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City has underfunded pensions to the tune of $1.1 billion

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Started 9 months ago by Norge
Latest reply from Mondoman

Norge

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Well it has come out that the City has under funded pensions for retirees to the tune of $1.1 billion dollars. This money is to be paid from the general fund. In order to pay the $35 million per year (for what 20 years?) they planned on doing at the end of last year, the city will either have to increase taxes or put more special levies on the ballot (libraries, seawall, etc.) in order to get more money into the general fund to make this obligation. This amounts to $3800 per household in Seattle.

And yes, the city is going to take $200 million from the general fund for the Arena knowing full well they have this obligation to the pension fund. I imagine some of that library levy money will fill this hole.

So -- GI -- do have an extra $3800 you can spare for my share since you are so agreeable with any levy or tax increase the city proposes? I live alone -- you probably have a family so your actual share is probably less than mine.

The city wants to give $200 million for a stadium so

Posted 9 months ago #
great idea

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"do have an extra $3800"

heck no!
as Burgess said, it's a "high benefit, high cost system" that needs to be reformed.
pesky city employees are living too long.

I only support levies and taxes that improve my city or neighborhood. I would not support this hypothetical one for that reason.

Posted 9 months ago #
Norge

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Neither would I but in order to pay this money the city will need to put special levies on the ballot -- such as the so-called library levy that has no oversight in spending the money thus and allowing the city to do with the money as they see fit. So the additional money collected from the library levy (or some other specifically named levy) could actually be used for funding this pension shortfall - so you are paying for it anyway. This is why I scrutinize levies -- how much is actually used for the levy and how much goes in to a slush fund to be used for pet projects or to make up for shortfalls.

Posted 9 months ago #
great idea

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granted there are lots of inefficiencies in government.

the city government screwed up by offering this deal to employees, but they are legally bound to make up this shortfall.

I am all for reforming these pension plans which are clearly not sustainable.
but we still have to pay for it right?

where else would this money come from if not the general fund? no one would support a levy that was specifically for this purpose.

Posted 9 months ago #
angeline

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We are all going to pay one way or another. If the city can't afford retiree costs and then doesn't pay the people some will fall into poverty in their old age, meaning the taxpayers will have to pick up the bill to subsidize housing, medical care, etc. So even if you don't think it is awful to renege on promised retirement pay, it is still a bad idea.

Posted 9 months ago #
Norge

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Although I don't necessarily agree with a promised pension with a 7.75% return, it is something the city needs to fund. What I object to is the use of general fund money for pet projects of the Mayor/City Council depleting the general fund of monies it should be using for library funding, etc. They use the general fund money to fund projects the public would never vote for -- such as this Arena, the Mercer Mess -- and if people were to look at the proposed Seawall levy they would see that a large portion of that levy is to start work on this elaborate waterfront park basically for tourists. If you remember, the public had no vote on the SLUT yet the city came up with $50 million in funding -- could some of this money been used to fund the pension shortfall -- of course but they didn't use the funds where they should have. So now what does the City do? How do they frame a levy the taxpayers will vote on, only to use a major portion of that levy to fund something we didn't vote on?

Posted 9 months ago #
Ballard Sucks Now

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Don't worry - me and my cronies will be well taken care of in our retirement. You can take that to the bank!

I sure hope that you suckers - um, wonderful, civic-minded visionaries - all vote for that seawall replacement project levy this fall....as Norge correctly points out, most of that money will be diverted to pay for our great downtown waterfront amusement park project for cruise ship passengers. Half a billion taxpayer dollars will be going down that rathole - um, transformative project (well, that's our initial cost estimate - we'll see how thing go - we might be back for more, you never know - wink).

We're counting on you, fellow visionaries, to keep voting for us and for our visions. Please keep doing that, and things will continue to just get better and better here. Enjoy your city! Ride The Duck!!

Posted 9 months ago #
onederfullone

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Norge, I'd find it surprising if this surprises you.

Others maybe, but you, I doubt it.

btw, that's just Seattle, imagine what the state doesn't have any plan to pay for.

If we are lucky, we'll go bankrupt like many other cities, and not need to face tens of thousands of personal debt, beyond what we carry for state and federal promises.

It's about 150K now, per living thing, fwiw. Don't quit your job.

Posted 9 months ago #
Norge

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Thanks onderfullone I had not heard that figure but have no reason to doubt it at all. I was reading Jerry Large's column in the paper this morning - Seattle is what 54 out of 100 on list for best places to retire -- basically because of the cost of living here, including house prices, taxes and utilities -- weather counted but not by much. I for one don't have the income to make up for these shortfalls -- maybe those keen on taxes and increased utility fees (when they can't raise taxes) would be willing to donate to make the city solvent. I just wish people would be a bit more prudent when it comes to spending other people's money -- then again there are those that don't seem to care about it at all and vote willy nilly for anything the city puts in front of them. I like the way the powers that be are renaming levies to tug at the heart strings of those yellow dog democrats -- youth detention center rebuild now called family and children's levy - same project.

Posted 9 months ago #
ballardpilot

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Here's a sad fact: the people who rule over you simply do not like Seattle. They hate it. They crave every opportunity to "transform" it into something it never was. They don't give a shit what the people who live here want, they have their own agenda which they know damn well would be quickly rejected by voters.

You think they're going to allow a vote on the newest publically-finaced stadium? Of course they're not. Because they know very well it would be defeated - like the last 2 ballot initiatives that defeated plans for publicly funded stadiums (those stadiums were built anyway, of course, ignoring the voters clear wishes). You think the city rulers are going to put up a ballot measure asking for half a billion dollars for the waterfront cruise ship amenities? Of course not. Instead, they're going to put up a "library levy" and a "schools levy" and a "doe-eyed kitten levy" and a never-ending stream of other pleasant-sounding deceptions which will keep the money flowing in.

And every time one of these "special levy" initiatives passes, most of the money collected will not go to the popular-sounding projects that the collections are named after. Nope, they're going to get quietly skimmed off and spent on what the city's rulers want to spend it on, and the well-meaning but naive suckers who thought they were voting for one thing will have their money go to something else entirely. Until the next "crisis" is discovered, and they'll float another levy to address that.

Why? Because your city's rulers have contempt for you, and your city. They see you as an easily manipulated fool, a rube, a sucker.

Are they right?

Posted 9 months ago #
Ballardemician

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Is any part of the library levy money earmarked for the library (and if so how much), or is all of it just a tax that goes into the general fund?

Posted 9 months ago #
lifeisamazing

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I realize that this question is minor compared to all of the things being brought up but can someone explain to me the building of the "cool" downtown library. I'm not good at understanding underlying politics so I may have this wrong but once that was built with funds that should have gone to actual library needs I stopped voting for anything to do with library funding. It seemed like me taking the food money and buying a new dress. Did I miss something?
I even read an article comparing the money it takes to keep all those windows clean with the amount of books it could buy and staff it could fund. Thoughts?

Posted 9 months ago #
Ballard Sucks Now

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Come on now, don't you want to be a world class city? Citizens of world class cities don't quibble over such things. Trust us.

Now don't you worry your pretty little head about those messy, complicated numbers. Math is hard! Let the Professionals take care of it for you - look at our track record!

Posted 9 months ago #
lifeisamazing

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Thank you and thank god! I feel so much better. Want a fresh baked cookie?

Posted 9 months ago #
Mondoman

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Ballardemician, here's what I've been able to find out:

The proposed Library Levy should bring in about $17 million per year (starting 2013). The legal wording of the ordinance says that the Library Board will decide how to spend that, without any restrictions.

Currently (2012), the Library gets $51 million from the City's General Fund. The City Council and Mayor decide that, without any restrictions.

When the Library Levy ordinance was passed in April 2012, it included non-binding "intent" language that the future General Fund contribution to the Library would only be changed in proportion to the changes for other similar City departments. (IOW General Fund money to the Library would not be cut more than other departments).

As of August 2012, the above "intent" no longer applies. The current plan is to cut other City department General Fund funding 4-8% for 2013, and to cut Library General Fund funding 10% ($5 million) for 2013. This cut is intended to continue during each year of the Library Levy, in effect transferring at least 30% ($5 million) of the Library Levy each year into the General Fund.

The City Council and Mayor can of course further decrease the General Fund contribution to the Library in the years after 2013.

Posted 9 months ago #
Ballardemician

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wow Mondo thank you for the detailed response.

so the levy on the current ballot is approx. 2/3's earmarked as an increase to library funding, 1/3 goes into the general fund up until 2013, when the (big C) City can then take as much or little of this money as they want.

Then I say no, because I don't like being tricked. With some concentration this structure is simple enough to relate in the short language on the ballot, which says nothing of the kind, just that it's money to buy books and maintain library hours for the next X years.

SO much for transparency I guess. The party to blame here really isn't the city but the elections officials charged with presenting clear, neutral and truthful language on the ballot. Smells a lot like how the ratings agencies colluded to cause the financial crisis ...

Posted 9 months ago #
Mondoman

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B - the nice wording about the library hours, technology, and books mentions that these are only "examples" -- that's the code word for non-binding.
This really annoyed me, especially when previous levies here have had detailed, legally-binding listings of what the levy money will be spent on, and even independent oversight committees.

Posted 9 months ago #
Ballardemician

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interesting -- so is it McGinn's admin. that's okay with taking the low road? Is he ultimately the one who's accountable?

Posted 9 months ago #
great idea

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"previous levies here have had detailed, legally-binding listings"

yes, but that was when times were good before the bubble burst.
when the economy went south and the government lost the tax revenue, they had to look elsewhere for the dough. I think Tim Eyeman has something to do with it.

since the general city fund is already being cut, I don't see the problem with taking money from the library to keep other critical operations going. it could be more transparent, but honestly I don't care if they have to push the money around to get things accomplished.
I trust our elected leaders (no sarcasm whatsoever).

Posted 9 months ago #
Mondoman

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You raise a good point, gi. Unfortunately, the general "how should we fund city government" and "what are the funding priorities" discussions, which are important and good, get over-shadowed by the transparency shenanigans.

Whenever I see (a) money measures mislabeled (i.e. Library Levy instead of Library and General Fund Levy) and mis-described and (b) assurances made, then withdrawn 4 months later (the "intent" to fund the Library proportionally to other similar departments), I have to wonder what's going on.

When the transparency issues are pointed out publicly to the Council and Mayor, and requests that they be straightforwardly remedied are ignored (as with the multiple letters from neighborhood associations and groups this spring), my faith in the Council and Mayor is shaken. I'm glad your faith is still strong.

Posted 9 months ago #
Ballardemician

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yep exactly -- I'm fine with paying taxes for services, not the hiding of a general tax hike inside a heart-strings plea for a popular earmark. It's lying, and as such it essentially subverts democracy. It's not okay, even if you like the result of the duplicity.

Posted 9 months ago #
Norge

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GI - your responses conflict with one another on this issue. I initially asked you, since you are so agreeable to tax or utility increases, if you had an extra $3800 to give me to fund this shortfall. You of course said no. You also said that "I only support levies and taxes that improve my city or neighborhood. I would not support this hypothetical one for that reason." Then you say "I don't see the problem with taking money from the library to keep other critical operations going. It could be more transparent, but honestly I don't care if they have to push the money around to get things accomplished." So, by agreeing with the city's use of funds for other purposes in regard to the library levy or upcoming seawall levy (waterfront park), you are agreeing to pay for the shortfall in the pension fund because the city can "push the money around to get things accomplished." This is how the city is coming up with the $200 million for the Arena -- something the city won't put to a vote because it would most likely be voted down.

The city will come up with the money for the Arena without our input because they know best and then having this pension (and other shortfalls in the budget) they will hit us up for another "feel good" levy to make up the difference, especially if there is no oversight. And who really knows how those oversight panels really work -- they are all city employees (who probably don't live in the City of Seattle) and really don't care how our money is spent. Do you honestly think they would object to a decision by the Mayor and/or city council?

Way back in the mid-90's the public voted down Paul Allen's Commons Park which included improvements to the Mercer Mess (for his neighborhood) twice. We voted on the "pot hole levy" to improve roads -- which specifically excluded the Mercer Mess. Well what is being redone -- the Mercer Mess both from funding from the "pot hole" levy and the general fund to the detriment of streets in other neighborhoods. At or about the same time, there was also a levy to rebuild City Hall which was voted down. Well a new City Hall got built from the general fund. Can you see why we need special "feel good" levies now to meet the basics? They now are messing around with the funding from special levies for their pet projects thinking the public can't or won't read the fine print. Maybe the City needs to look at some of the data on the citizens of Seattle, that there are a lot of educated people here.

I used to think it was sweet how naive Seattlelites were towards the working of their government--that people fell hook, line and sinker for the "company line." I don't think that anymore -- by not calling them on the carpet they are reaching to new depths to pull the wool over the public's eyes.

BTW, all the information about the Commons Park, Mercer Mess, City Hall levies can be googled or found in the Seattle Times or Seattle PI archives.

Posted 9 months ago #
great idea

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Norge--
perhaps it appears my basic instincts are in conflict, but there are a few things to consider:

- I am very pro-arena. not so much for basketball, although if it were just for that I would still support it. avid hockey fan.

- regarding the pensions, the city is stuck with these costs, no? I agree they could be much more transparent, offer up a levy saying 14% of that library budget going toward city employee benefits. the current administration would earn my favor if they can renogiate future contracts.

I remember the Seattle Commons levy well and voted for it. I wish it would've been built--this city would be better for it.

Posted 9 months ago #
OingoBoingo

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+1 onder
Seattle finances are chump change compared to unfunded state and federal pension obligations. Don't quit your day job and expect a decline in your standard of living to support this 'stealth' debt obligation in coming years.

Posted 9 months ago #
onederfullone

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chump change is a good way to put it. Relatively anyway.

Not quite chump change, except, those that think it's chump change tend to be chumps ;-)

Posted 9 months ago #
Corvus

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I have often wondered about these levies. I said to my wife as I opened the ballot envelope, "we always seem to be voting on something around here".

I have to admit, I'm a sucker for these feel good levies as you call them. I think like most people, I'm willing to give a little extra here and there for good reasons that affirm my, and my community's character such as library, parks, road repairs, etc. So maybe it's time a message was sent to our representatives.

Back to the ballot in hand...

The first item is King County Proposition 1: Children and Family Services Center Capital Levy. Again, this is a worthy cause and juding from the reports about the curent center and the cost of maintaining it, it sounds like a good idea. However, I am beginning to feel nickel and dimned to death here.

I don't find any wording whch would allow the money collected from the Family Services levy to be used for anything but construction. See #6. It can't even be used for regular operations. Am I missing something?

http://your.kingcounty.gov/elections/2012aug-primary/measures/KC-fulltext.pdf

Regarding the library levy, I guess I more apt to vote for the levy which clearly states where the money can and can't be used.

Posted 9 months ago #
great idea

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yes, Tim Eyeman is responsible:
"I-747 had been Eyman’s most significant victory. The 2001 Initiative generally limits increases to State and local property tax levies to one percent (1%) per year, which is well below the rate of inflation. The result has been a funding crisis for local and state government and cuts to critical public services.

I-747 was projected to reduce government revenues by about $1.5 billion over its first six years, and its impacts increase dramatically with each passing year. The State Department of Revenue projected that I-747 would reduce state and local government revenue by half a billion dollars in fiscal year 2007.

“The Court’s decision is a critical victory for growth management,” said John Zilavy, Futurewise’s Legal Director. “I-747 was actively harming the parks, schools, libraries, streets, and other public investments required to manage growth successfully.”
I-747 had been Eyman’s most significant victory. The 2001 Initiative generally limits increases to State and local property tax levies to one percent (1%) per year, which is well below the rate of inflation. The result has been a funding crisis for local and state government and cuts to critical public services.

I-747 was projected to reduce government revenues by about $1.5 billion over its first six years, and its impacts increase dramatically with each passing year. The State Department of Revenue projected that I-747 would reduce state and local government revenue by half a billion dollars in fiscal year 2007.

“The Court’s decision is a critical victory for growth management,” said John Zilavy, Futurewise’s Legal Director. “I-747 was actively harming the parks, schools, libraries, streets, and other public investments required to manage growth successfully.”
from the futurewise site fighting this initiative:
http://futurewise.org/I-747

Posted 9 months ago #
onederfullone

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Which makes Tim ahead of the curve.

I can't help but notice your link is "Futurewise".

damn, I bet a buck it aint. You could even call it "presentwise" if you are so bold.

cd, keep reading, you'll bet your hat for something truly important, or, I'll eat it.

Posted 9 months ago #
Corvus

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I read both proposals in their entirety. The Children and Family Services levy contains language which limits what the funds can and can't be used for and that is strictly limited to construction.

The library levy does not. Perhaps the city should rewrite the proposal with strict limitations on what the funds can be used for or not. If was guaranteed my 371 dollars went to the libray and wasn't siphoned off by some other project paid for from the general fund, then I would be more inclined to vote yes. As the levy states, times are tough and probably won't get better for quite some time. We use the library quite a bit and the services seem adequate for now.

In other news...

"cd, keep reading, you'll bet your hat for something truly important, or, I'll eat it." Oneder, this sentence makes absolutely no sense.

Posted 9 months ago #
Mondoman

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(it needs more commas!)

Posted 9 months ago #