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December 30, 2005 A very important question needs to be answered about MLGW natural gas rates. We know that gas rates are going up and we were told to expect up to a 70% increase this winter. But in a report sent to me by one of the smartest guys I have met in a long time, a CPA by education and employment, he points out that nationally natural gas rates have gone up 38%, but my rate and others I have talked to see a 104% increase in our price per CCF. We all smell a rat and it seems that the MLGW is padding the markup for natural gas to cover the 6% overall increase in the MLGW budget or could it be that the City wants some of this increase or another possibility is that they know that a lot of bills will not be collected this winter and those who will pay are being overcharged to make up for this expected non collection. We need answers. Here is the email from Bill Farrell. Something is not right here. MLGW predicts an increase of 55% in winter utility bills ... per the Energy Information Institute, the average American household will pay 25.7% more. MLGW says natural gas prices are $11.40 per 100 cubic feet compared with last year's $6.21 during the last week of December ... a 71% increase over last year. The Energy Information Institute is looking at a 38% rise in prices. MLGW says the new budget provides no rate increases for 2007. This statement, in spite of granting significant pay increases to their executives, management and union workers, and loading the payroll with a new set of unqualified, over compensated cronies, is an impossibility ... unless, the existing, and budgeted "rates", are already "burdened" with an awful lot of unjustified overhead. Remember also, all this is being accomplished in a "no growth" environment. Council Members, Lee needs to provide you with several pieces to the "budget puzzle": for 2004/2005/2006 you need the actual vs budgeted - FTE's by department, average salaries by department, benefits, gas & electricity purchases AND, most importantly, the compilation (bill of materials) for his budgeted utility rates with a comparison to the actual costs in the rate models. This could be accomplished in a 2 - 3 page summary which, I guarantee you should be very understandable and will cause many, many questions to be asked. I believe you will find that ratepayers are already being waxed in the interest of preserving what has become the "status quo" at MLGW. In other words ... it's already being paid for, then some, for next year. Demand a understandable compilation. WFF =========================== Click here to read about natural gas price increases across the country.   December 28, 2005 The figure is $25.8 million. Memphis mayor Willie Herenton feels confident in saying that is how much the city is in the red. His confidence in that troubling number for the fiscal year that ended in June is newfound. He even allows for some optimism. "We're not in a fiscal hole. We have a strong economy here and we have a bright future," Herenton adds. "We have a temporary aberration on our financial landscape that we've got to change." The above is from a recent article from the Memphis Flyer written by Bill Dries. The full article is linked below. If you will read and look at the above "City Pride" publication written for Mayor Herenton in February of 2005 your will see how out of touch the Mayor is. The answer to his question "How Efficient is City of Memphis Government?" is answered completely by the article from the Flyer. click here and read the full flyer article about the budget mess courtesy of Mayor Herenton and his group of financial wizards. December 21, 2005 We get lots of inside and outside information on City and County government activities and things that affect you as a taxpayer. One of our smartest contributors is a retired CPA with vast business experience. He recently sent us an article which we have linked below for you to read. Much of this kind of information is difficult for the average taxpayer to understand but it is important and will eventually affect each of our tax bills. This article points out the unfunded liability of private and public entities concerning their health and life insurance benefits which they have promised to their retirees. In 1995 the MLGW set up a Trust for retiree medical and life insurance benefits. They funded it initially but they have not contributed anything since 1995. The City of Memphis and Shelby County have not even done that. None of these entities have this obligation shown on their financiual statements. In the next few years they will be required to show this financial obligation on their statements and it will cause a poor financial situation to get worse. They do not want you, the taxpaying and voting public, to know what is going on until after the August 2006 County election and the October 2007 City elections. Click here to read an article from Business Week on line (America's other pension problem) December 19, 2005 Tennessee Supreme Court Judges and Court of Appeals judges are elected on a “yes-no” ballot every eight years in accordance with the Missouri plan. When a vacancy occurs on the intermediate appellate court, the 15-member Judicial Selection Commission interviews applicants and recommends three candidates to the governor, who appoints a new judge to serve until the next August general election. As with judges on the Supreme Court and the Court of Criminal Appeals, the 12 members of the Court of Appeals must, by state law, be evaluated every eight years. Results of the evaluations are published in newspapers across the state to help voters decide whether the judges should be retained. It so happens that 2006 is the year to say yes or no to the Tennessee Supreme Court justices and those judges on the Appellate Court. The recent term limit decision by two of the three Appellate Court judges (David R. Farmer and Alan E. Highers) gives Tennessee voters an opportunity to decide whether they deserve to be continued in light of their decision to overrule 81% of the voters in Shelby County who voted for term limits in 1994. Judge Frank Crawford voted to uphold the lower court decision in favor of term limits. We have read through the decision which is posted below and we find no convincing argument for their decision. This is the same court that ruled against the Charter Commission being on the 2004 ballot. In that ruling in November 2004, the judges were Frank Crawford, David R. Farmer and Holly M. Kirby. Even though the decision was unanimous, Judge Crawford due to the nature of his questions seemed to favor not overruling the lower court decision. In the recent term limits decision, David Farmer and Alan Highers ruled against term limits. The voters of Tennessee need to send a message to these appellate court judges and the Supreme Court judges that the will of the people in trying to reign in runaway politicians with a charter commission and setting term limits needs to be listened to. We recommend a NO vote for Judge Farmer, Highers and Kirby in 2006. And if the Supreme Court fails to hear the case or rules against term limits, those who voted against term limits should get our NO vote in 2006. Click here to read the read the recent appellate court decision on term limits.  December 15, 2005 BEALE STREET LANDING PROJECT-WHY ARE WE SPENDING $28 MILLION OF OUR TAX DOLLARS? W. C. Fields would feel right at home as a member of the current City Council or as financial director of the Herenton Administration. In the classic movie, the Bank Dick, Fields asks a customer if “He ever went boondoggling”. (The definition of boondoggling is engaging in worthless activities). The Beale Street Landing Project ($28 million projected cost) ,which is proceeding, fits this definition perfectly. This is one of the dumbest things that the Herenton Administration and the current City Council have done and that is going some with this current City Government. If you go to the website of the Riverfront Development Corporation Click here to go to the Riverfront Development website and read about the Beale Street Landing Project. you can read about it in their own words. They say “Approximately 50 stops are made by three major vessels each year, not including local excursion boats and special annual or one-time visits.” But when we checked the website of the Delta Queen Line they only show 26 stops during the 2006 season. The line has had financial problems in the past and recently emerged from bankruptcy. They presently use the ramp just south of the tram to mud island (just below the amphitheater as shown in the picture above) and this works quite well. Taxies, busses, supply trucks and passengers seem to do quite well at that location. As far as we know there has never been a threat from Delta Queen Lines to stop visiting Memphis if this new landing is not built. Why then are we spending $28 million dollars on this boondoggle? $19 million of this is general obligation bonds which Memphis cannot afford with our falling bond rating and general financial situation. This is a question that needs to be answered now. (Shown in another picture below are the contractors beginning to spend our tax money at the foot of Beale Street). We need to stop this project. Where is W. C. when we need him to guard the City Bank?  ROBERT LIPSCOMB SUED FOR SEXUAL HARASSMENT December 13, 2005 In a startling development, memphiswatchdog has been furnished public documents that show that Robert Lipscomb, Mayor Herenton’s selection for his chief financial officer to bail the Mayor out of his worsening financial situation and head of the Memphis Housing Authority, has been sued in Federal Court for sex discrimination and harassment, oppression and retaliation charges to the tune of $2 million dollars. We have provided below the complaint and the time line of the various filings. We make no judgment as to the validity of the charges, but this is something that the public needs to know and to consider along with all the other ethical failings of the Herenton administration. It is something to consider who would pay if the plaintiff was successful in his suit. Would the taxpayers of Memphis be responsible for this charge and its consequences? Click here to read the complaint against Robert Lipscomb and the Memphis Housing Authority. Click here to read the time line document of the suit against Robert Lipscomb and the Memphis Housing Authority. December 12, 2005 AN UPDATE ON WHAT THOSE LAWYERS CLOSEST TO THE HERENTON ADMINISTRATION ARE COSTING THE TAXPAYERS Allan Wade, Ricky Wilkins and Robert Spence are all lawyers and all have a close connection to the Herenton Administration. Click on the file below to see what they have made at the taxpayers expense on legal work given to them by Mayor Herenton. On top of this Allan Wade is the attorney for the City Council and in addition does work for the City Administration. His salary at the beginning of 2004 was $65,000 which the Mayor raised to $80,000. In addition to that, he was paid $250,913.75 in 2004 and has received over $165,000 in 2005. Don’t forget that in addition to his salary, he receives health benefits and is on the pension system. The total of just these three lawyers cost the taxpayers $3.29 million in the last 1-1/2 years. The Cook Convention Center mishandled contract alone cost $2.44 million in legal fees. The taxpayers of Memphis need to unite and get rid of this legal cabal. Click here to see what three lawyers are costing you in taxes. December 9, 2005 Recently in an open records request we asked for turnover reports for the following periods. July 1, 2002 to June 30, 2003, July 1, 2003 to June 30, 2004 and July 1, 2004 to June 2005. We were concerned with reports that good experienced people were leaving or being driven out and that they were being replaced with patronage people without any utility experience. Here are the results of our request for information. It is obvious that under Joseph Lee, and his boss Willie Herenton, good experienced people are being driven out and replaced with inexperienced patronage cronies of the Mayor. What is worse is that good lower level technical people who are vital to the efficient operation of this highly technical utility business will see the handwriting on the wall (who you know is more important to advancement than what you know and can do) and since they can get good jobs in the real private working world, they will leave. This situation needs to be corrected soon by firing Mayor Herenton at the first opportunity, October 2007. Remember that Joseph Lee took over at MLGW on July 1, 2004. (The years listed below run from July 1 to the next June 30). Job Group 1-Executives 2002-2003- No one leaving 2003-2004- 1 person leaving (Herman Morris, the President) 2004-2005- 5 people leaving (Stinson, Magness, Dillihunt, Dubose, Thompson) Job Group 2- Managers 2002-2003- 2 people leaving 2003-2004- 1 person leaving 2004-2005- 8 people leaving Job Group 3-Assistant Managers 2002-2003- 1 person leaving 2003-2004- 1 person leaving 2004-2005- 3 people leaving Job Group 4- Supervisors, Non Engineering 2002-2003- 7 people leaving 2003-2004- 6 people leaving 2004-2005- 14 people leaving Job Group 5- Supervisors, Engineering Systems 2002-2003- No one leaving 2003-2004- 1 person leaving 2004-2005- 1 person leaving Job Group 6- Foremen-Chiefs 2002-2003- 8 people leaving 2003-2004- 16 people leaving 2004-2005- 9 people leaving Job Group 7- Professional and Technical, Non Engineering 2002-2003- 4 people leaving 2003-2004- 8 people leaving 2004-2005- 8 people leaving Job Group 8- Professional and Technical, Engineering and Systems 2002-2003- 4 people leaving 2003-2004- 3 people leaving 2004-2005- 8 people leaving December 7, 2005 On this the anniversary of the sneak attack on Pearl Harbor are you aware that there was a substantial tax increase passed recently at the City Council? It is a new ordinance creating a STORM WATER ENTERPRISE FUND. We have attached below a copy of the ordinance. The cost is shown on page 4 and it goes from $2.54 per month for up to 3147 square feet of property in 2007 and will rise to $4.02 in 2011. Again, exempted properties will not have to pay the fee so it goes mostly again to homeowners. We do not have an estimate of the amount of money to be billed for this new fee but we estimate that it is a minimum of $12 million in 2007 and rising to $20 million in 2011. We will check further and let you know. Click here to see the new tax put on you by the Memphis City Council. December 5, 2005 MLGW TRUST FOR RETIREE MEDICAL AND LIFE INSURANCE BENEFITS In a recent open records request, we asked for a copy of the MLGW trust for retiree and life insurance benefits and the reports and statements of that trust. Here is some of the information that we received. Shown below is a copy of the trust document set up and signed on January 1, 1995. The purpose of the Plan is as written in the Trust document. WHEREAS, Division maintains medical and life insurance plans that provide benefits for retired employees of Division (the Plans); WHEREAS, Division has incurred and expects to incur liability under the terms of such plans with respect to the retired employees participating in such Plans; WHEREAS, Division wishes to establish a trust (the “TRUST”) and to contribute to the Trust assets that shall be held therein, subject to the claims of Division’s creditors in the event of Division’s Insolvency, as herein defined, until used to provide benefits for Plan participants and their beneficiaries in such manner and at such times as specified in the Plans; WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing benefits for retired employees of Division; WHEREAS, it is the intention of Division to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plans; In the Ernst and Young Auditors Report dated April 15, 2003 (shown below) it was noted that approximately $36 million dollars was contributed in 1995 when the trust was set up. In addition MLGW made contributions to the trust during 1995 through 1997. No contributions have been made to the trust since. 1997. Beginning January 1, 1999, the trust began making payments for retiree medical and life insurance premiums in accordance with the trust agreement. The Trust made payments to MLGW of $9.3 million and $10.8 million in 2002 and 2001 respectively. The net assets of the trust is as shown below. • 1995 48 million • 1996 57 million • 1997 70 million • 1998 78 million • 1999 83 million • 2000 82 million • 2001 64 million • 2002 45 million • 2003 46 million (This figure given in notes of the MLGW financial statement) • 2004 55 million (This figure given in notes of the MLGW financial statement) We were told that the firm of Watkins Uiberall will begin auditing years 2003 and 2004 shortly. We wonder why the 2001 and 2002 audits were available by April 15, 2003 and here it is December 2005 and they are just beginning on the audits of 2003 and 2004. If the assets of 55 million earn 5% per year (around $3 million) and the plans has to pay out $10 to 15 million per year in expenses, then it is obvious that more will have to be contributed to the plan in the future. The new GASB rules in 2006 will require that the unfunded liability be reflected on the MLGW books next year. Click here to read the trust document set up in 1995 fore MLGW retiree medical and life insurance benefits. Click here to see the 2001-2002 audits of the trust fund for MLGW retiree medical and life insurance benefits.   December 2, 2005 With all the talk about development around Beale Street, proposed new hotels, parking garages, restaurants, what about Mud Island? We still have not received one cent from Beale Street on the leases signed in 1982 but we have spent millions in and around the area. In the meantime, Mayor Herenton and the City Council turned over Mud Island to the Riverfront Development Corporation and we have been losing over 2 million dollars per year on Mud Island. Recently I visited Mud Island on a beautiful clear day and I was virtually the only person there except for some bored employees sitting around. I took some pictures shown above and below, one looking towards the old bridge and another looking towards the M bridge. The view is beautiful and we are not using it or selling it. Instead we are hustling Beale Street. November 30, 2005 Will Gotten and Joe Saino have been involved in trying to find out why Beale Street Development/Performa Entertainment have not paid one cent to the City of Memphis since 1982. Previously we have published the leases to Beale Street Development Corporation and to Performa Entertainment in this website section in an article dated September 19, 2005. We asked the City of Memphis and Performa to furnish the quarterly and annual financial reports required under the lease agreements. The City of Memphis initially said that they did not have the reports that showed how much the City had been paid but then they revised that answer to say that they in fact had some reports but that there were no reports showing money that had been paid since they have not received any money from Beale Street since 1982. The story gets more interesting because Joe Saino received information from a source that there were a number of boxes of reports and files that were in a locked closet at the Offices of Housing and Community Development at 701 N. Main. This information was given to the City Attorney and she said that she never knew that the reports were sent to HCD. She sent someone from her office down to HCD and in fact there were seven boxes of documents about Beale Street there in a locked closet. She sent the boxes to Ricky Wilkins (the attorney representing the City in the Beale Street case) for his review and then she contacted Will Gotten and Joe Saino to allow a review and inspection of the contents of the boxes. She also provided copies of some of the quarterly and annual reports from John Elkington and upon inspection of these reports she admitted that she did not understand the reports and could not determine what monies, if any, were owed by Elkington to the City of Memphis. The conclusion of all this effort and investigation is the following. • No one from the City Administration has been doing any oversight on Beale Street and no one knows or seems to care if the reports are accurate. • The City Administration has abdicated its fiscal responsibility in this matter and has allowed John Elkington to do as he wants. • The City of Memphis, the State of Tennessee and the Federal Government have spent millions of dollars on Beale Street and no one can show whether the money has been spent wisely or whether it was worth the cost. • There have been no independent audits or verification of the Beale Street reports. • Hundreds of thousands of dollars have been spent in useless litigation by the City of Memphis concerning Beale Street Development Corporation and Performa Entertainment. This is yet another example of the incompetence of the Herenton Administration. Check below some of the missing annual reports from John Elkington to the City of Memphis. Click here to see some of the Beale Street Reports sent to the City of Memphis about which they are doing nothing. Click here to see the Beale Street Budget for 2005 sent to the City of Memphis. December 1, 2005 We receive a number of letters from our readers and here is one that sums up the situation at the MLGW concerning hiring and promotions at the patronage factory known as the MLGW. No wonder morale is low.  November 29, 2005 We have been told time and time again about how lucky we are to have Northwest Airline as a hub in Memphis. With the financial problems Northwest is having along with many other major air carriers, we think it is time to rethink this policy. Recently, there was an article in the Wall Street Journal entitled “Why Travelers Benefit when an Airline Hub Closes”. This article pointed out the situation in Pittsburgh after US Airways announced in the fall of 2004 that it would stop using Pittsburgh International Airport as a hub. The result was that five discount airlines came in and fares went down. For example, round trip flights from Pittsburgh to Philadelphia fell to $186 from $680. Passenger traffic increased and the number of passengers beginning trips in Pittsburgh was up 12% in September of 2005 compared to September 2004. There has been talk of a major airline coming into Tunica which could hurt the Memphis Airport. With Delta Airlines in trouble and with the increasing availability of good discount airlines, it is time Memphis residents participated in the major change that is occurring in air travel in the United States. We need low cost discount fares in Memphis instead of being forced to drive to Little Rock and Nashville. Click here to read the WSJ article about the benefits of airline hub closures April 27, 2005 Mayor Herenton has recommended discontinuing city grants to local non-profit groups. It would be interesting also to learn what are some of the organizations that have been receiving grants. We know about the arts council, civil rights museum, boys and girls clubs, Crime Stoppers, YWCA and others. Many, however, are unknown to most taxpayers. Who are they? How did they qualify for a city grant? What do they do with our money? Is there any oversight? These include: • A More Perfect Way - $10,000 • Alpha Phi Alpha - $5,000 • Arts Visions & Venues - $20,000 • B.O.L.D. Brothers - $10,000 • Barron Heights - $50,000 • Binghampton Community Life - $10,000 • Black United Fund - $5,000 • Cultural Development Foundation - $10,000 • Hamilton Initiative - $25,000 • Hearts Community Development Foundation - $5,000 • Institute for Success - $20,000 • Kappa Alpha Psi Memphis Alumni - $20,000 • Kids in Technology - $10,000 • Mustard Seed - $5,000 • National Institute for Law & Equity - $25,000 • One Hundred Black Men - $10,000 • Personal & Career Development - $25,000 • Play it Again Memphis - $15,000 • Teen Challenge - $15,000 • The Works, Inc. - $15,000 • Volunteer Center - $10,000 • Whitehaven Development Corp. - $16,000 • Whitehaven/Levi Development Corp. - $5,000 April 25, 2005 There is a great debate going on now in Memphis and Shelby County. The question is do we preserve public service jobs regardless of the tax rate needed to support the jobs or do we demand that the government be run in the most efficient way possible at the lowest tax rate needed to support the services required? I have heard Janet Hooks say many times that Memphis does not have a spending problem, it has a revenue problem. Hence her support for any and all new taxes. At almost every City Council meeting, Barbara Swearengen Holt can be heard demanding that all jobs be preserved. There are thousands of City and County jobs with families depending on the people working for Government. However, there are hundreds of thousands of taxpayers wondering how they are going to make their tax payments which keep spiraling up. In my opinion responsible public servants must make decisions based on what is most cost efficient and demand superior job performance from public employees or private contractors if that is the most efficient way to perform the service. April 12, 2005 In the Commercial Appeal this morning there was a report of the bitter battle between Dr. Carol Johnson and school board member Sara Lewis. Ms. Lewis did not want to save 2 million dollars by hiring Trammell Crow for maintenance supervision. This dispute mirrors the City Council and much of local government. The local politicians think their job is to preserve and create jobs whereas their job should be to run the local government in the most cost efficient way with as few people as possible. If that means hiring outside contractors instead of putting more people on the local payroll and pensions system, so be it. Tax efficiency, not patronage should be their objective. Click here for MGT of American Report on possible school board savings April 11, 2001 Rev James Netters was paid $10,000/year as MLGW board member and had 10 years of service. He was entitled to a $400/month pension or $4800/year. However when the City Council and the Mayor were arguing over who was to replace Herman Morris, they appointed Rev Netters for 6 months at $93,000/year salary and then when Joe Lee finally took over, Netters applied for his pension based on the $93,000 salary. The pension board at MLGW said that the six months interim salary was not salary but the City Council voted to say it was salary and based on his years on the City Council he was credited with almost 28 years of service and his pension went up to $24,738 per year. This extra $20,000 per year the Mayor would say is infinitesimal. $20,000 here, $100,000 there, so what, as long as the taxpayers can be milked for more tax money. April 1, 2005 Click on the item below and take a look at the salary report that we just got due to our open records request. It is amazing. We do not need a property tax increase, we need to lay off a lot of people in patronage jobs. Click here to download salary spreadsheet  3/17/05 Yesterday I went to the 1:30 PM board meeting because of item 20 on the agenda (Approval of Salary S-75542). On Tuesday at the Rotary Club where Mr. Lee was speaking I asked him about the reported hiring at a $98,500 salary for Janas Jackson, a communications person, when they had Mark Heuberger at $107,000 in a similar job. Also I asked him about the hiring of Anderson Williams at around $100,000. He said that he had not hired anyone new at MLGW and bragged about what new executive would have not hired anyone when he takes over. He said that Williams was on a 6 months contract as if that was not hiring him. Then item 20 appears on the MLGW agenda (Approval of Salary S-75542) and then is pulled at the last minute. I asked the board what was the name of the person behind S-75542 but they refused to reveal the name or the salary level. What is going on? Joe Saino PS: See a new open records request sent to Mr. Joe Lee under the Sunshine Tab on this website.  March 5, 2005 Analysis of the Real Cost of the City Council Decision to Adopt the January 2001 Pension Resolution Allowing Elected and Appointed Employees of the City to Retire After 12 years Regardless of Age. 27 people have already retired under this pension change as of November 2004. These people are currently costing the taxpayers $675,000 per year. They retired with an average length of service of 13 years and under the pension system before the City Council passed the resolution, they would have had to work for another 12 years to receive the normal pension after 25 years. The true cost of this change is $6,143,000. This is the amount that would not have been paid had the City Council not passed this change. There are another 281 appointed employees who have not yet retired under this resolution and their combined salaries are $16.1 million dollars. If they all retire at 12 years, it will cost an additional 4.8 million dollars per year and the cost over the following 13 years that they would have had to wait if the City Council had not passed this resolution is 62 million dollars. How do you like that for astute leadership and a financially sound decision from the Memphis City Council? And this does not take into account the paid insurance and other retirement perks that these retirees get. Also consider that they are retiring at an average age of 50 years old. PAST NEWS ARTICLES 2005 | PAST NEWS ARTICLE 2006 | | Return Home | TODAYS NEWS AND MAIL | MEMPHIS CITY GOVERNMENT NEWS | MEMPHIS CITY COUNCIL NEWS | MLG&W NEWS | SHELBY COUNTY GOVERNMENT | CONTACT US | FAQ Page | MEMPHIS BRIDGE | |
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