Before the Memphis City Council got to the meat of the city operating budget on Tuesday, they debated whether or not to increase pension benefits for city government retirees.
City administration recommended a one percent pension benefit increase for people who have already retired, an increase of $740,000. City finance director Roland McElrath said that money would not come from the controversial operating budget, but rather, the city is looking at investment gains to cover the increase. Currently, there is $2 million in the city pension fund.
City councilman Kemp Conrad was the only council member to vote against the proposal because he didn’t feel comfortable voting on an increase that depends on an unreliable stock market.
“When are politicians going to stop making promises they can’t keep?” Conrad said.
McElrath said, if the investment gains didn’t cover the increase, the city would not turn to the operating budget to fund the difference. Instead, the city would either propose a reduction in benefits to future retirees or propose an increase in the amount employees give to the plan. Currently, city employees give up to eight percent of their salaries.
Councilman Jim Strickland proposed an amendment that essentially bars the pension fund from relying on the city operating budget if there isn’t enough money to cover the increase due to market fluctuations.
Councilman Joe Brown accused fellow council members who questioned the increase of “trying to put mud” on important pension benefits for retirees.
“Some members of this council seem to want devastation to come to the pension plan. It’s common knowledge, if you know anything about investments, that this pension plan is not going belly up,” Brown said.
Memphis fire union president Larry Anthony actually spoke out against the increase because he wanted a higher increase for city retirees.
“The promise was if you take care of the city, the city would take care of you,” Anthony said. He said the proposed one percent increase was “a slap in the face” and instead proposed a three or two percent increase.
The one percent increase is expected to go into effect by July 1st.
