Stewart Nelson » Budget

Pension Reform

svnelson — Sat, 19 Feb 2011 16:28:31 +0000

Everyone knows that we cannot afford the rich defined benefit pensions and retiree medical benefits that the City still promises to all it’s workers yet they still offer it to almost all new employees. Why won’t our City mangers and elected officials face the facts and at least stop offering this benefit that already is the “albatross” hanging around our necks? Just “kicking the can down the road” is not good enough any longer. Write a note to your Council person and tell them we must at least slow down this fiscal train wreck we are headed for while there is still time.

Service cut backs at City Hall

svnelson — Thu, 19 Mar 2009 00:13:12 +0000

Amazing! The headlines of the Ann Arbor News broke the bad news today about how the losses in the AA City Retirement Pension Fund may force cuts in services over the next three years. The worst case scenario that Mr Crawford outlined to the reporter is another example of how disingenuous City staff can be. The fact of the matter is that the worst case scenario Mr Crawford computed was on December 31, 2008 when the Dow was at 8800. It is not 20% below that and now and I am sure Mr Crawford hopes that he even can make the worst case scenario now!

Defined Benefit Plan

It is amazing to me that the City still offers a defined benefit retirement plan. They cannot meet the financial obligations that they have now so why are they still oferring a form of pension that virtually no business offers any longer? I am sure that in addition to ”praying” for 7% a year in investment returns, they are also counting on the generosity of the Ann Arbor tax payers to help meet a moral obligation. I will try to do some calculations on this in the next month but I think they will find that between the VEBA Trust that is less than 25% funded and the Pension Trust that is less than 70% funded, they would need to raise taxes by 15 to 25% to get them out of the hole. How can the City Council continue to do business the way they are? I have concluded that they are either in denial or they know they will not be in office when the proverbial feces hits the fan.

The pension plan has lost 50% of its value in the last 18 months. At 7% annual return, it will take over ten years just to get to where we were 18 months ago! The pension plan that 8 years ago was funded at 140% is now funded at less than 70%. We should force our City Managers to stop promising defined benefit plans and take the pension plan out of the hands of well intentioned amateurs before we will all be forced to leave the City because we cannot afford our already ridiculous taxes.

Police Layoff

svnelson — Sun, 08 Mar 2009 13:39:19 +0000

I was deeply saddened to see Judy McGovern’s column yesterday that broke the news on the proposed layoffs in the Police Department. During my campaign I asked Police Chief Jones if he could guarantee that when the new building opened he would guarantee that there would not be any layoffs due to budget constraints. Although that is a tough question, I was pretty certain that his answer would be “No”. It is ironic that the layoffs are announced not when this new building opened, but now even before they officially break ground.

I was worried about this eventuality not because my crystal ball on the economy is much clearer than others, but because I have been through more of these business cycles than most of the present council members. My business sense usually tells me when it is the time to “press on the accelerator”, “time for caution” or “time to step on the brakes”. For some time now I have been feeling the warning signs that this recesssion is going to get much worse before it gets better.

Municipal finance is the next big crisis we face as a community. The promises we have made to our City workers, delays in rebuilding our infrastructure, excessive borrowing, an archaeic and punative tax system all are leading us down a path towards total collapse if we do not act soon enough. This is a time for fundamental change in the way we do business as a City and County.

City Council Speech 2/2/2009

svnelson — Sat, 07 Feb 2009 15:46:34 +0000

I am sure it will come as no surprise to you that I am here tonight to speak against the proposed police court renovation at Larcom. I would like to go on record with my concerns about the continuation of this large and mostly unnecessary expenditure.

Let me preface my remarks with an observation. I don’t think that anyone would argue that the police department needs substantial renovation and improvements for the physical plant due to neglect of past administrations so I will confine my remarks to the money allocated to the court and other additions to Larcom.

Here are my major concerns:

First, this is not the time to commit residents that are struggling to make their own mortgage payments to a stream of interest payments totaling $26 M over the next 30 years to fix what essentially is not broken. Nor is this is not the time to commit the DDA to a stream of payments of $15M over the next 30 years that will not benefit the downtown merchants.

Next, the $47M expenditure for bricks and mortar forces the City and County to unnecessarily duplicate expenditures for court security, IT, transportation and administrative services in perpetuity. Future administrations, more focused on Regionalization will view the lost opportunity to combine all the Court services as a single unit as a bigger financial boondoggle than the early retirements granted to our City employees.

Additionally, why do you think the construction manager is lobbying heavily to convince the City to abandon the pursuit of LEED Gold certification? It is because they know they cannot bring the building in under budget with green building practices in the equation.

Lastly, City policy on Debt Management as outlined in the Adopted Budget 2009 for Limited Tax General Obligation debt stipulates that these bonds should be considered only when constraints preclude the practice of voter approved general obligation bonds. What precluded the favored General Obligation bonds in this instance except the convenience of not having to obtain voter approval?

You have the opportunity now to do the right thing and abandon this dangerous course and revisit the County’s offer to cooperate in “reengineering” government in Washtenaw County and use the cost saving to try to lower the tax burden of our residents and businesses.