Raise the sales tax rate to fund the pension?
MEMPHIS, Tenn. — Sources tell WREG-TV the heads of the fire and police associations in Memphis have proposed raising the city sales tax to restore full healthcare benefits.
The head of the Memphis Fire Association however told WREG that is not something that will go forward and be proposed to the public.
Current city employees and some retirees will pay 24% more for healthcare, while some retirees will lose their entire insurance subsidy.
We are told there has been a proposal for a tax hike by half a cent to 9.75%.
That rate would put Memphis equal with several surrounding municipalities which raised their sales tax to fund new schools.
If the proposal were to moved forward, voters would have to approve it.
There are estimates the hike could raise more than $45 million per year.
A similar change in the sales tax, to fund pre-k, was defeated last November.
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.
As of July 1, the State of Tennessee requires local governments to contribute 100% of the cost, determined by outside agencies, needed to keep their pension funded.