VOL. 130 | NO. 53 | Wednesday, March 18, 2015
City Council Approves Debt Restructuring
By Bill Dries
Memphis City Council members voted 8-4 Tuesday, March 17, to approve a proposed restructuring of city debt payments.
Council members approved Memphis Mayor A C Wharton Jr.’s proposal after a day of questions for financial consulting firm PFM and Tennessee Comptroller Justin Wilson.
Wilson said the refinancing was a way forward as the city rights its financial condition. But he said it is not his role as comptroller to talk about alternatives to that.
Several council members, however, were critical of the plan and its reliance on fully funding the city’s annual required contribution toward its pension liability in five years.
They advocated fully funding the annual payment in the current fiscal year and adhering to a $65 million cap on city capital spending in future fiscal years.
The path to fully funding the ARC by 2020 as required by state law coincides with the balloon payment in the city’s current debt payments without the restructuring.
Wilson said meeting the pension ARC of $74 million should be the city’s top priority among several difficult financial decisions.
Wilson also said he remains critical in general of the use of such “scoop and toss” financing that pushes balloon payments into future fiscal years. But he also said the council’s choices were limited, with all of them being painful and difficult to some degree.
Council members who were critical of the proposal argued it amounted to a burden on future generations of city leaders caused by the city’s 2010 refinancing of its debt payments.
Meanwhile, Wharton was critical of some council members for not proposing alternatives.
“All this stuff about two years – their own consultant walked in here and said, ‘You don't have the money,’” Wharton said, referring to the PFM consultants hired by council. “I guess they're still not satisfied. ... It got a deafening silence. Everybody talks about some other way to do it, but up to this minute not one person has stood up and said, ‘Here's a better package.’”