Monday, December 28, 2009

Council to Look at Cuts on the 12th

Posted By on Mon, Dec 28, 2009 at 10:45 AM

When the Memphis City Council comes back its first meeting on the 12th, it will be looking to make at least $10 million in mid-year budget cuts in order to fund a payment to the Memphis City Schools.

Memphis mayor A C Wharton will be bringing proposed cuts to the council, including consolidating services within city government and with county government, but he could not say how many jobs he thought might be effected or cut.

The council hasn't voted on terms of the payment, but a proposal on the table includes taking $30 million from the city's reserve fund, cutting $10 million, and giving the school system $10 million in debt forgiveness (for money the city says it's owed by the schools).

It's been said that this is a rainy day for local government, but it's not a storm that couldn't have been predicted.

Ever since the City Council decided in 2008 not to fund the school system as much as it had been, and perhaps violating the state's "maintenance of effort" clause that mandates education funders maintain their previous level of funding, there's been a multi-million dollar tug-of-war between the city and the city schools, in court and out, over who owes what to whom.

But it could have been helped if the council had made some harder choices back in the spring.

At a time when other local companies, FedEx among them, were instituting pay cuts, hiring freezes, cutting overtime pay and 401(k) matching contributions, the city's current-year budget included a 3 percent raise for employees.

Nice work if you can get it. Had the council held employee salaries steady — at a time where most people are just happy to still have a job — they would have saved $11 million.

Some of the other controversial areas — travel expenses for the council, travel expenses for the RDC — would really have been more symbolic than actual savings. Like saving up your pennies to buy a car. But the salaries were the largest cost increase of the year.

Now, mid-year, even taking those cost-of-living increases back would only save $5.5 million. And if it was a hard decision to keep salary levels steady, I suspect it will be much harder to institute what will now be seen as a pay cut.

Sometimes the hard choices turn out to be the kindest ones, especially in the long run. Now that the new mayor is looking at making budget cuts, he's hinted that it might mean layoffs, but he didn't provide additional details.

Theoretically, I'm always up for giving employees a raise, but you can't get one if you don't have a job.

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