City Beat: Council OKs pension resolution, hears budget scenarios

Springfield City Council has resolved to hold up its end of the deal in a plan to save the city's Police and Fire pension fund.

Council approved a resolution Dec. 15 spelling out the city's plan to bring the pension fund, currently underfunded by nearly $200 million, back to full funding levels.

The resolution is essentially a written version of the presentation City Manager Greg Burris has been making since taking office in August. The major points of the proposal:

• Council will ask voters to approve a 1-cent sales tax in the Feb. 4 election;

• If the tax passes, the city will increase its fund contribution to 29.88 percent of Police and Fire payroll, to be taken from the city's general revenue.

• Police and Fire Tier I employees - defined as those hired before June 30, 2006 - will increase their contributions as well, to an amount to be determined by the fund actuary.

• The city will contribute to the pension fund all net proceeds from the ongoing telecommunications lawsuit over back taxes.

• New Police and Fire hires will join the Local Government Employees Retirement System, or LAGERS, which also covers all other city employees.

• The city will not seek any new citywide tax proposals during the life of the proposed 1-cent sales tax, not including tax renewals or joint tax proposals with Greene County.

• City staff will look for city-owned property that could be sold, with net proceeds to go into the pension fund.

The resolution passed unanimously, though Councilwoman Cindy Rushefsky expressed concern about promising not to ask for any other taxes with the uncertainty of the current market.

"I think this provision is coming from a request from people who aren't going to support any tax, to be blunt, regardless of what we promise," she said. "If, God forbid, we get to a point where the city's survival depends on a sales tax - don't you think we have a responsibility to seek a sales tax if it's necessary and trust the voters to make the right decision?"

Burris agreed, but he noted that the situation Rushefsky describes isn't coming down the road - it's here now.

"I have the same reservations, but I'll have to live with that uncertainty - and quite honestly, I'll have to live with whatever budget I've got if we reach that point, because this (issue) is one that will bring us down if we don't address it first," Burris said. "My first obligation to the city is to ... avert the disaster now."

Budget planning

As evidence of the urgent need, Burris presented four budget scenarios at the Dec. 16 council luncheon - two scenarios assuming the proposed tax passes and two assuming it fails.

If the tax passes, the city would have about $1.5 million to restore the $5.2 million in budget cuts made for this year's budget, assuming sales tax revenue in fiscal 2009 grows by 0.75 percent - the less optimistic of the two scenarios.

If the tax fails, however, the city could face an additional $4.1 million in cuts to balance the budget, mostly because the city's actuarial recommended contribution to the pension fund would cost the general fund an additional $5.7 million.

Mayor Tom Carlson worried that the growth assumption may be too optimistic.

"I think you generally want to underpromise and overdeliver, rather than say 'I think it's going to be this good,' and when it's worse, say 'I'm sorry as hell, but we were wrong,'" Carlson said.

The budget proposals, Burris noted, were created before the city received its December sales tax check for collections in October; up to that point, the city up slightly from last year, though revenues are now about 2.5 percent behind. (See related story below.)

If the pension tax fails, Burris said the resulting deficit would take "drastic measures" to balance - and, he added, no option is off the table including staff cuts.

If personnel are affected, Burris said his preference would be to look at trimming specific services rather than advocating an across-the-board pay reduction for all employees.