Wednesday, December 21, 2005
Retiree Health Care Crisis: Resolution at a Painful Price
Overstatement can be a powerful tool. For example, politicians and special interest groups often create the illusion that “the sky is falling” in order to get things done. When voters realize that politicians and special interest groups have created a false sense of urgency in order to forward their agendas, they come to the conclusion that the process of government is disingenuous. According to Frank Luntz, a national pollster of political values, Americans want government to be accountable – they don’t want elected officials to blame other politicians or groups to gain political advantage. Citizens want their elected leaders to make common sense decisions that reflect the values of the common person.
Last evening, the Duluth City Council made a bold and refreshing move: it followed Mr. Luntz’s advice and voted unanimously to adopt the Retiree Health Care task force report recommendations to fully fund a $278 million dollar unfunded liability. One can be assured the council’s decision reflects the values of the everyday person in Duluth. We needed to get it done – nobody wants our city to go broke and nobody wants the retirees to go without the benefits promised to them while employed.
To be sure, not everyone will be happy with the council’s actions. To avoid the pain and embarrassment of bankruptcy, the council called for stiff resolve and passed around pain for everyone. Results of the council’s decision last night may well include a city property tax increase of 4.5%; an 8% increase in gas, water, and sewage bills; and significant health care insurance reforms from both current and former employees. Additionally, the council strongly recommended that city administration not only adopt the plan but asked the mayor to give monthly reports to the council on progress made in carrying out all fourteen task force recommendations. Clearly, the council acted in our long term interest – for this every property owner and retiree should be thankful. To have adopted anything less would bring additional long term pain for a relatively short term gain.
To the dismay of some within our membership, the Chamber officially advocated for the city council to adopt all fourteen recommendations. We have received some feedback that asking the city to raise taxes and utility rates is crazy. Some have even suggested we cut off the retirees or allow the city to slip into bankruptcy. Most of our members realize that neither of these solutions are viable options. Our city would lose in court once the retirees sued, and bankruptcy would only decimate our bond rating, thereby eliminating any ability to build new streets or attract new business. As a result, business and property owners will have to swallow hard and prepare for increased costs.
Mr. Luntz is right: Americans want elected officials to be held accountable for their actions and to use common sense in the decision making process. Without accountability, elected officials will resort to politics and dismiss common sense when it comes to making decisions. This lack of accountability and disregard for common sense is what got us in trouble in the first place.
Email the mayor and the council your thoughts. Urge them to stay the course until all fourteen recommendations have been fully implemented and we can once again see the light at the end of the tunnel.
The mayor can be emailed at hbergson@ci.duluth.mn.us; city councilors can be emailed at council@ci.duluth.mn.us.
posted by Andy Peterson www.duluthchamber.com at
Monday, December 05, 2005
Retiree Health Care Revisited
The next Public Policy Member Meeting will December 15 at 7:30am at the Playground Theater in the Technology Village. Council retiree task force chair, Sandy Sandbulte, will present the task force’s findings and take your questions. Mark it down – you do not want to miss this meeting.
Retiree Health Care Revisited
Duluth citizens engage themselves in city happenings. Issues that arise in our community evoke strong emotions in the general populace. The smoking ban, the home for chronic alcoholics, removing the Ten Commandments monument from city property – all of these community issues compelled Duluthians to express their strong opinions.
The city retiree health insurance for life issue is no different. In fact, the public heat surrounding this issue, perhaps, surpasses that raised by the aforementioned. People in Duluth are annoyed, frustrated, growing impatient - they want to see a resolution.
Duluthians have good reasons to be concerned. The state auditor recently concluded that the city will have to come up with $278 million to balance the fund – and this amount does not include funding future increases.
Retirees are concerned that a benefit they’ve earned will simply disappear. This fear, too, is normal. After all, these retirees banked on receiving this benefit throughout the whole tenure of their careers. Who among us would work for a paycheck, only to have that check reduced before he or she could cash it?
Citizens of Duluth have reason to be concerned because they are the ones who must ultimately pay the $278 million to balance the fund – this amounts to $3,200 from every man, woman, and child in the city limits.
Exacting money from citizens-at-large is impractical, given our system of taxation. The money must come from property taxes, which amounts to approximately $72, 800 for every property holder in city limits. This figure is alarming. Obviously, collecting $72,800 from every property owner is impractical and attempting to do so would be political suicide for any politician.
Clearly, this problem is not going to just disappear. We – the retirees and the citizen property holders – must put politics aside and deal this issue head on.
We all know that setting politics aside is difficult, because everyone involved is deeply invested. Retirees, to be sure, will rightfully fight for their best interests. Politicians will grapple with doing what is right while at the same time looking toward minimizing political damage. And citizens must be concerned because it is their pocketbooks that will ultimately be affected.
But there is room for optimism. On Monday, December 12 we will have an opportunity to turn our backs on the politics of the situation and deal with the problem directly. At this meeting, the city council’s task force on the retiree benefits will present its findings and recommendations.
One can only assume that the task force will offer several solutions, ranging from buying out the retirees with a lump sum settlement, consolidating multiple health plans into some kind of efficient delivery system, or even calling for the city to significantly raise taxes while reducing expenses to address the fiscal fiasco created by inaction of years past. No matter what kind of solution may be offered, we must resolve to commit to good public debate that will lead to resolution. Ultimately, the city must move towards offering defined contribution benefits to its employees.
Let’s figure out how to resolve this issue and get it done – once and for all.
posted by Andy Peterson www.duluthchamber.com at
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