Memphis, Tennessee, Public Safety Officer Benefits and Pensions Sales Tax Initiative (October 2019)
| Memphis Public Safety Officer Benefits Sales Tax Initiative |
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| The basics |
| Election date: |
| October 3, 2019 |
| Status: |
 Approved
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| Topic: |
| Local sales tax Expires in: No expiration |
| Related articles |
| Local sales tax on the ballot October 3, 2019 ballot measures in Tennessee Shelby County, Tennessee ballot measures City tax on the ballot Local pensions on the ballot |
| See also |
| Memphis, Tennessee 2019 Memphis mayoral election 2019 Memphis city elections |
A sales tax for public safety officer benefits was on the ballot for Memphis voters in Shelby County, Tennessee, on October 3, 2019.[1] It was approved.
| A yes vote was a vote in favor of increasing the city's sales tax by an additional 0.5% (from 2.25% to 2.75%) in order to fund health benefits at levels provided in 2014 and pensions at levels provided in 2016 for fire and police public safety officers; the measure was to earmark any additional revenue for roads and pre-kindergarten education. |
| A no vote was a vote against increasing the city's sales tax by an additional 0.5% (from 2.25% to 2.75%) to fund health benefits and pensions for public safety officers, thereby leaving the public safety health benefits and pension plans at their existing rates and the total sales tax rate within the city at 9.25%. |
‘’Tennessee has a statewide sales tax rate of 7%. The average local tax rate in Tennessee, as of 2019, was 2.489%.[2]’’
In 2019, half of the revenue from the city's 2.25% sales tax went into the general fund and amounted to about $113 million.[3]
In Tennessee, local option sales taxes apply only to the first $1,600 of a single purchase. The 0.5% additional tax rate proposed by this referendum would, therefore, result in a maximum of an $8 increase in sales tax on the purchase of a single item. The measure's approval increased the sales tax rate, but the allocation of revenue to the designated areas must be approved by the city council.[4]
Going into the election, the city's sales tax rate was last increased in 1984 from 1.5% to 2.25%.[3]
Election results
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Memphis, Tennessee, Public Safety Officer Benefits and Pensions Sales Tax Initiative (October 2019) |
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| Result | Votes | Percentage | ||
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49,689 | 52.50% | ||
| No | 44,962 | 47.50% | ||
Text of measure
Ballot question
The ballot question was as follows:[5]
| “ |
Shall the ordinance to increase the sales and use tax in the City of Memphis by 0.5%, from 2.25% to 2.75% become operative? The proceeds of this 0.5% tax increase shall first be used to restore and maintain the health care benefits for Public Safety employees (employees and pre-65 retirees of the Memphis Police Services and Fire Services Divisions) to the levels in effect as of July 1, 2014, and to restore and maintain the pension benefits of said employees hired prior to July 1, 2016 to the levels specified in the 1978 City of Memphis Pension Plan. Any remaining proceeds shall be used for street maintenance and/or pre-kindergarten education. All funds must be spent for the purposes designated above. These funds are to be used in addition to, and may not be used to replace or supplant, any current funding for the above purposes. Such tax shall be collected by the Tennessee Department of Revenue. A lawsuit for recovery of any tax illegally assessed or collected shall be brought against the City Treasurer of the City of Memphis.[6] |
” |
Full text
The full text of the initiative petition was as follows:[7]
| “ |
We, the undersigned registered voters of the City of Memphis, Tennessee, hereby request that the Memphis City Council adopt an ordinance to increase the sales and use tax in the City of Memphis by 0.5%, from 2.25% to 2.75%. The proceeds of this tax increase shall first be used to restore and maintain the health care benefits for Public Safety employees (employees and pre-6S retirees of the Memphis Police Services and Fire Services Divisions) to the levels in effect as of July 1, 2014, and to restore and maintain the pension benefits of said employees hired prior to July 1, 2016, to the levels specified in the 1978 City of Memphis Pension Plan. Any remaining proceeds shall be used for street maintenance and/or pre-kindergarten education. All funds must be spent for the purposes designated above. These funds are to be used in addition to, and may not be used to replace or supplant, any current funding for the above purposes. Such tax shall be collected by the Tennessee Department of Revenue. A lawsuit for recovery Of any tax illegally assessed or collected shall be brought against the City Treasurer of the City of Memphis. As stated in Tenn. Code Ann. 67-6-707, if, within thirty (30) days from the filing of this petition, the Memphis City Council does not adopt said ordinance and file a certified copy of such ordinance with the county election commission, this petition shall constitute an ordinance requiring a referendum on the question to increase the city sales and use tax. [6] |
” |
Support
The Campaign for Public Safety led the campaign in support of this measure. The campaign was sponsored by the Memphis Police Association and the Memphis Fire Fighters Association.[1][8]
Arguments
- Memphis Fire Fighters Association President Thomas Malone argued that the police and fire departments had had recruitment and retention problems since 2014, citing a reduction in the benefits offered by the city. He said that the referendum would allow the city to be more competitive and retain quality police officers and fire fighters.
- John Covington, the chief negotiator for the Memphis Police Association, said, “You can’t recruit your way out of a retention problem. The process began in 2014 when the city began making cuts to healthcare benefits. …We’ve been trying to get those restored. Basically it (referendum) will restore and maintain healthcare benefits.”[9]
- The Campaign for Public Safety website stated, "Let’s keep these employees here and committed to serving the City of Memphis! Voting FOR the referendum shows a commitment from the citizens to ensure dedicated public safety employees and retirees have what they need to commit to a career here and not just a 'job.'"[8]
The Memphis Police Association and the Memphis Fire Fighters Association estimated the tax increase would provide $52 million in revenue annually. The groups estimated that $34 million of that would be required to bring health benefits and pensions to the level designated by the petition.[10]
Opposition
The Coalition for Safer Neighborhoods political action committee (PAC) paid for ads in opposition to the sales tax referendum.[11]
Opponents
- Memphis City Council Chairman Kemp Conrad[12]
- Shelby County Commissioner Edmund Ford, Jr.[12]
Arguments
- Kemp Conrad said, “This will put us back on the wrong path. It's not right by anybody except the union leaders who would maybe get elected a couple of more times. [...] It's just the wrong answer and the right answer is [to] continue to do the hard work of growing our city, so we'll have more funds to continue increasing the pay for police and fire like we've done the last three years.” Conrad also argued that the city is hiring more police and fire employees and providing competitive compensation and that the tax measure would not provide for increasing healthcare and pension costs and could ultimately result in additional staff reductions in the long run.[12]
- Ads funded by the Coalition for Safer Neighborhoods PAC argued that the proposed tax is regressive and that residents of Memphis shouldn't have to pay it. It also argued that fire and police departments are meeting staffing needs with the existing levels of pension and health benefits. It also argued that the sales tax would not provide additional revenue for other services besides pension and healthcare benefits for police and fire officers as supporters claimed.[11]
Background
In June 2014, the Memphis city council voted to reduce benefits for city employees when they voted on their budget for the fiscal year of 2015. The intention was that the money no longer going toward city employee benefits would be used to pay down the pension and healthcare debt. Brian Collins, the city's finance director at the time, said, "[T]here was nothing less than a dramatic change that was going to make a difference when we were looking at liabilities that large."[13]
Changes to health benefits
The following describes how healthcare benefits for city employees were changed:
- health insurance premiums increased by 24%
- the city subsidy, which covered 70% of a retiree's healthcare cost, ended
- the additional fee for smokers increased from $50 to $120 per month
- spouses were no longer covered by the city's healthcare plan if their employer offered insurance
- a safety net for those in need was established, which included a new wellness clinic free to city employees and retirees
Following the announcement of these reductions, both the Memphis Police Association and the Memphis Fire Fighters Association coordinated sick-outs that were referred to as the blue flu and the red rash, respectively. At the peak of the sick-out in July of that year, over 550 police officers stayed home on one day, which comprised one-fourth of the police force at the time. [14]
Changes to the pension plan
In addition to the reductions in healthcare benefits for city employees, the city council voted in December 2014 to adjust the pension system for all city employees with less than seven and a half years of experience. The number of employees this applied to constituted 40% of the city's 4,100 employees. At that time, the city's pension was underfunded by $554 million. The vote enacted a hybrid plan called a Market Based Cash Balance 401(a) Plan, which guarantees retirees a minimum annuity while also sharing risk with employees by investing part of the money in a more typical retirement account.[15][16]
Police and fire staffing levels
According to the Memphis Police Department’s annual reports, the total number of commissioned personnel was 2,131 in 2014 and 1,959 in 2017. The total number of Memphis Fire Services employees was 1,789 in 2014, and 1,784 in 2017.[17][18][19][20]
Sales tax rates
Tennessee has a state-wide sales tax of 7%. The state limits additional sales tax to 2.75%. In 2012, the Shelby County cities of Arlington, Bartlett, Collierville, Germantown, and Lakeland increased their local sales tax to 2.75%. Before the ballot measure was introduced, five cities in the county, including Memphis, had a sales tax of 2.25%. As of 2019, the average local tax rate in Tennessee was 2.489%.[2][21]
Path to the ballot
The authority for a ballot initiative petition for a sales tax is granted by state law in Tennessee Annotated Code Section 67-6-707. That section of code authorizes a citizen signature petition to initiate a sales tax measure in a county or municipality. The petition requires valid signatures equal to 10% of the registered voters within the jurisdiction. If a petition with a sufficient number of valid signatures is submitted to the county election commission, the county board or city council has 30 days to pass the requested tax ordinance. If the ordinance is not passed, the county election commission must call for an election on the measure.[22]
This measure was put on the ballot through a successful initiative petition campaign. In January 2019, the Memphis Police Association and the Memphis Fire Fighters Association submitted about 140,000 signatures. A total of 38,450 valid signatures were required to put the measure on the ballot. On July 5, 2019, the Shelby County Election Commission stated that enough of the submitted signatures were verified to put the initiative on the ballot for the election on October 3, 2019. Approximately 100,000 signatures were rejected as invalid.[1][23]
See also
External links
Support |
OppositionSubmit opposition links to editor@ballotpedia.org. |
Footnotes
- ↑ 1.0 1.1 1.2 WMC Action News 5, "Sales tax increase for public safety to fall in the hands of Memphis voters this fall," July 5, 2019
- ↑ 2.0 2.1 Sales Tax Handbook, "2019 List of Tennessee Local Sales Tax Rates," accessed August 30, 2019
- ↑ 3.0 3.1 Memphis Government, "FY 2019 Adopted Budget: General Fund Revenue," accessed August 24, 2019
- ↑ Tennesee State Code, "§ 67-6-702," accessed August 25, 2019
- ↑ Shelby County Elections, "Memphis City October 3, 2019 sample ballot," accessed August 24, 2019
- ↑ 6.0 6.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Memphis Business Journal, "Memphis Police and Fire unions propose sales tax hike to pay for benefits," January 14, 2019
- ↑ 8.0 8.1 The Campaign for Public Safety,, "Home," accessed August 25, 2019
- ↑ TSDMemphis.com, "POLITICS 2019: Don’t overlook the sales-tax referendum," August 23, 2019
- ↑ WMC 5, "MPD, MFD open office for Memphis Public Safety Referendum campaign headquarters" August 17, 2019
- ↑ 11.0 11.1 Fox 13, "New, mysterious PAC jumps in election with push against Public Safety Referendum," October 2, 2019
- ↑ 12.0 12.1 12.2 WMC 5, "Police, fire sales tax referendum gets public opposition," September 11, 2019
- ↑ Memphis Flyer, "Memphis' Battle Over Employee Benefits," September 11, 2014, accessed August 30, 2019
- ↑ Reuters, "More than 550 Memphis police call in sick in 'blue flu' protest," accessed August 29, 2019
- ↑ The Wall Street Journal, "Pension Fight Comes to a Head in Memphis," accessed August 29, 2019
- ↑ City of Memphis, "Comprehensive Annual Financial Report 2014," accessed August 29, 2019
- ↑ Memphis Police Department , "2014 Annual Report," accessed August 29, 2019
- ↑ Memphis Police Department, "2017 Annual Report," accessed August 29, 2019
- ↑ City of Memphis, "Fire Services Annual Report 2014," accessed August 30, 2019
- ↑ City of Memphis, "Fire Services Annual Report 2017," accessed August 30, 2019
- ↑ Tennessee.gov, "Local Sales Tax Rate Change—Cities of Arlington, Bartlett, Collierville, Germantown, and Lakeland," accessed August 29, 2019.
- ↑ Tennessee Annotated Code, "Section 67-6-707," accessed July 25, 2019
- ↑ Local Memphis, "Referendum to raise Memphis sales tax to restore benefits for police & fire will be on October ballot," June 20, 2019
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