MEMPHIS, Tenn. — Memphis Mayor A C Wharton made it clear on Live at 9 Wednesday morning he believes city leaders ‘kicked the can down the road’ when it came to controlling expenses.
Wharton said he understands why employees are unhappy with a 24% increase in healthcare costs and for some retirees, a loss of their subsidy for healthcare.
The money saved by the city, according to Wharton, will go toward properly funding the city pension program.
As of July 1, the State of Tennessee requires local governments contribute 100% of the cost, determined by outside agencies, needed to keep their pension funded.
Governments have six years to get to that 100% funding mark. Unlike Memphis, some governments are members of the Tennessee Consolidated Retirement System which has long 100% pension funding.
The Segal Company, a human resources consulting firm, found the city pension is underfunded by $467 million.
That contradicts a report commissioned by the firefighters union which put the number at $301 million and a report done by PricewaterhouseCoopers which put it at $682 million.
When asked how Memphis got to a point where the pension was not funded properly, Wharton listed a series of events, “As long as the stock market was churning and burning, it was putting in the required amount. Almost being over funded. But when the recession hit, the bottom fell out. Property appraisals were down, you had the Supreme Court saying you got to keep paying the schools. All of those things were not contemplated.”
Wharton said city leaders met with unions and the heads of police and fire to see where saving could be found. MPD And MFD received extra funding for new recruit classes and cuts were proposed, but Wharton said those cuts would have had a negative affect on the city.
Funding the pension, Wharton said, was his priority, “There are alternatives to healthcare. There are no alternatives when it comes to a pension plan. If the pension gets in trouble you can’t go to Walmart. There are no pension exchanges out there. There are health exchanges. We’re going to make sure everybody has coverage.”
When asked whether he and the council could make sacrifices, Wharton’s answer instead focused on what employees have given up.
“The city employees have contributed to the tune of $32 million dollars to keep us at the point where we are now. The sacrifice has been made,” said Wharton.
Some city employees, and both the fire and police unions, say they fully know they have made concessions and they cannot make more.
Wharton did make it clear he expects all police and fire employees to return to work immediately, “I want them back. If they cannot come back there will have to be consequences. We want them back.”
As of noon of Wednesday, 546 officers were out sick, compared to 557 Tuesday. There were a reported 65 sick calls for fire employees, which is about double the normal number.