Archive for December, 2013

Looking Forward to 2014

Monday, December 30th, 2013

December 30, 2013


What’s New for 2014?


Well the affordable care act (known generally as Obamacare) is going to be on everyone’s mind. On my mind for some time has been the question of how it would affect the already high health care costs of the City of Memphis, Shelby County and the MLGW. This is a big subject and I will take on first the City of Memphis. I finally got their new rates and information for active employees. Here is the information and here is the statement about the new plan and rates.


1) City of Memphis plans are no longer considered Grandfathered under healthcare reform

2) Pre-Existing Condition Limits no longer apply to anyone regardless of age

3) Dependents covered to age 26 even if the child has access to his/her own employer coverage.

4) All copayments, coinsurances and deductibles now apply toward the Out of Pocket (OOP) Maximum

5) Coverage for Clinical Trials

6) Additional guidance for Women’s Preventive Health/Contraceptive Coverage – No Cost Share

7) Vitamin D Coverage for prevention of falls in older adults

8) Medical Plans – Employee contribution increased to 30%

9) Increase in dental premiums

10) Increase to ER Copay – Medical Premier Plan Only

11) A third medical plan option – the Value Plan

12) Notarized documents no longer required; instead you must provide your Oracle employee ID number

(located on your ID Badge or your paycheck stub) along with your signature.

Obamacare has arrived, whether you like it or not, and the costs have been driven up about 16.8%. The City of Memphis is self insured and pays all the medical costs but an insurance company handles the paperwork.

The following is the conclusions of Mercer (a city hired health care consultant) in a report dated April 23, 2013) on the impact of Health Care Reform on the City of Memphis.

  • Cost could increase annually by $7.6 million if all of the current waivers enroll in the plan.
  • Excise tax for 2018 is $477,000 dollars and will accumulate to $50 million over the following 10 years.
  • If the affordability test was based on dependent coverage contributions, City of Memphis could pay a penalty for up to 25% of their population.
  • Transitional Reinsurance fee will cost the City of Memphis about $1.4 million starting 2014.

Here is a brief recap of the new rates. This is the total annual cost with the City paying 70% and the employee paying 30%.

  • Premier Plan for a single                                                    $6,015.20
  • Premier Plan for a family                                                    $14,201.60
  • Basic Plan for a single                                                          $5,544.00
  • Basic Plan for a family                                                         $13,757.60
  • Value Plan for a single                                                         $3,360.00
  • Value Plan for a family                                                        $11,800.00

How does this compare with what you will pay in 2014 if you know? You will have to look at the details of the plan which I have attached above. There is much more to explain but this is the first dose of the new health care landscape.


Christmas Greeting

Monday, December 23rd, 2013

December 23, 2013


It may seem that I am forever speaking about our local problems with government and its finances. And I must admit that I spend a lot of time researching these facts and figures. Recently I went to several parties and wore my favorite red Christmas tie, “Bah Humbug”.



Also hanging on my office door is a painting of me “The Grinch” done by my daughter. The likeness is remarkable.


However I am forever optimistic and believe that we are turning a corner here in Memphis, Shelby County and the Country. The problems have become so obvious that reasonable people are demanding common sense solutions. We must live within our means and (more…)

Mayor Wharton Says Spend! Spend! Spend!

Monday, December 16th, 2013

December 17, 2013

Mayor Wharton Says Spend! Spend! Spend!

In a very interesting article in the Daily News by Bill Dries, the Mayor is quoted from a TV interview in July on the WKNO-TV program “Behind The Headlines” as saying the following.

“ projects like the Mid-South Fairgrounds renovation and the Bass Pro Shops move into The Pyramid are necessary ingredients in an administration he has vowed will not be about austerity measures. It has failed in Europe … this idea that austerity will cure all ills. It has not worked globally. It will not work locally. … Who is focusing on growth? Everything is cut, cut, cut. Anybody can say that. Forrest Gump can say that.”

This sounds like a statement coming from the White House, not City Hall. He may be repeating talking points. However it sounds like someone who has run out of other people’s money and is fishing for more. I hate to sound old fashioned. As someone who has run a business and has had to meet a payroll, spend, spend, spend is not a good long term strategy unless you can show investors from past successes and a well thought out plan, that there will be future revenue, revenue, revenue to cover the debt, debt, debt. But I repeat myself.

Now as to the pension reform mentioned in the CA, I like the framework of the plan but it does not go far enough. Going to a defined contribution pension plan for future employees and non vested present employees is fair and puts them on the same risk level as the private sector taxpayers. The “for profit” private enterprise market generally has been good to investors for the last 25 years with the exception of 2008. Why should public sector employees be insulated from the risk that private sector taxpayers take?

However we also need to consider that it may be necessary to look at current vested employees and consider freezing their earned pension credits at their present levels and also put them on the same future defined contribution plan for their future years before retirement. However he retired pensioners should be protected short of city bankruptcy like Detroit. These considerations and plans are necessary to avoid another Detroit in the future.











A Backdoor Tax Increase

Sunday, December 15th, 2013

December 12, 2013

A Backdoor Tax Increase

The City Council has passed another backdoor tax increase by unloading street lighting electric cost and maintenance on the MLGW. You already see a sewer fee, a solid waste fee, a storm water fee and a mosquito/rodent control fee on your utility bill.

The utility expects the fee to raise a total of $12.9 million per year, of which roughly half would go toward electricity for the streetlights and half would go toward maintaining them. This is an expense that is covered by the services paid for by property taxes. Now the City Council wants to take it out of their expense budget and bill it directly to the taxpayers through the MLGW billing process.

Here is what I investigated and found out. If you will look at the 2012 operating budget. The City shows an actual cost of $4.3 million for street lighting in 2010 but a 2012 adopted budget of $12.1 million. Then look at the 2014 operating budget and they show an actual (more…)

A New Plan For Downtown Memphis

Tuesday, December 10th, 2013

December 10, 2013


Please excuse my presumption to comment on downtown Memphis. My credentials are as follows.

1)      I was born and raised here and ran a business along with my brother for over 40 years.

2)      We employed over 60 people and eventually sold the business. Our plant was in south Memphis at 66 West Colorado.

3)      I am familiar with down downtown Memphis and with the beautiful bluffs and the river which are our greatest assets.

I think that we have wasted our greatest asset (the beautiful view of the river) but it is not too late to put it right.

Look at some views of downtown as it is now.

The Old Pier Restaurant on Wagner south of Union.

The Old Cossitt Library on Monroe and front.

The ugly downtown parking garage

This shows you what the riverfront looks like viewing south from front. You see the Riverfront Development and then the old Rivermont with the best view of the river. However there are no restaurants there now.




Compare this with some views of how rivers are treated and developed in Germany. Below is the Rhein River.



Below is shown the river in the port of Hamburg with restaurants, offices, industry, condos and homes

Below is shown a view of Berlin with the river and public buildings, offices, restaurants, parks and life everywhere

This takes careful planning which we have not had in Memphis.

Is it too late to reverse the trend for downtown Memphis? Is the investment in BassPro, the Redbirds stadium and all the other proposals the right way to go? I think we should have citizen input and scale back proposed investments and target one project that could really work and that would involve the parking garage, the Cossitt Library property that could be developed into a destination park, a great restaurant and beautiful views of the river. Think what we could have done with the RDC development money if we had put it into something worthwhile. Think what we could have done with the beautiful bluffs on Wagner south of Beale if we had had a mixture of offices, restaurants, condos, homes and businesses instead of just condos and private homes. Anyone interested? Let me hear from you.

The Convention Center and Kevin Kane

Wednesday, December 4th, 2013

December 4, 2013

The Convention Center

I have been out of town visiting my daughter, son in law and grandson in San Francisco. It is a lovely town but not much fun getting there and returning by air from Memphis. I picked up a recent morning paper and found that the flights from Salt Lake to Memphis and back were being cut further. In past years there were nonstop flights from Memphis to San Francisco but now we have to fly to Timbuktu to get there and the price is out of sight.


I spent the first day back visiting with Kevin Kane, President and CEO of the Memphis Convention and Visitors Bureau. It was a pleasant visit and he is very knowledgeable about the Convention Center and visiting Memphis in general.


What I was after was the annual financial statements of the Cook Convention Center. I had tried to get these statements directly from the Convention Center office but either they were never in or they refused to answer calls. I had the June 30, 2007 financial statement but none later. The 2007 statement showed a loss of $3.5 million dollars.


After discussions with Kevin he promised me that he would get the 2008 through 2012 statements to me and that since 2007 the losses have been cut at the convention center. He sent the statements later and the 2012 loss at the Cook Convention Center was cut to $2.8 million dollars. We discussed the future of convention centers in general and the new costly one in Nashville and the old Cook Convention Center and the possibility of a new one for Memphis. He said that all convention centers lose money but the purpose is to develop tourism for the city and make money on tourism generated sales taxes and hotel, motel and car rental taxes. I speculated that internet advertising and electronic face to face meetings might eventually diminish convention trade but he contended that face to face meeting were still important.