OUR OPINION: Cities and police and firefighter unions must renegotiate budget-busting pensions

The Miami Herald – link to original

Sunday, August 30, 2009

We ask our police officers and firefighters to do things we won’t do because of the risks involved.

In exchange we pay them more, make sure they are well compensated for any harm received on the job and allow them to retire at an earlier age than other government workers because of the stress and risks they face. All of this is fair.

What isn’t fair is how much political clout the first responders’ unions wield in local governments and in Tallahassee to the detriment of taxpayers.

That clout gets commissioners elected with low turnouts and generates favorable laws in the Legislature.

But when city commissioners agree to hefty raises and more benefits for police and firefighters the pandering creates problems for taxpayers — as has the Legislature when dumping unfunded mandates on local governments to curry favor with police and firefighters unions.

That’s what happened in 1999 when the Legislature approved and then-Gov. Jeb Bush signed a change into law that limits how cities can use a long-standing state fund that helps pay for local police and firefighter pensions. The fund is financed by an excise tax on property insurance premiums — after all, what do first responders protect, if not property and lives? The Legislature told cities that they could no longer use the fund for basic pension costs — only to tap into it for extended benefits for police and firefighters.

A double whammy

Lawmakers passed the bill to cities and mandated better benefits. This double whammy, plus a series of later legislative-inspired local tax cuts, has put big burdens on cities even without the recession.

Government pensions are funded by contributions from workers, their employers and the return on investments. With the stock market in free fall in the past year, cities find themselves having to pony up far more than usual for pension funds to make up for investment losses.

And while the stock market shows hopeful signs of recovery, South Florida’s housing slump and the recession it fueled are taking big chunks out of municipal budgets.

It’s unsustainable.

The city of Miami will pay an extra $32 million into its pension funds in 2009-10. Consider that since 2001, Miami’s pension bill has risen from $13.9 million to $60.8 million this year. Pension costs are projected to rise to almost $100 million by 2010.

That will consume almost one-fifth of the city’s operating budget — a Herculean challenge for a city that has a high poverty rate and dwindling property tax revenue because of empty condos and foreclosed homes.

Unrealistically generous

Many Broward cities also are scrambling to close pension holes created by unrealistically generous pension promises. For its firefighter fund alone Hollywood will pay an additional $9.2 million next year, more than double what the city contributed five years ago — a portent of future pension demands.

Many cities are planning layoffs and cutting back services to balance budgets. Pension costs are just one contributing factor. But in Miami, which misused firefighter pension funds in the 1980s to pay for other city obligations, pensions based on out-of-control salary bumps threaten to bankrupt the city.

Under the so-called Gates settlement, Miami must use general-revenue money to keep the pension plan whole if stock market returns plummet, as they did last year.

Renegotiate contracts

Eventually the stock market will stabilize, and South Florida pension funds will see higher returns again, providing some relief. But cities will still be on the hook for ever higher police and fire pension costs.

The benefits are now so out of whack that taxpayers simply can’t sustain them.

Yet city officials keep pandering. Hollywood is renegotiating its police, firefighter and general employee contracts as it faces a $22 million budget gap.

Incredibly, commissioners and Mayor Peter Bober agreed to give firefighters a 2.5 percent cost-of-living adjustment each year for the next three years, on top of raises they already received for promotions and long-term service. This salary-and-pensions contract will set the precedent for the others still in negotiation.

The firefighters union made some concessions: New hires’ starting pay will drop 14 percent, and they will be guaranteed a smaller return on their pension investments (now at 8 percent; the state’s is at 6.5 percent) if they enter the Deferred Retirement Option Program, which is another disaster in the making.

To their credit, union officials in several cities have also said they’ll work with their city leaders to find ways to reduce costs.

Clearly, pension-plan concessions are going to have to be part of the solution. Taxpayers are at a breaking point.

Coming Monday: State and local pension fixes

Similar Stories:

Warnings not heeded about pension burden

Miami politics, pensions a tricky balance

Miami faces worst financial crunch in more than a decade

OUR OPINION: Governments should move away from unsustainable pensions to 401(k) plans

The Miami Herald – link to original

Monday, August 31, 2009

Imagine being able to retire long before you turn 50. Among your benefits: a pension plan that gives you almost as much as your current salary each year, cost-of-living adjustments that go far beyond the national average, fewer years to qualify to be fully vested in the pension, overtime pay included in the salary calculations for your pension benefits. Perhaps an extra monthly check once a year — a lucky 13 payment.

Sound surreal?

Not if you are a police officer or firefighter working for a city in Florida.

Businesses convert

While most businesses were turning to 401(k) plans for their workers in the 1980s and 1990s and away from defined benefit plans, local governments counting on union support promised generous pension perks for those plans that guarantee a set amount for life. Adding to the pension costs have been exponential salary increases for these future pensioners.

From Miami to Jacksonville, the pension systems with guaranteed returns are straining resources. Miami’s pension plans — which will need almost $100 million next year to keep to its obligations — have skyrocketed 400 percent in recent years, forcing the city to tap emergency funds to balance the budget. Jacksonville will contribute $110 million to its pension plan next year — $70 million more than six years ago.

Some cities, such as Fort Lauderdale, have been moving toward 401(k) plans for their workers, which is a smart move. A defined benefit plan requires the employer to make up any gap to ensure an employee receives the guaranteed retirement amount — which is why so many cities are scrambling to find the money during this recession when property tax revenue has plummeted.

Overly generous pension benefits have exploded since 1999 when the Legislature passed a law that has saddled cities with increasing pension costs, as explored in The Miami Herald’s Sunday editorial.

The results, as detailed by the Florida League of Cities, are ever-higher taxpayer-backed contributions to the plans — as much as 30 to 50 percent of a first responder’s salary.

Florida state workers’ system is in better shape. It pays about 20 percent of a state employee’s salary toward the retirement system. Counties, which by law can piggyback on the state system, are not as exposed as cities throughout Florida that are having to dip into ever-dwindling revenues to plug holes in pension plans.

Cities do have the option to join the state system, but their debt obligations can make that difficult.

State and local governments should be moving out of pension systems and into a 401(k) or some other plan that would keep the public’s contribution at a steady rate, helping to match employee contributions.

Unaffordable luxury

Looming pension costs for municipal workers throughout South Florida — particularly fire and police pensions that grant extra benefits — are a luxury taxpayers can no longer afford. And loopholes in some contracts — allowing promotions in the year before retirement to become the amount to factor for pension benefits — abuse the public trust.

The Legislature must revisit that skewed 1999 unfunded mandate that put more pension burdens on cities. And cities need to renegotiate contracts to be fair to their workers and taxpayers as they move away from defined-benefit plans to more employee-driven 401(k) contributions.

A research firm hired by Miami Beach to look at how to deal with looming pension costs came up with some steps worth taking:

• Implement a uniform system for awarding pay increases. Some workers get annual “step” increases or mandated salary hikes rather than merit-based raises.

The merit-based system should be adopted for all government workers.

• Peg cost-of-living increases, now often negotiated with unions, to the national consumer price index instead. The average CPI for the Greater Miami-Fort Lauderdale area the past 10 years was 10 percentage points lower than Miami Beach’s cost-of-living adjustments, for example.

Residents need and should value municipal workers, especially our firefighters and police officers. But they pay taxes, too, and surely understand that cities must find a way to balance fair pension plans with other obligations.

Similar Stories:

Unsustainable pension pandering

Hollywood commissioners likely to approve firefighters’ pay contract

Miami Beach grapples with higher pension costs

Warnings not heeded about pension burden

Trim salaries of pork-laden municipalities

AUGUST 19, 2009

By JANE ZHANG

Wall Street Journal - link to original

Some Democratic lawmakers looking for ways to overhaul the nation’s health-care system are targeting the companies that handle drug benefits for more than 210 million Americans, setting off a lobbying battle over how much pricing information the companies should disclose.

One version of the health legislation passed by the House Energy and Commerce Committee last month includes provisions that could overhaul how pharmacy-benefit managers — middlemen hired by insurers to administer prescription-drug benefits — operate. It would require them to inform the government or federally approved health plans about differences between the average cost of drugs to the PBM and what the PBM charges insurers. It would also require PBMs to disclose rebates they receive from drug makers for pushing certain pills and say whether those rebates are passed on to insurers.

The goal of the provisions is to drive into the open any cases in which PBMs are earning improper profit margins or rebates, said Rep. Anthony Weiner (D., N.Y.), the lead sponsor of the provisions. He said his legislation will “cut down on inside deals that benefit only the PBMs and the drug companies.”

PBMs use their buying power to wring lower prices from drug makers and say they save money for employers, the government and others who pay for health care. Most health-insurance companies, including those running Medicare’s drug plans, hire PBMs to manage drug benefits.

Typically, pharmacy-benefit managers have carried out pricing negotiations behind closed doors, leaving insurers and other outsiders little idea of the actual prices PBMs negotiate for drugs or their profit margin.

The PBMs argue such secrecy is necessary to negotiate lower prices, but critics say it only helps PBMs pocket more money at the expense of others.

The president of the pharmacy-benefit managers’ trade group called the provisions a bad idea. “One of the great services PBMs provide is to play drug companies off one another and get big discounts on drugs,” said Mark Merritt of the Pharmaceutical Care Management Association. “The thing that drives prices down is competition, not this kind of transparency which tends to help suppliers keep prices higher.”

Greater transparency could result in drug makers giving smaller discounts to PBMs, which could lead to higher drug costs for insurers and consumers, according to analyses by the Congressional Budget Office of previous legislative proposals.

The Weiner provisions aren’t in versions of the health-care bill passed by other House committees. In the Senate, Maria Cantwell (D., Wash.), a member of the Finance Committee, said she wanted her committee’s health-care bill to include similar disclosure requirements for PBMs.

Some companies that offer drug benefits to employees are taking action on their own. Nearly 60 large employers accounting for more than $4.9 billion in annual drug spending, including McDonald’s Corp. and International Business Machines Corp., have banded together to demand greater transparency from pharmacy-benefit managers.

They have signed on 15 PBMs, including industry leaders Medco Health Solutions Inc. and CVS Caremark Corp., that are willing to disclose to the companies their acquisition costs for drugs and pass along any additional discounts they get.

One of the companies, Caterpillar Co., also negotiated prices for the drugs its employees buy from Wal-Mart Stores Inc., although it still uses a PBM to handle claims.

Troy Filipek, an actuary at consulting firm Milliman Inc., predicted that more companies will seek alternatives to traditional PBMs. “I think in general, plans just want to have an understanding of where PBMs are making their money,” he said.

Independent pharmacies, which have lost money as PBMs expanded into Medicare’s drug benefit in recent years, said secretive pricing techniques benefit PBMs more than employers and consumers. A prescription, for example, costs the pharmacies more under a PBM system because they often have to hire other middlemen to make sure PBMs aren’t underpaying them.

The National Community Pharmacists Association, an industry group, has beefed up lobbying against PBMs, hiring outside lawyers and increasing political contributions, said spokesman Kevin Schweers.

The group’s lobbyists are talking to Sen. Cantwell and are trying to persuade leading Democrats to include the PBM provision in the House’s final health-care legislation, said John Coster, the group’s senior vice president for government affairs.

——————————-

• Valerie Hamm wrote:

Wall Street Journal – link to original

August 29, 2009

Connecticut grabs $7,007 in state and local taxes per man, woman and child resident, according to the Tax Foundation, more per capita than every state but New York and New Jersey. That’s hardly the company any state would want to keep these days, but the politicians in Hartford seem intent on following Trenton and Albany off the tax-and-spend cliff.

This week Republican Governor Jodi Rell proposed a $1-billion-plus income tax hike, raising the top tax rate to 6.5% from 5% on individuals with incomes above $500,000 and couples with earnings above $1 million to close an expected two-year $8.5 billion budget deficit. The tax hike would be retroactive to January 1, meaning the government would snatch money that residents have already earned. Perhaps she aspires to the nether-world approval ratings of New Jersey Governor Jon Corzine.

Given the size of its deficit, it’s hard to believe that for 200 years Connecticut balanced its budget without any income tax and became the richest state in the bargain. That changed in 1991 when then-Governor Lowell Weicker pushed the state’s first-ever personal income tax with a promise that the rate would remain flat at 4.5%. But the next time the state couldn’t pay its bills, in 2001, the legislature raised Mr. Weicker’s tax to 5%. In 2007, Ms. Rell wanted more money for the schools, so she proposed raising the income tax again. That plan failed, but now comes her “millionaire surcharge,” which Democrats have eagerly endorsed.

But why? Since the income tax became law, Connecticut has experienced a long, slow exodus of jobs and people. The Yankee Institute notes the astounding fact that since 1992, the year the income tax went into effect, businesses in Connecticut have hired a grand total of zero net new workers. This is while the nation added 22 million jobs and despite the Wall Street boom. As the tax burden has surged, the state lost population to other states (a net 113,000) in every year but one over the last decade.

What the income tax did stimulate was a spending binge and big pay raises for the state’s unionized government workers. The year before the income tax was enacted, Connecticut’s government expenditures per capita ranked right in the middle of all states; now it ranks in the top 10. Per capita real spending has nearly doubled since the income tax was enacted.

Instead of ending periodic budget crises, a Connecticut legislative analysis found in 2006 that “heavy reliance on top income tax filers” has meant that tax collections are “more volatile than most states.” The new income tax bracket on the folks in Greenwich and Westport will make these booms and busts all the more severe.

Ms. Rell has one very good idea, which is to eliminate the state’s inheritance tax. The Nutmeg State’s death tax levy has chased thousands of wealthy seniors to states with no estate tax. The governor also wants to use some of the income tax money to lower the sales tax to 5.5% from 6%. She calls this a “huge, huge boost to the economy,” but cutting taxes on consumption and then raising them on investment and small businesses through the income tax is a strategy to lose jobs.

Earlier this year, George Jepsen, the former Democratic Senate Majority Leader, warned his former colleagues that “Connecticut now enjoys a modest competitive advantage over its immediate neighbors, but ill-conceived taxes and fees will . . . deepen the state’s weakness competing with the South and Southwest.”

We’d suggest that Ms. Rell give Governor Martin O’Malley of Maryland a call. Two years ago he passed a similar income tax hike dressed up as tax “fairness.” Today, a third of the millionaires have vanished from the tax rolls—and the state is still in deficit.

To revive growth and boost family incomes in Connecticut, Ms. Rell should be working to repeal the income tax, not expand it. It’s a failed experiment that has mostly benefited the likes of Florida and Texas. Connecticut’s saving economic grace in recent years has been that its political class is slightly less destructive than its Northeast neighbors, and that’s not an advantage it can afford to give up.

Faced with dwindling revenues and property taxes, Coral Gables commissioners voted to pass ordinances that will allow them to establish fire-rescue related fees.

 

BY ELAINE DE VALLE

EDEVALLE@GMAIL.COM

 

Miami Herald – link to original article

 

AUGUST 29, 2009

Despite the heated pleas from some in the audience, the Coral Gables City Commission on Tuesday laid the groundwork for two new fees related to fire-rescue service.

The first, a fire assessment fee, will cost homeowners $50 a year. Commercial and institutionals users will pay per square foot and be assessed according to how often they call for service.

The fee is expected to raise nearly $2 million for the city.

The second fee, for fire transportation, will charge residents if the city’s fire department whisks them away to a hospital. These fees would range from $360 to $616, depending on frequency of use and degree of life support involved.

The fire transportation fee is expected to raise another $450,000 next year.

City Manager Patrick Salerno has proposed the fees as one of several measures to raise revenues in a city budget tightened by the economic slowdown.

Commissioner Ralph Cabrera, who voted no on both fees but who also said he dislikes the transport fee, said he could find the $450,000 to take out of the budget elsewhere.

“Public safety is one thing that goes on beyond any other fee like trash and parks and any other ridiculous fee we have out there,” he said, adding that he felt people paid for police and fire out of their property tax dollars.

But Salerno told the commission that the city’s proposed $150-million budget relies on the adoption of both fire fees.

“These dollars are already included in the budget and would have to be made up by other fee increases, other tax increases,” Salerno said, reminding them that police officers had just gone to the dais to protest a proposed 7.5 percent cut in pay.

“We had the police here urging we consider their plight. Without those dollars that are here today, we would have a greater hole to climb out of,” Salerno said.

He said increasing the tax rate to pay for these services would cost more than the $50 fee for those who own homes valued at more than $300,000. The city has already proposed increasing the millage rate for next year’s budget; budget hearings begin Sept. 8.

The transport fee would be a new cost for residents.

The city would not go after people who didn’t have medical insurance or who would pay the fee out of their own pocket because of health insurance deductibles, Salerno said.

“They would still get a bill — Medicare has certain regulations and we don’t have the ability to not charge a particular group of individuals,” Salerno said. “They would receive a bill. To the extent they can pay it, they would. We would not aggressively pursue collection of people without insurance.

“And we would know who does not have insurance.”

Cabrera, an insurance benefits consultant who said the insurance companies would raise premiums and pass the cost along to the customers, was less thrilled: “So, in essence, we will subsidize this program with the insured, whether they pay or their insurance company pays, someone will pay and they will subsidize those that will not pay.”

Salerno said he would look at it differently: “Today, anybody who is paying insurance, whether it is private insurance or whether it’s through the employer, they are already paying in their premium for this benefit. Who is losing out in this regard is the city.”

Cabrera said residents “are already paying for this benefit because of the property tax they pay in Coral Gables and that pays for basic services.”

Residents and taxpayers who spoke against the fire assessment fee, which can only be applied toward fire rescue services and not the city’s general operations, said the same thing.

Activists Richard Namon and Charlie Girtman called it a hidden tax. Girtman said the city had to make better use of its ad valorem taxes so it wouldn’t need the fee.

 

“If we didn’t have to pay $2 million for this municipal building, we wouldn’t need $2 million for fire,” Girtman said referring to the city’s estimated cost — added to grants and private donations — of the Coral Gables Museum, which is under construction and will house the city’s archives and its historic preservation department.

“Does that make sense?” Girtman asked. “I urge you not to do this.”

Danielle Blake, a spokeswoman for the Realtor Association of Greater Miami and the Beaches, also asked commissioners to vote down the ordinance.

“We don’t believe this is the right time in this market to impose any new fees like this,” Blake said.

Vice Mayor William Kerdyk was concerned about the impact on commercial property owners. Commercial properties would be assessed approximately six cents per square foot.

“It’s the tenants that are going to have to take this absorption and right now everybody is hurting,” Kerdyk said.

“I’ve always been very supportive of the fire department but I have some concerns.”

Firefighters argued that they needed the fee to upgrade their equipment and training.

“If you don’t fund the fire department, people die,” said Deputy Chief Dan Thornhill, who is also treasurer of the Coral Gables Firefighters Association.

“Lives are lost. Property is lost.”

Thornhill said the department was operating at a “bare minimum” as far as training and equipment. He said the city’s back-up apparatus for high-rise fires is a 1988 fire truck.

“Most people don’t know that. If we have a fire fee in place, we can project and anticipate when we can get some new equipment,” Thornhill said.

“You have to give us the tools.”

Roxcy Bolton and Vince Damian, president of the Coral Gables Citizens Political Action Committee — which has scheduled a protest of the fees and budget proposals in front of City Hall on Monday afternoon — were not convinced.

“This is an attempt to pull something over the citizens of Coral Gables,” Damian said, who noted that the city’s proposed $150-million budget is nearly double what the city’s budget was in 2001, when three of the five commissioners first took office.

“There has been some reckless spending. This is part of it,” he said, adding that his father was a New York City firefighter.

“I don’t want anything taken away from the firefighters,” he said.

He said commissioners should increase the tax rate rather than institute a new fee.

“Stand up and be honest. Say I’m a commissioner in Coral Gables and I spent your money and I will raise your millage rate and be responsible for it,” Damian said.

Mayor Don Slesnick turned the microphone off after Damian had far surpassed his allotted three minutes and called for a five-minute break.

When commissioners returned, they passed the ordinance allowing them to establish the fire assessment fee if they choose to do so at the public budget hearings in September.

They then passed the fire-rescue transport fee ordinance, which also allows them to implement that fee if they decide to next month.

Weekly Standard – link to original

August 31, 2009

If readers have any questions about the validity of the Obama broom sweeping through Washington–clearing out the corruption and changing the way things have been done, putting the status quo and the special interests and the bad old ways on notice–THE SCRAPBOOK suspects the U.S. Senate has given them a definitive answer.

This month, after a yearlong “investigation,” the Senate Select Committee on Ethics dismissed complaints against Senators Christopher Dodd and Kent Conrad. The two senior Democrats had been accused of using their positions to obtain sweetheart deals on home loans from Countrywide Financial Corp., the nation’s largest purveyor of subprime mortgages, and whose ex-CEO Angelo Mozilo has been charged by the SEC with fraud and insider trading.

Dodd and Conrad had participated in a Countrywide program for prominent customers known as “Friends of Angelo,” which furnished special deals on mortgage refinancing for their homes. Indeed, Dodd took advantage of his Countrywide deal to refinance his residences in both Washington, D.C., and Connecticut, which reduced his mortgage payments by some $75,000.

The ethics committee exercised some tough love here. To be sure, it saw nothing wrong with the connection between the Countrywide deals for specially selected customers and Dodd’s status as chairman of the Senate Banking Committee or Conrad’s position as chairman of the Senate Budget Committee and member of the Finance Committee. No, it didn’t. But it did criticize the senators for not exercising “more vigilance in your dealings with Countrywide in order to avoid the appearance that you were receiving preferential treatment based on your status as Senator.”

More vigilance–or else! Then the ethics committee opened up both barrels–on itself, taking the blame for not providing better “guidance” to the chairman of the Banking Committee and the chairman of the Budget Committee “about issues surrounding mortgage negotiations.”

The executive director of Citizens for Responsibility and Ethics, which filed the original complaint against Dodd and Conrad, commented that the ethics committee’s astonishing action was “like a battered woman who explains she brought the beating on herself.” Which is certainly true, although THE SCRAPBOOK would add, with a touch of cynicism, that this latest Capitol Hill whitewash confirms the fraudulence of President Obama’s calls for “change” in Washington.

 

THE SCRAPBOOK would also add that the silver lining in this particular cloud is that Senator Christopher Dodd is facing reelection in Connecticut. Forty years ago his father, the late Senator Thomas Dodd, was sent into early retirement by the voters of Connecticut after censure by the Senate for corrupt practices. May the family tradition continue!

Coral Gables commissioners voted to raise the tax rate to offset a budget shortfall caused by lower property values and higher costs.

 

BY ELAINE DE VALLE

EDEVALLE@GMAIL.COM

 

The Miami Herald – link to original article

 

July 10, 2009.

 

Coral Gables property owners likely will pay more taxes next year — up to more than $500 for an average-priced home — to help offset an approximate $10-million shortfall in the city’s budget.

City Manager Pat Salerno proposed three different tax increases at a budget workshop Wednesday, ranging from $5.65 to $6.245 per $1,000 of taxable property. The current tax rate is $5.25.

Commissioners voted on publishing the $6.25 figure. It doesn’t mean they will go that high when they set the final tax rate in September, but since they cannot go higher than the published rate, they wanted room to maneuver.

The average assessed value of a Coral Gables home in 2009 was $571,388; property taxes on that home would be $2,739 at current rates, after the $50,000 homestead exemption. At the $6.245 proposed rate, taxes on that home would be $3,255. At the $5.65 rate, taxes would be $2,945.

Cities across South Florida are facing budget shortfalls due to higher costs and lower tax bases stemming from falling property values. The result: higher tax rates or substantial cuts in services are anticipated as the budgeting season begins this month. Last week, the county reported a decline of $23.4 billion in 2009 countywide taxable value, or a 9.5 percent decrease when adjusted for new construction.

`IT’S HUGE’

In Coral Gables, the tax base has dropped by about $1 billion, or a 7.5 percent decrease from 2008 to 2009, when adjusted for new construction. Finance Director Don Nelson told commissioners the city’s losses would be $3.5 million higher if last year’s tax rate remained in place.

”It’s huge,” Nelson said.

To help balance the budget, the city is laying off about 40 of its 827 employees through job eliminations, including seven police department positions, 10 in public works and 11 in public service.

Residents also are likely to pay more for nearly everything. Among the fees discussed:

• Garbage pick-up — which is proposed to go from $610 to $685 a year, and expected to generate an additional $800,000.

• Parking on both street meters and in public garages, which would raise another $645,000.

• A fire-assessment fee of $50 per household.

Salerno said the proposed $150.8 million budget had ”many, many moving parts” and that commissioners had never dealt with a budget that had so many new measures at once. He sent notifications last week to people who were identified for possible layoffs, including Assistant Public Works Director Ron Van Eyk; a video production assistant; a staffer in the planning department; two in parking; and three in building and zoning.

WAGE CUTS

The remaining employees will be asked to take a 5 percent wage cut or contribute 5 percent more to their pension, easing the city’s pension contribution, which is about 20 percent of its operating budget and has been ballooning.

Mayor Don Slesnick said that he felt the cuts had been spread out so that not one stakeholder was holding more of the burden.

‘I, for one, will not vote to reduce any employees’ benefits or reduce any numbers if we don’t spread the responsibility,” Slesnick said. “We are all responsible for this city. Every constituent, every resident. We are all residents and employees are part of the family and if we don’t spread this and all share responsibility, we can’t do it.”

 

Dozens of police officers showed up at the Gables commission meeting Tuesday to protest a proposed 7.5 percent pay cut.

 

The pension — which comprises 45 percent of the city’s budget.

 

… someone who worked for the city for 20 years to 68 percent of his or her salary, rather than 60 percent

 

 

 

BY ELAINE DE VALLE

EDEVALLE@GMAIL.COM

 

The Miami Herald – link to original article

 

August 26, 2009. 

 

While the matter was not on the agenda for Tuesday’s commission meeting, dozens of Coral Gables police officers showed up at City Hall on Tuesday to show their distaste for a 7.5 percent pay cut proposed by the administration.

Wearing T-shirts that read, “My life isn’t worth 7% less,” the officers stood side by side as their president gave a short speech after Mayor Don Slesnick spoke.

Coral Gables Fraternal Order of Police Lodge No. 7 President John Baublitz said he couldn’t be too specific because the city and the union are at impasse over contract negotiations, meaning the commission will make the decision. That could happen as early as next week.

Coral Gables, like many cities, is contending with a budget shortfall due to lower property tax revenues. City Manager Patrick Salerno has proposed a 7.5 percent salary decrease for members of the police and general employees union and a 5 percent salary cut for firefighters. The firefighters union voluntarily took its 5 percent pay cut in a contract signed this summer.

The police union is still negotiating with the city.

“We know the mayor and commission will do the right thing and keep the citizens safe,” Baublitz said outside City Hall. “These cuts will decimate the department.”

Baublitz said the cuts would not allow the Gables department to compete with other agencies across the county. The Gables department provided the fourth best pay and benefits from 16 police agencies in the county five years ago, he said.

“Now we are 13 out of 16,” he said. “Every other department in the county has a better retirement plan. If they do the cuts they want to do now, we won’t be able to keep anyone. All the young officers with less than 10 years on the force, they’ll have to leave.”

Salerno scoffed at that notion.

“We lose officers now. People leave for family reasons, for positions they think may be better,” Salerno said, acknowledging that turnover might increase.

“I certainly would not want to lose police officers. However, this is, in many respects, an ability to pay issue on the part of the city,” Salerno said. “What we’ve asked for is for the police to make a pension contribution. They are the only bargaining unit that does not contribute.”

Other employees, including firefighters, have contributed 5 percent of their pay to the pension — which comprises 45 percent of the city’s budget — for at least four years, the manager said.

“That’s just simply a situation that is not one that is sustainable over the long term, and it needs to be addressed,” he said, referring to the pension being nearly half of payroll costs.

He said the union representatives did not present any financial terms at the meeting last Friday, but sent a fax to the city’s labor attorney, James Crosland, on Friday afternoon. The union asked for the multiplier on the pension to be 3.4 percent, rather than 3 percent. The change would allow someone who worked for the city for 20 years to 68 percent of his or her salary, rather than 60 percent.

“This is not a time to be asking for increased pension benefits,” Salerno said. “In these particular times, I am not aware of communities giving increased benefits.”

City commissioners are scheduled to hear both sides at a hearing at 10 a.m. Monday in commission chambers at City Hall, 405 Biltmore Way.

Coral Gables unionized employees are being asked to take a 7.5 percent pay cut, 2.5 percentage points higher than initially discussed by city leaders.

The Miami Herald - link to original article

BY ELAINE DE VALLE
EDEVALLE@GMAIL.COM

Similar stories:

Coral Gables police officers protest proposal to cut their pay

City layoffs, wage cuts, higher tax bills likely in store for Gables

City employees in Coral Gables are being asked to take a bigger pay cut than they first anticipated.

The city manager has proposed a 7.5 percent salary decrease for members of the police and general employees union — more than the 5 percent first proposed. About 85 percent of the city’s approximately 800 employees belong to the police, fire fighters or general employees unions.

Labor attorney Jim Crosland presented the offer Aug. 5 to the Teamsters local that represents the general employees. The offer proposes either a 7.5 percent cut in wages or an additional 7.5 percent contribution to the pension.

The general employees already contribute 5 percent to the pension. The 7.5 percent cut would be additional.

The firefighters union also contributes 5 percent to the pension, but is not being asked for additional cuts because it voluntarily took a 5 percent wage cut in a contract signed this summer. The police union has not contributed to the pension; it is being asked for a 7.5 percent wage cut or pension contribution.

“We won’t agree to a 7.5 percent pay cut,” said Mike Scott, president of the Teamsters Local 769, which represents the general employees.

“Their budget documents refer to a 5 percent cut and I don’t even know if that will see the light of day,” he said, adding that his union will present its economic proposal at a meeting next week.

Part of the reason for the sudden additional wage cuts could be an additional $2 million pension liability that had not been identified at the budget workshop last month.

Instead of $800,000, as commissioners had been told they would have to pay this year, the city will have to contribute $2.8 million to the pension fund to keep it in the black.

“Bad news comes in clumps,” Mayor Don Slesnick said.

“The actuary working with [Finance Director] Don Nelson projected around $800,000 and that’s what we were working on increasing our contribution this year,” Slesnick said. “The increase was decreasing. It was still an increase, but it was decreasing.

“Now all of a sudden, the figures most recently given put the increase at $2.8 million, which is a total shock,” the mayor said, adding that the commission had “begged the pension board” to seek a new agreement with a new attorney and new actuary.

“We haven’t gotten the full story, but this is the same actuary who has given me a hard time on a number of issues,” Slesnick said.

Slesnick said he was not sure whether the salary cuts were related to the pension news.

The 7.5 percent salary cut will save the city $2.75 million — just enough to cover that $2 million extra hole and have some wiggle room, said City Manager Pat Salerno.

“It’s a combination of things. It’s what we need to do to put ourselves on a path to being able to sustain our pension plan,” Salerno said.

City commissioners cannot impose an additional pension contribution, but they can impose wage cuts, Salerno said.

“If we don’t reach an agreement, they can impose a 7.5 percent wage decrease,” Salerno said.

“Either way, the payroll check to the employee is going to go down 7.5 percent, whether it’s a wage reduction or a pension contribution,” Salerno said.

The firefighters union, which had already agreed to a 5 percent salary cut, will not be asked to make any further sacrifices, Salerno said.

“They have a contract.”

Other details of the contract proposed by the city for the general employees include a cut in future merit increases and loyalty payments given after 10, 15 and 20 years of service from 5 percent of one’s compensation to 2.5 percent.

Additionally, employees who were compensated an extra 7 percent in pay rate because they worked from 6 p.m. to 7 p.m. will now get a 2.5 percent additional compensation. And the city will fund 70 percent, rather than 100 percent, of health insurance.

The proposed contract also gives the city authority to change to the Florida State Pension system, something that has been discussed for years as the city’s pension payments have ballooned to more than $20 million a year. Any new employees would be entered into that pension.

Battalion Chief Dan Thornhill, secretary and treasurer of the Coral Gables Firefighters Association, said he did not think the city would go back to his unit to ask for more concessions.

“We’re kind of proud as employees of what we’ve done,” Thornhill said of the fire department. “It’s something pretty significant that’s never been done in the history of our city. We went back and sharpened our pencils and did what we could and it saved them $2 million.

“Now the police and general employees,” represented now by the Teamsters Local 769 “are going to have to do their part,” Thornhill said.

Leaders at the police union, which has an impasse meeting Aug. 31, could not be reached last week. But the Teamsters’ president, who has a meeting scheduled this week with Salerno, said employees could not be asked to bear so much of the burden.

“Obviously there has to be some give from employees and we recognize that. But we need to see what management is going to contribute,” Scott said

 

Friday, August 28, 2009

 

Rasmussen Reports – link to original

 

August 28, 2009

 

Sixty-two percent (62%) of Americans say it’s always better to cut taxes than increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their own money.

A new Rasmussen Reports national telephone survey finds that just 20% of adults disagree, and 18% are not sure.

The new findings mark a nine-point increase in support for taxpayers as the best judges of spending since January.

But then Americans by a two-to-one margin – 50% to 25% – believe that a dollar of tax cuts is always better than a dollar of public spending. One-in-four-Americans (25%), however, aren’t sure.

Similarly, just 25% say public spending provides much more bang for the buck than tax cuts when it comes to economic policy and creating jobs. Fifty percent (50%) disagree that public spending is better for the economy than tax cuts. But again 26% are undecided.

(Want a free daily e-mail update? If it’s in the news, it’s in our polls). Rasmussen Reports updates are also available on Twitter or Facebook.

 

Women are more likely than men to prefer government spending over tax cuts. Investors favor cutting taxes more than non-investors.

Republicans are almost twice as likely as Democrats to think that taxpayers are the best judges of how to spend their own money. Sixty-seven percent (67%) of adults not affiliated with either party agree.

While two-thirds (67%) of Republicans and the plurality (49%) of unaffiliateds say a dollar of tax cuts is always better than a dollar of public spending, Democrats are evenly divided on the question.

Seventy percent (70%) of voters favor a government that offers fewer services and imposes lower taxes over one that provides more services with higher taxes. Fifty-four percent (54%) worry the federal government will try to do too much to fix the economy rather than not enough.

Support for tax cuts over new government spending has been consistent in years of surveys. As for taxpayers’ confidence in themselves over bureaucrats, consider that 74% of Americans trust their own economic judgment more than that of the average member of Congress. By a two-to-one margin, voters also trust their own economic judgment more than President Obama’s.

When it comes to Obama’s trillion-dollar health care reform plan, most voters think they understand it better than Congress does – and about as well as the president himself.

Fifty-four percent (54%) of voters say tax cuts for the middle class are more important than new spending for health care reform, even as the president’s top economic advisers signal that tax hikes may be necessary. Seventy-six percent (76%) believe it is at least somewhat likely that taxes will have to be raised on the middle class to cover the cost of health care reform.

Sixty-eight percent (68%) say government spending will go up under the Obama administration.
While a government job looks less attractive to Americans than it did at the beginning of the year, it remains the top employment choice in today’s economic environment.

Still, for nearly four-out-of-five voters, the problem is not their unwillingness to pay taxes. It’s their elected representatives’ refusal to cut the size of government.

Please sign up for the Rasmussen Reports daily e-mail update (it’s free) or follow us on Twitter or Facebook. Let us keep you up to date with the latest public opinion news.