Prior to Mayor Herenton’s budget presentation to the city council Tuesday afternoon, council members rejected a proposal to merge four departments of MLGW.

With a resounding no vote -- minus an abstention by council member Janet Hooks -- the personnel committee killed the plan, which utility administrators insisted would have saved the city more than $4 million.

The plan would have combined legal services, human resources, audit services, and information services.

In a follow-up to an initial presentation before the council, MLGW director Joseph Lee and city chief administrative officer Keith McGee sought support for the plan. Before the vote, skeptical council members repeatedly questioned the need for the merger, arguing that savings could be realized between the two entities with simple cooperation.

“There are ways to reduce expenses without the dog and pony show of a merger,” maintained council member E.C. Jones. “We can’t even get our own business with the city straight.”

Utility employees and retirees in attendance had bombarded Lee with questions before the start of the committee meeting. Most were inquiring about the status of their pension, retirement, and healthcare plans in light of the merger proposal and the possible sale of other utility divisions. “I’m going on the record to say that there has been no discussion of a sale of MLGW,” Lee responded.

Council member Carol Chumney, whose comments were not heard prior to the vote, told committee members during a break that the savings numbers presented by Lee and McGee would have been skewed had the measure passed. Plans were included in the merger to raise city salaries to those of MLGW equivalents. Chumney’s independent calculations suggested that qualifying the salaries would cost almost $500,000, a sum that would correspondingly diminish the $4 million projected savings.

In a post-budget presentation press conference, Mayor Herenton lamented the merger vote. “The MLGW veto shows a lack of understanding of economies of scale by the city council,” he said. The mayor left council members to mull over a proposed FY 06 budget that calls for a 54-cent property tax increase. Herenton cited a lack in revenue, a downtown in the economy, and 9-11 security requirements as reasons for the budget shortfall.

During his presentation to the council, the mayor had said that the city was still being affected by the 2003 windstorm, although much of the city’s costs were reimbursed with federal emergency management funds. During FY 05 budget presentations, the mayor and other division leaders cited the windstorm as a reason for budget increases, as well.

When asked by the Flyer about the true lingering costs of the storm, Mayor Herenton admitted that the storm accounted for an “infinitesimal” amount of the budget increase. “It all listed [in the budget proposal]. I just told you it was infinitesimal. Look in there; you’ll see.” The Flyer had looked, there and elsewhere; we will subsequently provide more details on windstorm damages and its portion of budget costs.



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