The city of Memphis will reduce a planned health care premium increase for city employees and non-Medicare retirees.

In June, the council approved raising rates employees and retirees pay to 28.5 percent of costs, up from 27 percent.

However, Memphis officials and the city's health care consultant, Mercer, since discovered that the existing rate was 26 percent, not the 27 percent they reported during budget discussions.

The city is now proposing to increase the rate to 27.5 percent in January, which could cost the city an additional $600,000.

Deputy finance director James Stokes said the health care fund for the previous fiscal year could produce a surplus of $400,000 and that the city might make up the rest of the deficit after the middle of the fiscal year.

"Because we were given incorrect information, the increase was higher than we intended," said council budget committee chairman Jim Strickland. "It's disappointing that we get incorrect information because we make decisions that affect taxpayers and employees, and we want to be fair."

City ordinance requires retirees and employees to pay 30 percent of their health care costs, but the city has not imposed that amount for several years.

"We've got to get to 30 percent and we all know that," said Mike Lee, secretary for the Association of Retired City Employees. "But we're in a terrible time of austerity and there has to be fairness to everybody. We're real pleased with what the city is proposing."

City transfers James Lee House

The City Council voted unanimously Tuesday to transfer the historic James Lee House in Victorian Village to a private developer for $1.

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Memphis lessens health care hike