Memphis battle of the budget - 14 News, WFIE, Evansville, Henderson, Owensboro

Memphis battle of the budget: Pension vs. 401(k)

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Tuesday night's vote to cut benefits was a surprise to union members and retirees. The council was supposed to begin voting on the changes June 17. Tuesday night's vote to cut benefits was a surprise to union members and retirees. The council was supposed to begin voting on the changes June 17.
MEMPHIS, TN -

(WMC) - In what may be the biggest battle this budget season, Memphis City Council approved massive changes to the city's pension and retiree plans. It was a big vote, but not the last one.

Tuesday night's vote to cut benefits was a surprise to union members and retirees. The council was supposed to begin voting on the changes June 17.

The city proposed the cuts to the pension and retiree systems to make up for heavy debt and a multimillion dollar budget gap. But employees and retirees say they cannot make it day-to-day with the changes the city wants to make.

Dozens of union workers and retirees filled the Memphis City Council committee room Tuesday morning.

"We'll try to put this in writing so everybody can see it," said Memphis City Chief Administrative Officer George Little. "We've got to come in line with the market, if we're going to control these costs."

The city says the current business model is not sustainable and it wants to convert the pension to a 401(k) for employees with less than 10 years of experience, as well as increase premiums on retiree benefits.

"They're proposing premiums about $1,400 for families. In one case, $1,600 or $1,700. They can't pay it," said Retirees Association President Mike Lee.

The unions say the city needs to slow down.

"We're moving at mach speed on something that's going to affect thousands of lives, maybe even cut their lives short," said Fire Fighters Union President Thomas Malone.

Some council members say employees and retirees will not be able to survive.

"The administration has brought to the table something that is so fraudulent, that it's corruptible in nature," said Memphis City Councilman Joe Brown.

Others say those against the cuts to benefits have not proposed a viable alternative.

"It comes down to we have to make cuts or we have to raise taxes. I'm 100 percent against raising taxes, so therefore we have to make cuts," said Memphis City Council Chairman Jim Strickland.

It is unclear at this point how much of a tax increase could happen or what city services could be cut. A decision won't be final until the third reading, so some union leaders say they're not reading much into the vote.

Read more about the Memphis pension debate here: http://bit.ly/1nMuLHp.

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