With budget shortfalls looming, spending cuts likely and financial woes socking City Hall at the same time taxpayers are hurting, officials are scrambling to find ways to cope.
Solutions are hard to come by.
But city Councilor Ken Cockayne, a second-term Republican, said one possible answer is to revisit the much-debated plan to tap excess pension money to fill a new trust fund that aims to pay more than $70 million in post-retirement health care costs for municipal employees.
The move would save taxpayers $1.8 million, city officials have calculated, while simultaneously assuring municipal workers that Bristol will make good on its contractual vow to pay for 10 years’ worth of health care after employees retire.
The idea was shot down last winter by a special panel exploring the concept, mostly because city unions feared it would undermine flush pension funds.
“I feel the climate has changed somewhat and the parties involved would be willing to sit down to talk about this,” Cockayne said.
Cockayne called it “a very complicated issue,” but if the city pursues it, tapping the excess pension money “can be beneficial to everyone involved.”
City Comptroller Glenn Klocko has estimated that using excess pension cash for the health care instead of tapping taxpayers would save $1.8 million annually without risking anyone’s pension payments.
But the special city panel created to investigate it decided on a 4-3 vote not to pursue the idea at least until the financial markets settled down and the risks could be figured more accurately.
Since then, the city’s three pension funds have bounced back up.
They collectively total more than $470 million – and even at the lowest point in the market since last fall’s crash, the pension accounts always had enough money to pay anticipated claims and still have millions left over.
Bristol is one of the few cities in the country that has more than enough money socked away to pay off future pension obligations, the result of more than 30 years of investments.
Cockayne and other supporters of tapping some of the excess argue that creating a health benefits fund would make it possible to pay retirees’ health care without hitting up taxpayers for more money.
In fact, if the new fund was flush, the city could also stop paying out nearly $2 million annually for retirees’ health care. The fund could pick that up, supporters said, and the city would no longer have to come up with the cash each year.
That would reduce the pressure to raise property taxes or cut services, officials said.
But city unions argue that moving forward could jeopardize the pension funds. Some union officials have admitted privately they might agree with the change as long as employees get some additional benefits in return for taking the chance.
Plus, they point out, employees chipped in some of the money that made the pension funds flush to begin with.
It’s not clear what will happen next, if anything, but Cockayne said the issue deserves to be reexamined.
Copyright 2009. All rights reserved.
Contact Steve Collins at firstname.lastname@example.org