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Thursday, September 18, 2008 10:03 AM CDT
Auditor says city of Mattoon's pension costs will eventually dominate property tax levies
By HERB MEEKER, Staff Writer hmeeker@jg-tc.com
MATTOON — A discussion about the 2007-08 city audit turned to a familiar subject: the cost of city pensions.
Brian Daniell of West & Co. in Mattoon said Tuesday night the city’s pension costs for city firefighters, police officers will eventually dominate future property tax levies.
City Treasurer and Attorney Preston Owen said the city has little control over pension costs at this point. Firefighter and police pension contributions through taxpayer dollars are set by state legislation established by actuary figures averaged across the state.
“We control almost nothing of those costs. We only control the number of fire and police on our staff,” said Owen.
So does that mean staff cuts are on the horizon? For now, the number of firefighter retirees now outnumber active employees by 50 to 38, city officials said. So even with job cuts, there would still be plenty of pension obligations.
Commissioner Randy Ervin asked about less drastic measures such as switching firefighter and police retirement plans to 401ks.
“In the private sector, the trend was to move to 401ks as opposed to pensions. Should that happen for municipalities, too?” asked Ervin.
Firefighters Local 691 President Bart Owen questioned that move due to length of service for emergency services workers. Many firefighters or police officers retire 10 to 15 years earlier than other workers, he said.
“We don’t have the time to build into a 401k for retirement. That is the nature of our jobs. And the later years on the job provide the most earning for retirement plans,” Bart Owen said.
Mattoon firefighters like other public employees have suggested ways to increase revenue and reduce costs without drastic measures like job cuts or slashing of benefits.
The Local 691 president noted firefighters agreed to cutting a provision on pensions that helped spike benefits for new retirees. In addition, they have offered plans to increase revenue for the city.
“We’re willing to talk about generating revenue to offset some or all of the pension costs,” Bart Owen said on Wednesday.
Commissioner David Schilling believes the city should take seriously Daniell’s comments on the pensions.
“He suggested some outside adviser come in to check our pension situation,” Schilling said. “About 80 percent of the costs for running a city are personnel costs. That’s the same for every city nowadays.”
Bart Owen said both the police and firefighter union locals agreed to acquire actuary figures on the pension figures two years ago. But the problem with actuary figures is they are based on statewide averages, not specific to each community.
The audit presented by Daniell showed revenues for all city funds down by $502,400 from the opening of the FY 2007-08 fiscal year in May 2007 and the close April of this year. Expenses were down by $1,405,487 during the same period, but Daniell noted one-time capital projects and purchases covered much of that figure.
So that means personnel cuts might be the only alternative because cutting elsewhere will not yield much savings, Schilling said.
“You can only look at so many paper clips,” he said.
Contact Herb Meeker at hmeeker@jg-tc.com or 238-6869.
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Harry Potter wrote on Sep 17, 2008 8:48 PM:
Perhaps a justification for firemen and police officers might be appropriate, but not for those who spend a great deal of their time riding around in city owned vehicles. "