There is a simple way to slice city property taxes by more half a mill without cutting services or laying anyone off, some officials say.
All it would take is a commitment to shift excess pension trust funds into a new account to cover the tab for post-employment health benefits, a move they say would have no impact on city workers or retirees, but would save taxpayers more than $2 million annually.
City Comptroller Glenn Klocko, who has long advocated the change, said that if city leaders decide to do it, he can immediately pare $2.5 million from the spending plan currently on the table.
That would allow a big cut in this year’s property taxes and a permanent reduction in the amount the city budgets to pay its retired workers a decade’s worth of health benefits.
City Councilor Ken Cockayne, who is also championing the move, said it “could save a great deal of tax dollars” if officials would seize the opportunity.
He said he can’t understand why he has met “nothing but a wall in dealing with this from the unions and those beholden to the unions.”
Mayor Art Ward said he’s creating a task force to look into the issue, which he said may prove more complicated than supporters expect.
City union officials have said they’re not against the change, but are looking for the city to negotiate any shifting around of money, angling to get something more for municipal workers and retirees in the process.
But it’s not clear that there’s any downside for city workers.
As it is, the pension trust funds set up to pay Bristol’s retired city workers are so flush with cash that experts say they have enough money to cover all anticipated future costs and to have as much as $200 million extra.
What Klocko is asking to do is to shift $77 million from the overfunded pension funds to fill a newly required post-employment benefits fund.
No matter what the city does, it is obligated to cover the tab for both pension payments and the post-employment benefits, mostly health care for the first 10 years after a worker retires. Those are contractually mandated and even if they were revised down the road, the existing requirement to pay would remain.
The issue is simply whether the city can move some money from one trust fund to the other, a move that Cockayne and Klocko say makes good sense because the cash will wind up benefiting workers one way or the other.
Making the change, though, means taxpayers won’t have to fork over $2.1 million to cover current post-employment benefits in the coming fiscal year – and they won’t need to shell out another $250,000 to kick start the new trust fund.
Best of all, from a city finance point of view, there will never again be a need to include the money in its annual budget because the trust funds should continue growing enough to allow investments to cover rising expenses in the decades to come.
The half a mill property tax cut that the change would produce, Klocko said, would go on forever.
Klocko has another plan to save that half mill for just this year: to put off purchasing any new police cruisers, delay park and fire equipment purchases, slice $500,000 from education, snatch excess cash from the ropes course fund, pare the economic development cash and more.
The trouble with that course, which may be what’s needed to cut the mill rate hike to 4 percent instead of 6.5 percent, is that nearly all of the money Klocko is eyeing will have to be paid next year, or soon after.
Taxpayers may get a little break for a year – and some cost to the schools and to city services – but there’s no real long-term benefit.
What the proposal to shift around excess trust fund money offers, however, is permanent relief, its advocates say.
And failing to seize the moment would be a mistake, Cockayne said.
For more on the post-employment benefits issue, read this story
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