Can the City Council Draw on "Found Money" to Restore Employee Pay?

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Yogi Berra had it wrong. It ain’t over ‘til it’s over, true enough, but even then it ain’t over! That is the apparent predicament of the Memphis City Council after Tuesday’s meeting at which budget issues relating to the pay of city employees came unsettled after apparently being settled two weeks ago.

By now it is well known that Councilman Joe Brown, among others, has expressed confusion concerning what he voted for in his vote to approve the fiscal 2011-2012 budget. What Brown et al. said Tuesday was that they hadn’t realized they had approved a 4.6 percent pay cut for city employees when they voted on a package lopping off 12 paid holidays.

Mayor A C Wharton would later restore the paid holidays in favor of an out-and-out open and declared pay cut. That was the shift which occasioned all of the pain and denial expressed at the Council meeting Tuesday.

But various Council members say there was no question that, whatever they said this week, every member of the Council was fully aware two weeks ago that, whether by dropping paid holidays or by imposing a simple percentage cut, city employees’ salaries were to be cut by 4.6 percent. That was always a part of the final package.

The immediate occasion of revisionist thinking on the Council, of course, was the tragic killing over the weekend of Officer Timothy Warren — a circumstance which, in the eyes of many, on and off the Council, made the timing of the scheduled pay cut appear questionable, at best.

Hence, the prospect of restoring some or all of the pay cuts at the Council meeting of July 19.
Administration spokespersons, notably city CAO George Little, have responded to that possibility by saying, in effect, it’s a matter of squeezing blood from a turnip, that there is no money left to draw upon other than the city’s perilously low $76 million in reserves.

But, in fact, Councilman Jim Strickland, who does not favor restoring the pay cuts, did some arithmetic this week, observing that Mayor Wharton had brought to the table two weeks ago a budget proposal totaling $671 million — only $668 ½ of which was approved, a fact leading to the prolonged Council stalemate that was finally resolved with the revocation of the 2008 property tax cut of 18 cents.

According to Strickland’s count, the roughly $20 million gained from the tax increase should have put the final budget figure in the neighborhood of $690 million, but the final released budget figure was closer to $680 million, suggesting that the $20 million add-on had been applied against a base of $661 million, not the original $671 million.

Where, Strickland wondered, was the odd $10 million that seemed to have disappeared from the total? And could this amount turn up on July 19 as potential collateral for at least a partial turnaround on employee pay cuts?

Budget chairman Shea Flinn, who had moved for the 18-cent tax-cut restoration on budget night, acknowledged that “the special assessment obviously impacts the budget in some ways, freeing up money.” But, said Flinn, he believed anything gained would be held in reserve for the $57 million debt still owed Memphis City Schools. Rather famously, MCS had sued for and was granted a $57 million court judgment after the Council voted to withhold that amount from the city schools in the wake of the 2008 tax cut.

Flinn was adamant that no money had been secreted away and that, consequently, there was no money to be "found," that all funds had been accounted for by the time of the June 21 budget vote.

Any attempt by the Council to tap into what might superficially appear to be available funds would likely run into the same liability issues that it incurred with its ill-fated vote of 2008, Flinn said. Moreover, he noted, an increase in debt service expense next year would further offset any imagined gain.

In short, the money, more or less in the amount Strickland suggested, might indeed exist, at least as a theoretical sum, but could not be committed, and basically had not, in any true sense, been freed up.

That may not be enough to keep it from being the subject of debate on Tuesday, July 19, however.

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