Union Study: Memphis Slashing Employee Health Insurance While Recklessly Gifting Corporations

Thomas Malone, President of the Memphis Firefighters Union

Thomas Malone, President of the Memphis Firefighters Union

The Memphis City Council’s new 2015 budget includes major changes to city employees’ health insurance, a big business win over workers.  City officials say the changes are necessary to offset pension costs and ensure taxes don’t rise.

Firefighters are going to see a 24 percent hike in their health insurance premiums.  Many firefighters have argued that the changes, which cut spouses from the many plans, will financially ruin them.  According to the Fire Critic, the Basic Plan Family premiums will rise from $320.05 per month to $921.90; jacking annual costs up to $11,062.80. Premier Plan Premiums will rise from $334.32 per month to $1,328.19 ($15,938.28 annually).  For retirees the news is even worse: They will now have to pay almost 100 percent of their insurance premiums.  

The cuts, which also heavily impact the police department, have led some to consider an immediate change in profession. According to WMC Action News, Memphis Police Association President Mike Williams reported that his members were busy all day looking for assistance in creating an exit strategy.  As Williams told Action 5:

“The phone has been off the hook today,” said Memphis Police Association President Mike Williams. “We don’t get paid commensurate with the civilian sector for the job we do. So if you don’t have the pension, if you don’t have health care, why are you here putting your life on the line?”

Williams says officers stand at death’s door every day and some feel that threat is not worth the return.

“This is a combat zone out here. It’s a war zone,” he said.

The firefighters union recently presented a study showing the amount of money the city loses via corporate welfare through their Payment In Lieu of Taxes (PILOT) program.   Their report suggests the city loses $42 million each year due to the program which provides tax benefits to multi-million dollar corporations.

From the study:

In 2013 the annual cost of the PILOTs to the city was $42 million, or about 14 percent of the city’s property tax base. The debt deals will be increasing the subsidy bill more in years to come.  

Sixty‐four of the PILOTs have been granted to some of the world’s largest corporations and two performance audits found that more than 63 percent of the deals were not meeting job creation, wage and/or capital investment goals.  

The debt deals have their own problems. The Bass Pro project involves a desperate effort to rescue the troubled Pyramid Arena by diverting a large amount of sales tax revenue to underwrite the cost of a huge retail outlet.  

As part of a $228 million subsidy package that also includes a PILOT deal, city and state bonds are being used to help finance a factory for the Swedish appliance maker Electrolux.

The deal was negotiated secretly and provides taxpayers no money‐back protection if the deal falls short.  

Memphis is also on the hook for financing costs related to expensive sports facilities for the Grizzlies and the Redbirds that, like other stadium deals, are unlikely to pay off.  

Giving all this financial assistance to big business costs more than the ongoing cost of providing pensions to city workers, which has averaged about $33 million annually in recent years.   Annual subsidy costs, which in 2012 were $43.7 million, are running at about 131 percent of the pension costs.

Thomas Malone, President of the Memphis Firefighter’s Union, is livid about the big business favoritism:

“We call that corporate welfare and they’re trying to put our people, the retirees and trying to put them on real welfare.  We got people 80 years old who had their insurance snatched out underneath them.”

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