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Pension costs continue to swell

August 11, 2012
Cape Coral Daily Breeze

To the editor:

Permit me to share some short observations on the proposed FY 2013 budget.

The new City Manager's proposed budget contains a 2.8 percent tax increase, or $2.4 million additional dollars to spend, all derived from the higher property taxes you will pay next year.

How will these new millions be spent? Will they translate into new or increased services? Unfortunately not. All of the additional tax money will be consumed by the pension fund. In spite of the entire tax increase going to that obligation plus an additional $1 million taken from reserves, there will still be a $1 million deficit.

This year the City contributed $22,870,441 to the pension trust fund. In next year's budget it will rise to $27,228,122. That is an increase of $4,358.681, almost twice the tax increase. The short fall means that about one million more dollars must be taken away from City services even after the $1 million is withdrawn from savings.

Since FY 2009 your taxpayer contribution to the pension fund has increased from $15 million to $27 million. In spite of this increase, the accrued unfunded pension liability also continues to rise. As of September of last year your unfunded obligation stood at $198 million. In addition you have another unfunded indebtedness of over $190 million for other retirement benefits (commonly called OPEB) such as health care and life insurance, that is a debt of over $10,000 for a family of four, quite a sizable sum for our community of 154,000 with double digit unemployment. It is as if the City took out an adjustable rate mortgage of $389 million on behalf of every one in Cape Coral with the annual payment constantly increasing. Remember from 2012 to 2013 just the annual pension payment alone (exclusive of OPEB) went up $4,358,681, consuming the entire tax increase, $1 million in savings and another million from existing services.

Is there a solution? The government will no doubt look for new ways to separate you from your hard-earned money. Beware when the bureaucracy speaks of revenue diversification or new sources of revenue. What they really mean is another tax on your electric bill, more taxes on your phone or cable service, or on your already too costly water and sewer bill or some other scheme such as higher fees, assessments, special fire and/or police taxing districts that rapaciousness may concoct. You see you are the only place they can go to for more money. Far be it for them to reduce costs.

It is time for our new City Manager (or perhaps his proposed six figure assistant) to implement the reforms like those claimed to have been instituted in Troy, Michigan, e.g. outsourcing certain services, volunteer firefighters for a hybrid department, going to a defined contribution pension as well as others that appear on his resume. Should we fail to do so and stay on our current course will we have a future such as San Bernardino, Stockton, Jefferson County, Central Falls, Scranton, Harrisburg or Vallejo all of which have sought bankruptcy protection?

Bill Deile

Cape Coral

 
 

 

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