Wednesday, March 05, 2008

Police and Fire Pension Fund sales tax proposal

Only if the city is willing to match sacrifice for sacrifice

There's a lot of talk on the web about the pension fund and whether voters would support an increase in sales tax to fund it.

I attended the media budget briefing, what, a couple of weeks ago? Last week? When was that thing? Anyway, regardless of when it was, here is my understanding of the key points I think the city is trying to make.

For expediency, here's what Mike Brothers of the City wrote, in part, in an email to me this morning:

"The law was passed at the state level last year, so the best way to put it is that we’re coming up on the end of the first year and the start of the second."

The "law" Brothers is referring to is a state law that requires Springfield (and other cities) to meet an actuarial recommendation amount for funding the pension plan one year out of five and the clock started ticking last year. The City wants to meet that actuarial recommendation next year because every year the actuarial recommendation will continue to increase by big bucks.

Naturally, if the City pays the $5.2 next year they won't have to pay as much as they would have to pay the year after that or the year after that or the year after that. That is one of the reasons why the City wants to pay it in the next budget year. The other reason is, if they don't get it done sometime in the five year period the state can garnish the city's sales tax revenue and make sure it gets done. The city doesn't want the state to do that, the city wants to have complete control over their budget, not let the state get control of some of their money. Think of it in terms of this scenario: the deadbeat dad (city) fails to pay child support for his children (police and fire pension fund) so the county (state) steps in and garnishes the deadbeat dad's wages to make sure his children are taken care of, see how that works? The only difference is when the real deadbeat dad's wages are garnished he isn't offered all the other nice little options the city is offered by the state. He doesn't get to pay a portion of what he owes his ex-wife one year out of five to avoid having to pay the entire amount he owes the rest of the time.

The City is talking about tax increases for the very reasons given above. Every year the actuarial recommendation is going to increase. If the City, who can meet the actuarial recommendation this year through budget cuts, tries to continue to meet the actuarial every year through budget cuts alone, they will cut themselves right out of existence. They CANNOT do it through budget cuts alone because, even though the City rakes in a lot of money every year and you see them building and redeveloping and planning to do wonderful parks projects and center city revitalization all around you, they can only use the general fund to fund the police/fire pension fund. They cannot take money that taxpayers approved to buy donuts and spend it on bon bons. You see, folks, that would be illegal. Taxpayers didn't approve a bon bon sales tax, they approved a donut sales tax. Taxpayers didn't approve a pension fund sales tax, they approved a parks sales tax. Get it?

Now, the City has to meet the actuarial recommendation in one of the upcoming years but not necessarily next year, they just want to meet it next year because, by meeting it next year, they don't have to put as much in as they would have to if they put it off.

It is a possibility, though, in my view, to put it off next year, get taxpayers to approve of a pension fund sales tax and balance the budget without extreme cuts, if you consider 7% extreme, that is. I like the idea of government shrinking 7%, myself. I'd like to see them scale down.

Now, here's something that's been on my mind. I'd like to see the City bring to ballot a sales tax for the pension fund with the following terms included. Attached to any tax increase proposal:

> A feasible future plan for how the City is going to fund the actuarial recommendation after the tax sunsets in two years.

> City promise that they will draft a bill, with a timeline for drafting it, allowing the citizens to reconsider the Vision 20/20 plan by ballot. (Sometimes, I know in my family, we have these glorious visions for what we'd like to do in the future but other obligations get in the way and we have to postpone the timeline we originally set. Perhaps the city needs to give voters the option to retire the Vision 20/20 plan until it has settled some other priority issues of vital importance. Voters should have a say in this vital decision. There are even other areas in the overall budget that could be treated the same way.)

> An administrative delay on any further grant applications that require matching money on the part of the city. (Often I see city officials mention "this is federal grant money," as if we should all be happy it isn't costing us anything to do this or that except that either way it IS taxpayer money. Often the city has to match a certain amount of funds to the grant. Can we afford to be soliciting grants for unnecessary projects that require matching funds right now? )

Those are just some ideas I had that might make a new sales tax a little more palatable to citizens who feel they shouldn't bear the entire burden for bailing the city out of the pension fund shortfall that the city's own money management has created, for what it's worth. I think the voters would like to see the city match their "grant" of sacrifice for the pension fund with a matching sacrifice. I know I would and without a matching sacrifice I couldn't and wouldn't support a sales tax increase to support the pension fund. It's up to the City to sell me on it. I love our police and firefighters and I want security and police protection, we have a right as taxpaying citizens to expect it but I don't want police and firefighters to feel backed into a corner on this issue. The city needs to make some sacrifices on their behalf before they knock on my door.


tom said...

I would really like to see the SFD and SPD funded entirely by a sales tax as long as the money doesn't go through the general fund first. Of course I would like to see that portion of the property tax related to this expenditure being rebated back to the people.
I believe any money spent on the parks excluding the sales tax that was voted on be placed into the pension fund.
The city leaders ripped the people off by NOT funding this and we aren't going to lightly take the idea of a tax increase to prop up those that have misappropriated those funds which were SUPPOSED to go into the pension plan.

Chestnut Expressway said...

I would like to see the present cost of "debt service" the City has at present, compared to 1990 at the beginning of Tom F. and all his big ideas.

His main function was to find easy dollars for JQH, and other local big and little wheels.

It is only a matter of time before the City will be upset at the taxpayers for not supporting the new 120 million dollar airport that we did not get to vote on....

Anonymous said...

personally, I will never vote on any tax increase contingent on a promise from the city...

why should police and fire be cut? why should they have to sacrifice again? It's the city's turn to sacrifice.

Whoever keeps drafting and re-drafting these storage container ordinances needs to be the first to go... Their services are obviously not needed.

tom said...

That would be Gary Deaver. Your more than welcome to cast a ballot that gets him unelected from office.

Anonymous said...

Don't worry, Tom... I will vote against every current council member (except Rushefsky, Burlison & Chiles)...

So it's Deaver himself that's writing these storage container ordinances? Or is he having folks on staff do it?

Anonymous said...

Some City Retirement History

In the 90's, City employees made a contribution of 4% to their retirement package, with this 4% being matched by the City. This 8%went to the LAGERS Retirement Fund in Jefferson City.

About 1993 or so, the City, (with the approval of Council) decided to take over the entire 8% contribution. A "new hire" would have his pay scale, plus 8% "over the top" going to LAGERS.

All employees got to keep 4% more of their check.

However, this was not good enough for the "good ol' boys"... they decided that in order to be equal to the "new hires" they should have a 4% contribution made retroactive to their hire date, in some cases 20 or 30 years.

The City paid in a giant LAGERS contribution for about 1500 employees. The employees were then refunded 4% of what they had earned since they were first hired. This amounted to a few thousand dollars for some City employees, and $60,000 to $80,000 for the long-term big guys. A nice take home check...

Next time someone sees Mr. Finnie at coffee, buy him a donut, and he could explain the total cost of this process.

Of course, Police and Fire are not a part of the LAGERS system, and for some reason they were falling behind on their retirement system...


tom said...

Deaver is the muscle behind the problem. I believe he along with Nick Heatherly will do what ever it takes to run businesses out of Springfield.
As for the council members you said you wouldn't vote out they aren't up for election this go around, but if they soon don't change their status quo voting pattern I'll be working quite diligently to get them removed when their term is up.

Burlison up to this point isn't any different from Griggs. Rushefsky isn't any different from Wright in her voting patterns, and Chiles has been a mirror image of Jones except whn it comes to bike paths and green buildings. In some ways Chiles has actually been worse than Jones.

Jason said...

Good post.

Anonymous said...

Tom -

So, Deaver didn't actually write the multiple page storage container ordinance and its sequel(s)...

Therefore, we DO have fat to cut on staff - the folks who could make time for drafting these ordinances are clearly expendable...

Chiles has stood up against the storage container ordinances, so I have to disagree with your assessment of him, Tom. Looks like we'll have to agree to disagree on our assessments of the individual staff members...


The council members come and go with elections...

It's the city staff, which stays throughout, which is the problem.

We need a full time paid mayoral position - not the current part time amateur arrangement - to clean house and get the staff in order.

tom said...


I talked to Dan Chiles the other night at the meeting held for the container ordinance, he arrived late but was there to follow the process. I had to apologize to Dan in person for my portrayal of him as a council member that lacked the compassion to do what is right. Dan is 100% behind the businesses on this issue and wonders why we even need to go through this process. For that I commend him I still disagree with many of his "green" stances however. Next time I'll do a bit better on research before I lump him into the rubber stamp committee.
It appears council isn't always a cohesive unit which this can be attributed to Burlison, Rushefsky, & Chiles, but in the end they still vote the same on many issues which is bothersome in many ways.
Can staff be cut "YES", except it is the City Manager that has the reins on that issue, so it looks like we will be waiting until that position is filled my someone else before seeing any results.

As for the "debt service" in the 90's as compared to today that is being researched and when it is thoroughly digested in a easy manner and format to look at and understand Jackie will be given the complete documentation to write a story or blog with.