Why not cancel construction projects to fund the pension?

memphis skyline

MEMPHIS, Tenn. — We’ve heard many people ask why the city council can’t just cancel some of its proposed projects and shift that money to fund the pension.

For example, the city plans to spend $30 million to renovate Raleigh Springs Mall, with another $30 million in private money. The project includes a new police precinct, library, community center and various city offices.

Money for such a project comes from the capital funds budget which also finances roads, sewers and other services.

Money for salaries, healthcare and the pension system come from general operating funds.

Money from the capital budget cannot be moved over to general funds.

However, general funds are used to pay interest on capital projects. The interest typically runs 6-8% per year. That means cancelling a project such as Raleigh Springs would not would not free up $30 million, but it would free up 6-8% of the interest paid on that project.

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.

37 comments

  • Ricky

    Someone needs to ask Herenton why he kicked the can down the road and also skimped on the City’s obligations. He can be found and interviewed.

  • george

    Willie should be thrown in jail for his evil deeds. Look at what he has done to this city! He should at the very least repay his salary he collected all those years and his pension.

    • Herenton

      Good luck with that. Im not giving you a dime of my hard earned Money…Cats out the bag, its on AC now…

  • Becky

    so you can move money from the general fund to other budgt funds, but you can’t move money from the capital budget fund to the general fund to pay back money taken from it……….Where is the wheel tax money that is no longer needed for the non-existant city schools? where is the money used to run the now non-existant inspection stations? it can go on and on. The city has the obligation to fund this pension and other benefits promised and earned. If you want to change the benefit package, start with all new hires, change the rules that appointed staff only have to work 12 years for FULL benefits. There are many things that can be done if the City chooses to do them.

  • IwishUwould

    Can you not see this is a media driven bull by the Admin. to get away from the key facts…. where is the money’s that the City employee’s paid into the pension fund. Remember the city is the one’s who didn’t pay their part. Now the Admin. wants to push the blame. AC is a joke of a Mayor.. Don’t foget this is the same one who got on TV and said that the city had the money in the Banks drawing interest to pay the school system if the courts found that the city owes. Onces the told the city to pay up, what happened he had them to give up the school charter to keep from paying the money. WHY? Because him and the rest CFO, CAO his whole Admin. spent the money and they didn’t have it. Ask this to MR. A.C (A Crook) where is the $57 million that he said was in the bank drawing interest. I bet you want get a straight answer.

    • George Brown

      The employee money is there and a good deal of tax money is there but for years, it has been underfunded. I don’t think anyone disputes that as a fact. Money was moved to other areas. Now the state is Requiring all governments to fully fund pensions within the next six years.

      • King Willie

        Here’s a question – where was the press when all this was happening? Where was the press when white elephants were being built. The state doesn’t want to bail out a bunch of crooks who funded pork projects for kickbacks like they are doing in Detroit.

        Where was the press?

  • rhen74

    80k for every million in the CIP budget gets taken from the operating budget for debt service. Scrapping the mall project would keep 2.4 million in the operating budget every year. Add up all the failed projects. That’s a huge chunk being taken out of the operating budget for pet projects. How much is the unfunded liability on the CIP budget?

  • Ray Foshée

    Let me please add this to this page… What has happened to the investigation of all the missing material and monies from the old Memphis City School System ? please do not forget this and let it be swept under the rug.. thanks for letting me inject this herfe.

    • Thisisstupid

      Its Memphis. If there was money , it went into the pockets of our corrupt council..It probably paid for a party or to get someone out of jail…;)

  • rknunn

    Never mind the construction projects. What about the $110M that will be used to DE-construct part of the airport? That’s an insane amount of money for a senseless project to begin with.

  • Thisisstupid

    How about we all just get up and move..let them have their defunct city…let the gangs kill each other off. If I win the lottery I will give all of us money to move LOL!!!!! Wish I was a billionaire so I could actually do that. But your tax bracket is going to be much less soon. 10 plus us are moving from this horrible city soon…

  • V. brown

    There are several alternatives to getting health care coverage. 1. Those over 65 and those with disabilities can apply for Medicare. 2. There are also supplemental insurances, especially through AARP that are affordable. Both Medicare and supplemental coverage, together, do not add up to nearly the the amount of the premium that is now being proposed. 3. Affordable Health Care is a reasonable alternative. I know several individuals who signed up and have used it and are extremely pleased. 4. All of those retirees who now have other places of employment should not continue to be covered by health insurance from City of Memphis but should obtain coverage from their present employer. I heard someone say that there are those who don’t qualify for Medicare. If you’re age 65 or older, you can qualify. I also heard it stated by some officers that some cannot qualify for other coverage because of pre-existing conditions. That statement is erroneous because there is now a law that protects those with pre-existing conditions. Sounds like grasping for straws, to me. Eliminating as many from the insurance rolls as possible should result in some savings for the city. I’ll beg that they PLEASE!!!! do not raise our property taxes! I wonder if proposing to lowering our property taxes is a tease and a precurssor to raising taxes, again. City employees are not being asked to do anything any different from others who are employed other places. Premiums for others rise all the time. They’re acting like bullies and very unprofessional. I didn’t mean to write this much.

    • Johnny

      I hate to break it to you, after all this is resolved (sic), the council is going to raise taxes anyway in an “emergency” fall session. Go back and check how many times they’ve already quietly done it…. they threaten with it to bust workers benefits, then do it anyway after they get more pocket money.

  • King Willie

    Did you see me fight Joe Frazier?
    Hee Hee Hee and all you chump police and fire fighters thought I was your friend! Chumps. All that money went into the pockets of the rich developers! But hey you can go visit your pension and insurance chumps. It’s AC’s hot potato now and everyone’s rent, mortgage and taxes are going up!

  • Josh

    To V brown you have no clue people don’t understand what the job is really like. How many moms have you had to tell that there 3 month old baby is dead. How many bullet holes have you plugged? How many times have you been called at home and told you need to come in for a TB test because one of the patients you transported had TB. How many 24 hour shifts away from your family? How many Birthdays ? Holidays ? Graduations? Ball Games have you missed ? It is a job I decided to do but I was promised if I gave my life to save yours my wife and kids would have insurance and receive my pension. I don’t think this is to much to ask. Why am I going to risk my life knowing I would be leaving my family in a crisis? So I will move on to another city that is gladly willing to at least appreciate me trying to save their life or their families life. You will only have the bottom of the barrel left. Wish you all the best. I know and have seen what the fire and police see an have to deal with everyday and urge the citizens to do a ride along on a ambulance your attitude would be a lot different

    • wrldgnmd

      Excellent post Josh. You gave excellent examples of why the benefits of emergency responders SHOULD NOT BE compared to private sector employees. Also, it’s an absolute NON-FACTOR where these guys live, retired or not. The fire & police DID NOT create a mess of a city in which the tax base steadily evaporates because of high crime, corruption and mismanagement over many long years. The citiy’s pension fund has been robbed for years, just like social security at the national level to pay for cronies’ high paid positions, ridiculous unnecessary projects, incredible waste and abused programs. It’s nothing short of criminal.

  • Sean Brown

    The city of Memphis will need to do what other big cities have done — Toll system put in place that charges any vehicle coming into the City that is not a registered vehicle from the City of Memphis. Solve the problem or face a certain city bankruptcy resulting in significant reductions in all City Pensions. Demand your Union leaders to back creative solutions.

    • Mike

      Funny about the mouse. OK. Here’s your alternatives. Broken record time:
      Don’t buy 50 Million dollar boat docks.
      Don’t buy 28 million dollar parking garages on Overton square.
      Don’t give 200 million to bass pro and Electrolux. (Private venture )
      Don’t give 35 million dollars to sears crosstown building. (Private venture )
      Don’t give 66 million dollars to Raleigh springs mall. (Private venture )
      Don’t buy 26 million dollar baseball parks. (Red bird stadium)
      Don’t build 250 million dollar basketball arenas (already had a perfectly good pyramid and mid south coliseum )
      Stop wasting 10′s of millions of dollars a year on an empty trolley system riding up and down the tracks.
      Millions to chisca hotel.
      Millions to civil rights museum.
      Millions to Graceland area (a near dead tourist attraction)
      SHALL I GO ON???
      Stop giving multi million dollar no bid city contracts to your buddies/cronies.
      Pave the ragged third world streets in this city and then raise my taxes if you must.

      • Johnny

        If you really want to blow their minds Mike, go back and put the council member’s name beside each one of those projects that their families companies benefit from…. BTW, I owe you a beer. Awesome post.

      • Nan Bullen

        The Overton Square parking garage is also a catch basin for overflow from Lick Creek which routinely flooded Midtown. It had to be fixed. Overton Square is pouring lots of money back into the City coffers from property tax and sales tax.

      • Nan Bullen

        The Civil Rights Museum is privately funded. Graceland is far from dead; it is the second-most visited residence in the nation, after the White House. The trolley system has tons of riders. You cannot possibly live in this city. Check your facts.

      • Nan Bullen

        “For example, the city plans to spend $30 million to renovate Raleigh Springs Mall, with another $30 million in private money. The project includes a new police precinct, library, community center and various city offices.”

        Fixed it for ya!

  • Bill

    This somehow reminds me of the story about the panhandler on the Las Vegas Strip.

    ”Excuse me, mister, could you give me a few dollars? My wife’s awful sick and needs an operation. I’m trying to get enough money to help her.”

    “Don’t give me that. If I give you any money, you’re just going to take it into one of these casinos and gamble it away.”

    “Oh, no, sir, I wouldn’t do that. [pats back pocket] I’ve got my gamblin’ money in this pocket.”

    The CIP money’s in the other pocket. I get it.

  • dante

    I still don’t see the 57 mil saved on school and shutting down inspection stations saved 12 mil and titon programs could pay for it all and a cost of living increase they haven’t seen in 7 years. Take care of your employees and they will take care of you. That is how the saying goes.

  • takenobull

    Why are we buying ball parks that the average tax payer cannot afford to enjoy. Spending 40 million in concrete expense at the end of Beale Street so drunks can view the river, investing millions in in every fantasy that hits the city council, and all this when streets are full of pot holes and neighborhoods are crime ridden with trash in the streets? Go ahead and take all benefits from the Fire and Police Departments and make them jobs for folks to bounce in and out of. What you will have will be employees who stay for a few years and leave the jobs for new hires. This will not give you a fire dept. with the knowledge to fight chemical fires or a police dept. with the knowledge to solve homicides that comes from years of experience. It will give you employees who come and go as the grass is greener else where taking the training and experience they have every few years to other cities who have benefits or other jobs completely. You will in affect have the level of a volunteer fire dept. and security guards.

    • takenobull

      uh don’t forget the Para medics —-> The paramedic is a healthcare professional who works in emergency medical situations. —- I am sure they will stick around when offered no benefits.====== Who do you call then :)

  • Phil Cook

    The problems with Memphis started long before Wharton, Willie and Hackett. In 1967 Memphis voted to change Memphis from Commision to a City Council government. Worst mistake ever made and compounded by the clowns they elected. The job paid very little and most who were elected were land developers, commercial real estate owners, (2) building supply owners and worst of all a lawyer named Wyeth Chandler. Within 3 months of taking control he and the council had the garbage workers on strike, brought Martin Luther King to Memphis and the rest is history. That’s when Memphis started the downhill slide and now it’s a free fall.

  • Phil Cook

    If you look at the municipal bond ratings of the twenty largest cities in the U.S. you’ll find most have a AA rating, including Memphis. That’s the true fiscal condition of any city not the B.S. they put out. Memphis can’t be as broke as they say. S & P can’t be fooled. Memphis hasn’t had decent leadership since the days of Ed Crump.

  • Just Saying, too

    In very recent years, many major cities have attacked the benefit plans of first responders, teachers, and city workers. In many of those cities/states, it was done out of a political plot to destroy unions, by causing financial hardships on those that were deemed to support them. Unfortunately, these other cities got away with it and now Memphis is simply jumping on the bandwagon. However, there were serious fallouts from these decisions that never made the national news…(1) school districts were forced to RIF thousands of teachers (in some cases there are 40-43 students to a class, now), (2) cities lost hundreds of their first responders to western and some southern states, (3) thousands lost their homes, savings, etc, (4) families were not able to send their kids off to college, and (4) there were serious medical emergencies and/or suicides…I personally knew two of the later. Memphis always seem to try to reference or take actions that they have seen in other places, but do so without being well-informed. This is why ALL CURRENT appointments need to be removed from ALL political offices. We need candidates that are willing to do the research, make better decisions, leave the racism elsewhere, and are EDUCATED!

    • Just Saying, too

      AND I should add that I don’t believe Memphis’s decision to alter benefits had anything to do with unions or political plots. Our dear leaders only saw one side of the equation…other cities that did this reported savings in the millions or more (but they did not report their failures and losses). Memphis’s crime is already through the roof, we can not afford to lose our first responders. Based on the inadequate criminal laws that TN has, these folks are doing the very best that they can do and as such, they should be treated well.

  • Jeff Bailey

    OK….all you folks who have all the answers, next election, run for mayor and when you’re elected, you can fix all the financial problems with no pain to anyone. Good luck!

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