VOL. 129 | NO. 108 | Wednesday, June 4, 2014
Council Begins Decisions on City Financial Changes
By Bill Dries
Memphis City Council members took the first steps Tuesday, June 3, toward major changes in pension benefits for city employees and began delving into the details of even broader changes in health insurance coverage for city employees and retirees.
The council approved on the first of three readings Tuesday a trio of ordinances that together would switch all city new hires and employees with less than 10 years of service to a 401(k)-like defined contributions plan effective at the end of the fiscal year that begins July 1.
Meanwhile, in Tuesday committee sessions, council members got their first detailed briefing from the Mayor A C Wharton Jr.'s administration on changes to the city’s health insurance coverage.
The resolution the council could vote on as early as its June 17 meeting or sometime in July does away with the 70 percent medical premium subsidy the city pays for city retirees older than 65 years of age who are on Medicare. The city would replace the coverage with city-sponsored Medigap insurance or other types of coverage and would also eliminate the medical premium subsidy for city retirees younger than 65. Retires older than 65 with partial or no Medicare coverage would continue to have their coverage subsidized by the city.
Council members quickly agreed that when they do vote on the resolution, it will likely be a set of votes on the elements of the proposal instead of voting on it as a package.
City Personnel Director Quintin Robinson said some of the savings the city realizes from the health care coverage change would be applied to the city’s unfunded pension liability as well as remedy an “underfunded” health care plan.
“These are some of the tough choices we are having to make,” Robinson told council members, some of whom were vocal in their opposition to any changes to insurance coverage for city employees and retirees.
“Everything is no,” council member Joe Brown said.
“There’s no way I’m going to let anyone cut my wife out of anything,” he said of the provision that bars city health insurance coverage for spouses of city workers when they also work and are offered health insurance coverage by their employer. “You’re not going to win. Some of you are rich anyway. I’ve got a wife that needs my support.”
Council member Shea Flinn tallied a $58 million deficit in the city’s health care plan if the council does nothing, before even taking into consideration the pension liability.
“If you’re not going to support these changes, you have to come up with the revenue to cover the cost differential,” Flinn added.
Council members hear from city retirees and municipal union leaders and members in June 17 committee sessions with the council deciding at that point whether it is ready to vote.
Meanwhile, the council approved on the second of three readings the proposal by council chairman Jim Strickland to change the terms of the city’s Deferred Retirement Option Program – or DROP – that permits city employees to announce their retirement years in advance and receive pension payments while they continue to work for the city.
Also in two weeks, the council wraps up its budget deliberations with committee votes on amendments to the administration’s operating and capital budget proposals.
Among the amendments presented Tuesday in budget committee, but not voted on yet, were:
– $3.6 million in capital funding for a Cooper-Young parking garage, proposed by council member Janis Fullilove.
– $14 million in capital funding to be divided equally among the seven single-member council districts, proposed by council member Wanda Halbert, with a freeze on all nonemergency, nonessential spending by the city for one year as an alternative.
– $1 million proposed by council member Joe Brown for Klondike revitalization.
– $525,000 to reinstate the city weights and measures bureau the council voted to abolish earlier this year, also proposed by Brown.
– $500,000 for the Frayser Neighborhood Council, proposed by council member Lee Harris, for the first of three years toward a seven-year revitalization plan. Harris had proposed taking $300,000 from revenue generated by red light cameras, as well as $120,000 from Greater Memphis Chamber funding, but there are doubts about whether the revenue from red light cameras can be used.
The budget committee, chaired by Harris, approved the following budget amendments:
– $1.2 million for a Memphis Fire Department recruit class, proposed by council member Shea Flinn, with funding to come from the Greater Memphis Chamber. This was approved after the council voted down a motion by council member Kemp Conrad to reduce the fire budget by the same amount, with fire brass determining where the money would be cut. Conrad’s argument is that it is savings from cutting down on sick leave abuse by firefighters.
– $2.6 million in capital funding for an expansion of Paul R. Lowry Road brought by the Port Commission.
– $25,000 proposed by Harris for the Memphis Fire Museum to fund school field trips, taken from Greater Memphis Chamber funding.
– $75,000 proposed by Harris, also taken from chamber funding, for training programs by Lifeline to Success, the Frayser-based rehabilitation program for men and women just released from prison.
In other action Tuesday, Strickland delayed for two weeks a council vote on the second reading of his ordinance to establish residential permit parking in the Overton Square area on a trial basis.
And the council affirmed its rejection of plans for a new county cemetery at Raleigh-Millington and Duncan roads. Fullilove moved for reconsideration of the May 20 council vote against the cemetery, but the move for reconsideration was voted down by the council.
Fullilove moved for reconsideration the day after the Shelby County Commission approved the cemetery plans.