Saturday, January 15, 2011

Paying For Pensions

Mayor Bzdock highlighted Commissioner Gillman's concern over upcoming pension obligations and kudos to Mr. Gillman for making everyone aware of this looming issue.

Commissioner Gillman had a forum piece in the Record-Eagle: Pension time bomb is about to explode

The CEO of the Municipal Employees' Retirement System of Michigan had a rebuttal piece: The answer to pension problem

I really like Mayor Bzdock's 'Our Options' section of his post. It is easier to edit than create and by him listing some options it gives everyone else a point to start discussions.

Here are my thoughts...

We can't make it rain money

(So how is the City going to embark on a $10 million development project on West Boardman Lake?)

What do we do?

First have to ensure this is a one time thing and the City appears to be working on that goal already.

Next we need a list of cant's and wont's.

Can't increase the tax rate; can't break contracts with employee's unions.

Then what are known unknowns?

-Will the Unions be open to renegotiations?
-Are there any employees who want a buy-out?
-What will be the anticipated tax revenues from The Commons when the Renaissance Zone expires after 2017 and what about future revenues from the TIF districts when they expire?

Answering these questions can hopefully lower the amount the city needs to find to fund these pensions.

Once some numbers are in place to make some estimates how about crowd sourcing the problem? Make it an exercise for the high school government classes? Whichever class finds the best solution wins. There are many smart people in Traverse City. Give them the numbers in a spreadsheet at Google Docs and let them see what they can come up with similar to how the New York Times has an interactive tool for people to try their hand at fixing the budget deficit.

My first solution is find more tax revenue without raising taxes to fix this one time problem. This is done with more in-fill development and growing up. Meaning let buildings downtown have more stories. Larger building are worth more money. A higher value leads to increased tax revenues.

And then if we're really desperate there's the crazy idea department:

-Offer gas drilling leases in City park land
-Sell bay front property like the Senior Center
-Sell municipal bonds backed by Hickory Hills or other valuable parcels

I have no doubt that this crisis can be averted by intelligent people working together to find a solution that benefits everyone.

Now this seems like a worthy topic for a community Visioning session.