DISCLAIMER

 

06-0741R


RESOLUTION DECLARING POLICY FOR ACTIONS TO FUND POST-RETIREMENT BENEFITS.

BY COUNCILOR NESS:

     The city council finds as follows:

     (a)  The council and the community are justifiably concerned about the city’s ability to adequately fund post-retirement health care benefits of city employees; and

     (b)  The council has passed a previous resolution, by a 9-0 vote, that supported the principles of the post employment health care benefits task force report and has adopted their recommendations as a general blue print for solving the retiree health care liability problem; and

     (c)  The council has demonstrated its commitment to this vital issue by its willingness to raise the revenue necessary to implement a comprehensive solution; and

     (d)  The council further recognizes that improvements in the administration of the benefit and compromises by the bargaining units are essential to the achievement of a final solution; and

     (e)  The council is concerned with the perceived lack of progress in negotiations between the administration and city bargaining units (other than the supervisory union); and

     (f)  The council feels a sense of urgency to have the contracts approved prior to the end of this calendar year when the current contracts expire and a new budget year begins; and

     (g)  The council recognizes its role in this process is to make budgetary decisions and consider approval of contracts when agreement is reached between the bargaining units and the administration; and

     (h)  The council believes that by pro-actively addressing the issue this year we can solve this problem with limited impact upon the taxpayer, those receiving the benefit, and the operations of the city. Conversely, if the opportunity to solve the problem is missed this year, the solution will ultimately be more painful to all interested parties.

     NOW, THEREFORE, BE IT RESOLVED:

     (a)  That the council reaffirms its commitment to a comprehensive, long-term solution to the retiree health care liability burden that threatens the fiscal health of the city for decades to come;

     (b)  By this action, the council commits itself, to the full extent allowed by law, to revenue dedication for the purpose of creating a sustainable retiree health care benefit. In making this commitment, it encourages and expects leadership from all other involved parties to make the sacrifices necessary to solve this impending financial crisis prior to the meeting of the council on December 18, 2006, which is the last meeting of the year;

     (c)  That the council will commit to the following measures to carry out the plan and policy for solving the financial problem, but only if labor contracts for all bargaining units are completed and presented to the council by the end of December 18, 2006. All revenues listed below would be dedicated to an OPEB trust to finance retiree health care, and the city will seek from the legislature authorization to have the community investment trust invested by the state board of investment, which, with higher rate of return than is now available to the city, will, over the term, replenish the CIT for the money withdrawn:

           (1)  A transfer of $10 million from the community investment fund;

           (2)  Dedicate annual revenue from a $600,000 property tax levy increase for 2007 and 2008, providing an annual contribution of $1.2 million to the OPEB trust;

           (3)  Assign the city portion of property tax revenue from TIF districts 2, 3 and 4 which is currently tax increment (about $1.1 million each year) as those TIF districts expire in 2007 and 2009;

           (4)  From utility funds, annually transfer $2,300,000 from increased rates to account for the retiree health care costs associated with utility employees;

           (5)  Transfer to the OPEB trust $2 million of the $6 million current balance in the health care fund;

     (d)  That this resolution commits the council to this policy until December 18, 2006. If contracts for all bargaining units are not approved by the council by December 18, this resolution will be considered null and void. The council would then reconsider its position in the new year or when contracts are approved. Additionally, if labor contracts are not approved by December 18, the council will:

           (1)  Rescind the utility rate increase dedicated to retiree health care by resolution of September, 2006;

           (2)  Pass a tax levy for 2007 which only captures new growth. The council would not set a levy higher than that amount for any purpose.


STATEMENT OF PURPOSE:  This resolution adopts a new policy and model for funding post-retirement health care.