Some Memphis City Council members want to pay the city’s pension deficit quicker than the plan suggested by Memphis Mayor A C Wharton and, in the first day of council budget talks, began to whittle down the mayor’s budget to make it happen.
The city is supposed to pay a set amount each year to ensure the retirement system is whole. Those payments skyrocketed when the recession took a $450 million bite out of the city’s pension fund. But the council didn’t make the higher payments. Instead they made the same payments they made before the recession. But thanks to a new state law, the council now has five years to begin making the full annual payments.
Wharton’s administration put forth a plan to ramp up payments over the next five years and would pay an additional $15 million this year for a total of $35 million.
But council members Shea Flinn and Jim Strickland said Tuesday they want to pay a total of $60 million to the pension fund this year. Strickland said Wharton’s proposal to ramp up the payments would make the problem bigger over time.
“It’s going to be really hard and a we have some really difficult choices ahead of us,” Flinns said in a budget hearing Tuesday. “The reality is, if we drag this out, the public is going to see a much larger debt and a much larger tax increase.”
Tuesday’s hearings were the first opportunity for council members to weigh in on Wharton’s budget, which he presented to them three weeks ago. As the hearings began, Flinn and Strickland quickly started cutting the budget and funneling the savings to the city’s pensions payments.
The two proposed cutting new positions, travel budgets, funds for seminars and conferences, catering, and more. The budget committee approved many of those cuts, which wouldn’t become reality until the full council votes on the overall budget in late June.
Wharton has suggested changes to the city’s health care benefits, which would yield savings of about $30 million. His plan would put $15 million of those savings to the pension fund. The other $15 million would go to a reserve fund that could be used by the council to pay for emergency public safety items in the next year. Flinn and Strickland said they want at least $10 million of the proposed reserved public safety fund to go to the pension fund.
They brought their ideas to the council hearings not in writing but in spoken amendments that warranted immediate votes by council rules. This confused council member Wanda Halbert who said she wanted the information in writing.
“I haven’t talked to any of you and I haven’t talked to the administration about (these ideas),” Halbert said. “I’m not a finance guru or a legal expert so to sit at this table and have these things going on….You are asking us to vote on things that haven’t come to us yet. I’m not comfortable with that. It’s not fair.”
Flinn and Strickland said they’d continue to propose the small cuts to every division’s budget during the months-long budget process. Or, they said they’d be willing to negotiate with Wharton on a more wholesale plan to increase the pension payments.
“This is not kicking the can down the road,” Flinn said. “This is grabbing the bull by the horns.”
