Saying he took no pleasure in the sacrifices City employees and retirees are being asked to make, Mayor A C Wharton Jr. on Tuesday presented the Memphis City Council with a 2015 fiscal year budget that he said reflects difficult choices.
According to Wharton, the budget proposal represents difficult choices his administration had to make to avoid raising taxes, while making strategic investments in core neighborhoods, securing the City's financial future, and protecting the pension system.
The proposed 2015 fiscal year operating budget is $596 million. That's an $18 million decrease from fiscal year 2014. The proposed CIP Budget for fiscal year 2015 is $83 million.
"It is a moral imperative to ensure that our employees' pension is there for them when they retire," Wharton said.
"Also, pension reform is a critical first step in securing the City's financial future. We are going into this budget season with an annual increase in our pension obligation of between $60 and $80 million and a total unfunded liability over $700 million. Without raising taxes or cutting services, some tough choices had to be made."
More than 70 percent of the City's budget is for personnel costs, so this is the logical place to make changes, Wharton said.
"I only propose these changes because I am confident that history will show that these difficult choices were the best way to secure the City's pension and its financial future.
Key features of the FY15 proposed budget:
· Strengthening the pension and securing the City financially are key drivers of the proposal.
· No tax increase is proposed, and the budget maintains current levels of core services.
· Recommends transitioning the pension to a Defined Contribution or 401(a) retirement plan.
· Proposes that the City no longer subsidize healthcare benefits for Medicare-eligible retirees and reform current employee health plans for a savings of $27 million.
· Proposes no cuts to public safety and will rely on reorganizations and reassigning of duties to produce efficiencies.
· Includes a pension and public safety reserve of $15 million.
· Strengthens public transportation with an additional $1.5 million allocated to MATA.
· Proposes a major $23 million investment in the Raleigh/Frayser area to redevelop the mall for public and private uses to help revitalize area neighborhoods, create jobs and generate revenue.
For more information on the fiscal year 2015 proposed budget, http://www.memphistn.gov/Government/FinanceDivision.aspx.