s a movement in this city,” Memphis Police Association President Mike Williams said Tuesday.

Williams defined the movement as including a reaction against the chamber and what he charged is city government “putting businesses before the needs of the community.”

“For years we gave you money and you took my money,” Williams said, referring to city and county government funding of the chamber and the chamber’s decision to pass on any city funding this year.

“You declined it this year, because you knew there was going to be an all-out attack on city employees,” Williams continued. “But you made millions of dollars. That’s why you don’t have to take that subsidy this year.”

Danny Todd, a former president of the Memphis Fire Fighters Association, said city employees and retirees are paying the cost for bad financial decisions over several years by city leaders.

“We’re now responsible for the underfunding, so we have to change it?” he asked. “This is really strange coming from the chamber because the last five budget cycles, the chamber received a subsidy from the city – corporate welfare. … Why do we have to support a dues-based organization?”

Business leaders, especially those in real estate, mobilized for the council vote as well.

Their point was a failure to change health insurance and retirement benefits to meet the liabilities to the city from both would leave the council with no alternative but a city property tax hike.

So, their reaction usually did not specifically mention the changes and their impact on city employees – current and retired.

“We are heading in the wrong direction,” said Kim Grant Brown, president of the West Tennessee Homebuilders Association. “Any tax increase or service cut only stands to make that worse.”

Jim Maddox, a Memphis business owner who described himself as being on the “political sidelines” his whole life, also linked the budget vote including the insurance changes to a middle class exodus from the city.

“I see our city at a crossroads,” Maddox added. “Memphians now face the highest tax burden in the state. We cannot afford another tax increase. We must find ways to rightsize our expenses.”


Memphis Fire Fighters Association president Thomas Malone argued that city employees were also paying the price for bad financial decisions at City Hall and acknowledged the issue was also about taxes.

“I’m going to break some news to everybody here today,” he said. “As a city employee, the only way you get paid is through tax dollars.”

But he said the city’s problem is “long-term debt” and that isn’t the fault of the rank and file. He specifically faulted the Wharton administration for the 2010 refinancing of the city’s debt and a recent refinancing that drew the concern of Tennessee Comptroller Justin Wilson a year ago, when Wilson considered barring the second refinancing of Wharton’s tenure as mayor.

“I’m not the sharpest knife in the drawer, but when I refinance my house it’s to make the debt go down,” he said.

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