Behind the Headlines — Feb. 28, 2014

Behind the Headlines — Feb. 28, 2014


(female announcer)
This is a production
of WKNO – Memphis. Production funding for “Behind
the Headlines” is made possible in part by.. Mayor AC Wharton
on the state of the city tonight on
“Behind the Headlines.” [theme music]
♪♪♪ I’m Eric Barnes, publisher
of the Memphis Daily News. Thanks for joining us. We are joined tonight
by Mayor AC Wharton. Thank you for being here. It’s great to be here. Also, Bill Dries, senior
reporter with the Memphis Daily News. And Brian Collins, finance
director for the city of Memphis. Thanks for having me. We’ll start with a big issue. It’s not necessarily
the sexiest issue. But it’s the
unfunded liabilities. It’s a big budget
gap of some size, which we’ll talk about,
that the city is faced with. And then we’ll move in to a
whole range of other issues that are going on right now. But let’s start with this
question of what is the unfunded liability. What is this budget gap? The unions have talked about
a number in the 300 range. I think the administration has
talked about a number in the 700-million range. What is that number
and how is it paid for? It’s a big number. And we don’t have the money,
whether it’s 300 or whether it’s 700. So the issue is.. I mean it’s good for discussion
purposes now but the bottom line whether it’s 300 or
whether it’s 700, we’ve got to make some changes
to come up with the money. We think our numbers are good. We’ll soon find out pretty
soon we’re gonna have all the actuaries in just before
the next council meeting. But the key is
whether it’s 300, 400, whatever, where do
we get the money. That’s the challenge there. And isn’t it? It’s fundamentally, I
mean, really basic level here. You raise taxes or
you cut spending or… That is correct. Or the state does it for us. Which doesn’t seem likely. When I say “for us,” I mean
they come up with an answer. They’re not gonna bail us out. They will come up with an answer
under present legislation and present laws rather or
legislation pending. But those are the choices. It is, I think, Mark Norris,
who’s leading in the state senate, a bill that would
force municipalities — not just Memphis because by no means
— and we always have to say. People think this is
just a Memphis problem. It’s not. It’s a national
problem on many levels. But the state wants areas
to take care of this number. Are you in favor of that
legislation or would you like it modified? I mean what’s your
feeling on that legislature? I’m fine with the legislation. We sat down and talked with the
treasurer and the comptroller. They built in to the
law, a bill at that time, some provisions that will give
us some flexibility along the way. But the bottom line
is come six years, we’re gonna be in compliance. What I wanted to do is
that along the way.. For example, we have that $57
million school thing out there. What if a judge were to come
down next year and say pay it or pay a big piece of it? Then that year, I would
have to say Mr. Comptroller, I got to take care of
this school thing right now. Don’t put the
death penalty on us. So we got that built in. But in the end, we
ended up at the same place. You’ve got to be in
compliance in six year. Brian Collins,
I’ll bring you in. Your finance background —
You’ve been finance director for a year? A little over a year now. Why is there such
a big difference, from a purely
mathematical point of view? Why and how can there be such
differences of opinion on what the number is? Well I think the biggest issues
that remain right now are two. One is is how much will salaries
of employees grow over the next 10, 20, 30 years? And I think what we’ve seen
in the last 10 or 20 years, inflation has been really low
and the expectations that people have built up is
relatively modest increases. But actuaries — and I think
that’s the position that some of the unions are
taking is that hey, recently, growth
has been pretty low. But you have to look at
much longer spans of time. Thirty and fifty years
where inflation is much higher. If we’d a been
having this conversation, for instance, back in the ’70s,
our actuaries are saying that it’s 5%. Well back in the ’70s, I think
people would have said whoa, that’s way too modest. So I think the difference of
opinion is somewhat influenced by the current
economic environment. And the actuaries at P-W-C are
taking a much long review and they expect growth to be higher. So I think that drive is the
primary driver of the difference of viewpoint between the
unions and the P-W-C-H. One more question and
then I’ll get Bill in here. But you know I was thinking
about this before we started the show on some very
simplistic level, if the unions are saying it’s
300 million and it’s going to go to the union workers, why not
throw your actuary away and say well 300 is a lot
easier to get to than the, you know, 700 that
the P-W-C came up with? I mean why not take
the lower number. Well because, look. You have to look at
it in the longterm. It would be yes for us. It would be easy to do that. Politically, it’d be the
best thing in the world. I’m not going to do
that because 10 years, 15 years somebody else will be
sitting around this very table here answering
the same question. That’s what got us to where we
are now — taking that short term view, kicking
the can year to year. I’m not going to do that. Bill? Council Chariman Jim Strickland
on the show last week talked about perhaps doing a
two-year ramp up as opposed to a five-year ramp up. What do you think about that? Look, the quicker the better. And that’s easy to
say right there. But the question then
becomes, how do you do that? Well how? Are you gonna cut expenses, cut
the pay out or are you going to raise taxes? The more you compress
it — which is fine. Let’s get this over with. But it simply means that you’re
going to have to find more money or more cuts in a more condense,
compacted period of time. That’s all it means. I’ve talked with him
briefly, the chairman. I’ve talked with Councilman
Strickland briefly on that. We’re gonna be meeting. If we can find a way to do this
in two years that’s anywhere near reasonable —
Hey, I’ll get on board. We need to get this behind
us though once and for all. Right. And instead of about $15
million over five years, you would be talking about a
$40 million shift from somewhere else over two years with this. That’s correct. And let me before you even
get to asking the question. You’re talking about cuts. The big issue then is are you
willing or would we be willing to take a look at a tax increase
to make up the difference. I’ve said all along
that I would not. Of course, I was looking at a
five-year spread and then did not have the legislation pending
up there that you have to do that. I think we have to remain
open-minded and be very careful when it comes to the public
safety piece because that’s where the money
is quite frankly. Matter of fact, we’re trying to
squeeze right now out of police and fire a total of
about $15 million. We’re working every day on
that, including weekends. We’ve got to come up with that. When it gets to the point where
public safety may be at risk, then you’ve got to
shift to the revenue side. Um.. There seem to be two pieces to
this — the annual contribution and then the bigger
number going forward. Am I off on that or is that an
accurate description of what we’re dealing with? We are. But there are really two
sides to the same coin. One is the total
ununfunded liability, which is the very big number. And then the smaller but still
substancial number is the annual payment that you
make toward that. And right now, the dispute again
is somewhere between 3– and 700 million on the big number. But the number that means the
most to us in the short run, which is the one that we
have to fit in to our budget, is that annual
required contirbution. And that’s going to
grow very substancially. Right now, we’re
paying $20 million. And over the next
couple of years, we have to get that number up
by 50 or more million dollars. But keep in mind, the
unfunded liability, whatever it is, that dark cloud
that’s presently hanging over us, that’s going to stay there
for a while because it’s based on the whole plan
that we now have, the Legacy plan. No matter what we do, it’s
going to be there for the civil future. But now down the road, if we
close that plan — the present plan, that number’s
going to start to shrink. Our annual required contribution
will begin to shrink simply because we’re not
feeding this monster, this $700 million monster
that’s hanging over us. And is that the whole question
of changing the pension plan for future retirees going to, what? — a defined contribution
versus defined benefits? So right now, old retirees have. They’re gonna get a certain
amount of money that’s in the contract that’s in
the pension plan. Going forward — and most many,
many private businesses have gone to this — we’ll put a
certain amount of money in there. It’ll appreciate as it does. And that’s what
you’ll have to work with. And see, to use a weather term,
once the actuaries see that you’re not putting any more
folks in to that monster that you have there, that’s when
you see some relief in sight. Because they know one thing. It can’t grow anymore. Why? No body’s going in to it. And we should go back
and enrich the benefit, which is not going to happen. So that’s where we benefit by
that in the short term because actuaries look at
that and say phew, the city’s getting
it’s house in order. That monster is not
gonna grow anymore. Right. So you would
start in a new plan. I believe the last read I had on
this was with new hires and with those who are unvested who have
been with the city for less than 10 years. That is correct. That’s why they
call it a hybrid. You have the old
existing plan stays. If you’re vested
under Tennessee law, a case they call the
Blackwell, we can’t touch that. So it’s not that
anybody is being timid. It’s just as the law now
stands, we can not touch that. But for those who have
not hit the 10-year mark, those who have
not yet been hired, they go in to a new
plan, 401k type plan. We increase our present
contribution which is 6%. We increase it to 8%
for those individuals. Let me move. We’re about 10 minutes in here
and we begin to shift to off the pension question. I mean it’s a huge number. I mean we kind of joked last
week about it’s not the sexiest or most compelling issue. But it is compelling in terms
of the dollar amounts to it. But you talked about fire and
safety and I think the numbers. And Brian Collins,
you can correct me. What is it? — 80% of all city
employees are fire and police. And salary benefit, all of that
is the biggest number I assume in the budget. There’s been talk
about trying to shift, you know, some
police work, let’s say. We’ve got uniformed officers
doing more clerical work. And can we get civilian
people doing that and uniformed officers out on the
street fighting crime? What kind of shifts are possible
within the police department and police spending in
this going forward? Well there are a number
of backroom services, if you wish, that could be
civilianized as the term is. Those are the kinds of things. Do you need uniformed officers
to sit behind the consoles at the real-time crime center? Those things. Other things that have
been placed on the table, and I say placed on the
table because they’re not yet proposals. Do we wish to continue
investigating every non-injury auto accident? Fender-bender, now
we’re full service. Many police
departments do not do that. Those are the kinds of things. And you look at those things
because one thing you do not want to do is to take boots
off the ground when it comes to those things that
bring the most fear. We want the uniformed officers,
the boots on the ground. Now is there anything behind the
streetcar or cars on the street that you could change, yet keep
the police present out there? Do we wish to go back to P-S-Ts? If you decide to
investiage all accidents, do we need fully loaded
uniformed commissioned officers out there doing that? Those are the things
we have to look at, keeping in mind that you never
want to get to the point where when you call and
there’s a threat or whatever, they got to be there. Okay — Bill? Do the police and fire
departments — Do you feel like they are where they need to
be now in terms of personnel? Because the issue with those
two units in particular has been recruit classes. We have more people retiring or
about to retire and leave than we have coming in. So the thinking is the
compliment might be at some risk of falling below an
acceptable level. Let me take the fire
department first because.. And I credit them. Director Benson
has done a good job. Over the past three years,
he has cut completely 114 positions. So I’m really looking
more closely at that. Police department is
another situation. I am not yet convinced that
we’re at the point where we simply can not cut anymore
or become more efficient. Let’s put it that way. We’re looking at
that right now, Bill. I mean.. And we’re bringing in
outside consultants. We’re bringing Dr. Janekowski,
who knows as much about this police department
as anybody else, works well with
Director Armstrong. Director
Armstrong, to his credit, has given me, starting
at a million dollars. Take this million off,
I’ll stop doing this. Take two million
off, we won’t do this. Take three million off and
we’re going all the way up. Now at some point in there,
you’re gonna get down to the bone marrow. You’re gonna get
somewhere in there. Where that is, I do not know. But we’re going through
that exercise right now. Right. And there’s got to be people
listening saying what are we talking about cutting police
when there have been a series of shootings. I mean some tragic
shootings lately. I know that, I think, Tony
Armstrong would say and other people would say well
overall, crime is down. We have to remember that. But every shooting is one
shooting too many kind of thing. So your take on that? You don’t want to put.. People don’t want to feel. Crime is a reality and
it’s also a perception. And they can’t perceive that
we’re pulling back on crime fighting efforts, I suppose. And that’s why it’s going
to be a very difficult sell. Let me tell you. It’s one things to sit wtih
folks in the business community who analyze things. And then as Brian will tell you,
we’ve been to three town hall meetings in the last
two weeks — Whitehaven, West Wood and Orange Mound. And the citizens are saying
we don’t want anything cut from the police department. That’s going to be a
very difficult sale. You are absolutely right. You know it used to be when
I’d go to town hall meetings, folks would get up and say we’re
tired of these police roughing us up. And they’re abusing up. And they’re mean and
they’re disrespectful. We have not heard one
of those complaints. It’s just the opposite. You’re absolutely right. We’re going to have to do
a better job of educating. And keep in mind, this is not
about taking police officers away from protecting people. That’s first and foremost. But are there things that
are not on the first line of protection out there
that we could revamp, that we could shift to other
agencies or do a different way? That’s what we’re talking about. Critics.. I mean as we talk
about spending, we talk about the pension side,
we talk about the crime side, you get critics who say
okay, that’s all well and good. But why is the city doing things
like investing in a baseball park Downtown or funding
Crosstown or Overton Square — these projects. Whitehaven — there’s
talk now about converting, what? Is it the Southbrook mall
and the Raleigh Springs mall? Those are multiple
millions of dollars. And you’ve got people saying
well whya re they doing that. Why don’t we put more
boots on the ground? Why do we spend money in those
kinds of fanciful projects? And I’m not
saying I believe that. But you hear it. I know you do. So let’s start with you but then
we’ll talk a little bit about the finance side of that too. Why are those things worth
while in the time of constricted budgets? You hear the term
economic engine. You have to feel. You have to put the coal in
the furnace that’s running your economy. And in other cities, it
would be manufacturing. In Las Vegas, it
would be casinos. But we are a tourism
based, service based economy. Tourism brings
millions of dollars in here. We gotta keep that engine going. The stadium is a part of that. Graceland is a part of that. Whitehaven is a part of that. The T-D-Z on the fairground. Those are the things that
bring the dollars in here. Now if we can shift
our base, economic base, economy base to
more manufacturing, which we are trying to do
but we’re not there yet, then we wouldn’t have to keep
building all of these amenities. We wouldn’t need Bass Pro
because we’d have a General Motors plant, a
Ford Motors plant. But we don’t have those. So we have to dance with the
boy you brung us to the dance. And it’s tourism, Graceland. You’ve seen the studies. Beale Street, Graceland, Civil
Rights Museum — three most iconic places. I didn’t say that. National Geographic said that. That’s what’s
bringing the money in here. That’s how we’re gonna
make up this pension cost. That’s how we’ll fund
schools and all those things. We have to feed the engine
that’s employing the people here. That’s what it boils down to. What is the key? There’s the operating budget and
then there’s the capital budget. Is that correct? And a lot of what we talk about
when we’re talking about when we talk about these projects
are in the captial budget. Are you comfortable, again
from a finance point of view, that these projects are
one, they’re appropriate to be financed but that
there’s accountability? That’s another thing people say. Is anyone really checking to see
that these projects are paying off or are we just writing
a blank check and there’s developers running off and
doing whatever they want? No, the biggest projects that we
just mentioned — your Bass Pro, for instance, is
really the largest one. And you’ve got
the Autozone Park. Both of those are going
to be self-sustianing. So not only are they going to
help tremendously attract more tourism dollars to the city,
they’re also going to pay for themselves out of the increased
sales tax that we’re gonna generate. And no, we just haven’t
let the developers run. We have been watching
very, very closely. The Wall Street
watches this very closely. All of the plans, all of the
projections get scrutinized not just by the developers but by us
and by Wall Street who are the folks who expect to be
repaid on those bonds. So that goes through a process
that doesn’t take away from the money that we spend
on the operating side. There’s this misperception that
everytime we spend a million dollars on a captial project,
somehow that’s taking away from oeprating dollars. In fact, the opposite is true. It doesn’t take
away, number one. And number two, it
really helps build the base. It generates a better
economic environment. It brings more jobs to the city. Is there a point at which —
one more question on this — of what.. In the financial crisis, people
talked about moral hazard, the federal government bailing
out big banks and bailing out big A-I-G. Is there a point
at which, you know, some of these really
very privately oriented developments.. I’ve heard many people pick on
the Hotel Chisca development. I work Downtown. I love seeing that
place getting redeveloped. But shouldn’t that have
just been a private project? Why did the city
have to get involved? And every project that
you get involved in, does that bring one more person
to the trough saying well I’ll get a little of that money too? I mean, you know, I hear that
criticism a lot that it creates this expectation in what should
be purely private projects. Look, if you were to look
at the things we turn down, you would see that we don’t just
grab everything that comes down the road. And sometimes, particularly,
take the Chisca for exmaple. You have a piece of property
that’s fallen in to such a blighted condition, it’s
damaging properties in terms of value all around it, right
across the street from The Orpheum there. So it is proper for government
to step in and to be a part of the process so that the private
investment is willing to come in. But we’re not gonna go in 100%
on our own and start doing that. So it’s a mix and we try to
strike that balance on each of the projects. Bill? Mayor, you were in New Orleans
at the end of the week with the President and talking about.. We talked earlier about probably
a different level of the city’s approach to fighting crime. The discussion yesterday came as
there was another shooting here. Talk a little bit about the
President’s initiative and where the city is on that and kind of
the impact of not so much the crime statisitcs but the
anecdotal evidence that we deal with in terms of violence? — which you have said is
more than a crime problem. It’s actually a
public health issue. It is. It is definitely a
public health issue. The President, and
uncharacteristically so, has said look, let’s quit
being so academic about this. We know where the challenge is. It’s with young men of color. In Memphis, for the most part,
that happens to be young black men. We’ve got to just
fess up to that. Face up to it and
quit being academic. Oh, young children
are in jeopardy. Let’s be very precise. Young male blacks in the city
of Memphis are in grave jeopardy and the United
States as a whole. For the first time
in his presidency, the President looked
right in the camera, told a nation we have something
that we have to come to grips with. We can not do it simply by
saying let’s just round them up. Make everybody mad. See the value side of it. When you get inside
their heads and minds, as the President did, which
moved him to come up with the program yesterday. He was in Chicago when he ran in
to this group of kids who just spoke out to him. He got to see what
was inside them. He said let’s
take this national. We’ve got to do that here. We can’t build anymore juvenile
court detention halls and more jails. We’ve got to get in and use
programs as we’re already doing with the Bloomberg money to take
these young men where they are and take them to
where they ought to be. The face of crime in
Memphis, the nation sees this. We just made the
national news with.. And this is
anecdotal but it’s the life. Two lives have been ruined. A 13-year-old is
dead — physical death. The 15-year-old’s life
will never be the same. More and more and more, that’s
becoming the face of crime. And this is where we’re
gonna just come up with precise programs to focus
on the positive. Try to flip the script on this. Do you think that our criminal
justice system here in Shelby County as it currently stands
meets that challenge that the President outlined? Are we doing the right things
in our criminal justice system’s approach or are we doing what
we’ve just been doing for a long time? It’s spotty. Let me answer your question. Does it meet the standards now? No, it does not because we
are heavy on the prosecution, heavy on the incarceration,
heavy on the punishment side. Now this is not to say that
you just give up on suppression. You’ve got to hold
people accountable. But if we spent just one half as
much on getting to these kids.. And they’re kids. I’m not using that. They’re kids. They’re children. That’s what a 13-year-old. Get them. And it’s very costly though. If I didn’t have
the Bloomberg money, I wouldn’t be able to
do the Literacy program. I wouldn’t be able to do the
Summer Night Lights programs to keep then engaged at night in
basketball and things like that. But no, we are not there. We’ve got to get there. They’re gonna eat us
alive if we do not. How do you think we get there? You know the system from
being a public defender. Where do we start
to turn it around? That’s what the President’s
My Brother’s Keeper is. We have to stop saying oh, I
don’t do a black boy crime. That’s not my thing. I’m in healthcare. I don’t do black boy crime. I’m a minister or
I’m a business person. Look, if you’re in this town,
you’re being impacting by what young male blacks are doing. Your stores are closed. People are not investing. Folks are moving out. The fear factor is there. Let’s face it. And everybody’s impacted by it
so they are your little brother. That’s what it’s
all about, Bill. The system, me, 201
Poplar will never do it alone. But if we, as the
President has done, give the
philanthropic community.. I was just reading this morning
the Kellogg Foundation is investing $750,000 just to
try to design a program. And then they will come up with
grants for programs that work. So to answer your question, My
Brother’s Keeper means this is everybody’s problem. It is not a criminal
justice system problem. Just a minute left. I mean is it.. You find at this point.. I mean it’s 2014,
not, you know, 1968. That talk about race, that it’s
a more comfortable conversation for people, that you can talk
about young black men and the problem there without vilifying
a whole race of people. That’s correct. We have to be just honest. And I said this down in
New Orleans yesterday. I don’t feel guilty when I go
in to a community and say let’s come up with this program. And if the room is 100% black,
there’s nothing negative from that. Let’s just come to grips with
it and quit tiptoeing around it. We will leave it there. Thank you very
much for being here. Brian Collins, thank
you for being here. Bill Dries, thanks. And thank you for joining us. Goodnight. CLOSED CAPTIONING
PROVIDED BY WKNO – MEMPHIS.

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