VOL. 131 | NO. 64 | Wednesday, March 30, 2016
Amended De-Annexation Bill Up for Key State Senate Committee Vote
By Bill Dries
A de-annexation bill that takes in the whole state has a key state Senate committee vote set for Wednesday, March 30, after senators made some significant changes to the proposal Tuesday in committee.
Sen. Bo Watson, R-Hixson, left.
(AP Photo/Mark Humphrey)
The changes include raising the bar on the percentage of voters in an annexed area it would take to put the de-annexation proposal on the ballot for a referendum.
The 10 percent requirement was raised to 20 percent.
Senators in the State and Local Government Committee also approved an amendment that includes charging those who de-annex for a share of the pension and other benefits liability of city employees.
That would be in addition to those who de-annex paying a proportional share of general obligation debt for capital improvements made in the area by the city.
Committee chairman Ken Yager of Hixson made the move to raise the bar for putting a proposal on the ballot.
“We are plowing new ground here,” he said. “What we are doing here has tremendous consequence whether you are for it or against it.”
He proposed a 12 percent requirement as a compromise from 20 percent. But other legislators suggested it should be higher than 12 percent.
“How many of the residents who will be voting in the affected area were residents in the area at the time of annexation?” asked Senate Republican leader Mark Norris of Collierville. “We have a tendency to presume that everyone who was there is there today and they are the ones voting.”
Williamson County Sen. Jack Johnson agreed.
“The vast majority of annexations were raw pastures,” he said of his district. “The only voters were cows before the annexation.”
But Senate sponsor Bo Watson argued the bar is too high at 20 percent.
“I think 10 percent is fairly high,” he said. “Are we creating the illusion that we are giving citizens a vote here, but we are setting it so high that we know they will never reach it?”
But Johnson countered that a percentage that is too low would produce a flood of de-annexation ballot questions that would cause “heartache and heartburn” for relatively small groups of citizens in a single subdivision created by a developer who agreed to annexation.
The provision to include pension and other benefits liability as a responsibility of those who successfully de-annex drew fire from state Sen. Todd Gardenhire of Chattanooga.
Gardenhire, a financial consultant with actuarial experience, was particularly critical of the city of Memphis for its unfunded pension liability.
He argued the liability is on a pay-as-you-go basis – not a debt – and that the liability should fall on city leaders who didn’t up the city’s contribution to that liability.
Gardenhire said making the de-annexed pay is effectively making them pay twice.
“If the city of Memphis was that far underfunded, they need to get a new actuary or a new board of trustees,” he said.
He also challenged Memphis business leaders who appeared before the committee last week opposing the legislation.
“Where was the influence the business leaders used to go to the leaders of the city and say you have an obligation to fund that?” Gardenhire asked.
“Some of these pigs were at the trough,” he said of First Tennessee Bank executives who also spoke out against annexation. “People need to be held accountable for not funding their pension plans.”
“Are you here just picking on Memphis?” Norris asked, pointing out that 60 other cities and towns have a similar liability problem.
The Senate version, if approved by the committee and the full Senate, would have to be reconciled with a vastly different House version approved on the House floor in March. The House version would apply only to five cities in the state, including Memphis.
Greater Memphis Chamber president Phil Trenary said the business community's position remains that the legislation in the House and Senate should be delayed and go to a summer study committee before starting all over again in the 2017-2018 legislative session.
“It’s better. It’s still not what it needs to be," Trenary said moments after the Senate committee adjourned for the day Tuesday. "It really highlights just how complex this issue is. You can tell … that a lot of this hadn’t even been considered before.”
Trenary was also critical of Gardenhire's comments about the city's financial condition.
“With all respect to the senator he has a gross lack of facts on the side," Trenary said. "He failed to acknowledge that the issue is a statewide issue. He failed to acknowledge that Memphis is the only community in the entire nation that took on the pension and OPEB (other post employment benefits liability).”
“If you had rewound the tape about two years ago, a lot of what he said would have been true," he added. "But either he’s been living in a cave or he chose to ignore the facts. I don’t know which one. But he’s just wrong.”