Last Sunday, retired businessman and 35-year resident Jim Goodrich offered some thoughts here on the town budget — including the pension liability.
His “06880” piece elicited strong reactions — including several explanations of the pension fund. Today, Jim addresses those responses.
You’re never too old to learn.
By going to the recent Board of Finance meeting, thinking about that meeting, then posting observations that generated considerable feedback, I’ve picked up a bit more understanding about my town. I find it useful. Maybe you will too.
I called the pension fund “elephant in the room” a $3 million problem. Is it really an $8 million problem — or $30 million?
The answer is: It’s all 3 problems. Here’s — in rounded numbers — is why.
The $30 million refers to an unfunded shortfall in the town’s obligation to the pension fund for municipal employees. (Teachers are not included; they’re covered at the state level.)
The $8 million refers to the annual amount the town must pay for the next 30 years, in order to fulfill its pension obligations.
Now it gets really interesting.
The $3 million represents a reduction to the $8 million annual payment the actuaries say the town should pay into the pension fund. Why would Westport pay only $5 million of the $8 million into the fund, creating a larger long-term obligation?
This is not where our pension fund is. We hope.
The answer is pretty straightforward. By underpaying the pension fund, town and Board of Ed budgets can be more fully funded without having to raise taxes as much, or at all. Of course, the amount of the underpayment must be paid someday — just not now.
There are all kinds of discussions knowledgeable people can have on this point — and much of the subtext at the recent Board of Finance meeting dealt with this issue. What seems to be going on is “fiscal responsibility” versus “competent resource management” in balancing important community needs and the taxpayer’s ability to pay. The BOF is the place these discussions should take place.
Currently, town and school officials are finalizing details to show what a total of $2.6 million cut in funding will mean to educational programs, as well as vital services. The public does not yet know the exact cuts to be made — but they are expected to be serious.
What does “serious” mean? It could easily be headcount cuts to police, fire and teaching personnel, plus public works and all other town departments. What may get hit are all the “S”s – safety, security and schools — as well as Westport’s large “Q” (quality of life).
So pay attention. We may know within a few days what the cuts will bring. By Wednesday the BOF will have voted — and then it’s a done deal.
For a moment, consider what would happen if the BOF went in another direction and simply reinstated the $2.6 million to the town and school budgets. Would the world come to an end?
No. But taxes would go up by an average of about $260 for each Westport household. There are 2 people in my household. That’s $130 for each of us for the year. It’s $2.50 a week — 36 cents a day. For safety, security, excellent schools and quality of life — I don’t know about you, but it seems like a bargain to me.
(What do you think? To contact the Board of Finance, click here.)