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A closer look at the city of Lodi’s budget

Fiscal woes: City worker pensions and health care costs continue to increase

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Posted: Wednesday, April 20, 2011 12:00 am | Updated: 8:51 am, Tue May 3, 2011.

As revenues continue to stagnate, city of Lodi employee costs like pensions, health care and workers’ compensation continue to increase steeply.

The city currently spends $7 million on pension costs, and by 2013 to 2014, that amount is estimated to be at $10 million.

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Welcome to the discussion.

7 comments:

  • Josh Morgan posted at 6:07 pm on Wed, Apr 20, 2011.

    Josh Morgan Posts: 532

    Question: When municipalities declare bankruptcy, does it dissolve the contractual obligations to their respective employee groups?

     
  • Darrell Baumbach posted at 4:03 pm on Wed, Apr 20, 2011.

    Darrell Baumbach Posts: 9405

    Bob... very constructive and objective post from my perspective... two aspects that has been mentioned are health insurance costs and retirement plan strategies and possible solutions.
    The obvious immediate solution for healthcare is as you mentioned, the consumer paying a higher share of costs... and reducing the benefits of the deluxe plans, however, that does not address the root cause of what makes it expensive... The mandated benefits and provisions that legislators have thrust upon is is the cancer... for example, The city of Lodi will have to comply with federal regulation July 1st, 2011 concerning the Mental Health Parity Act... another mandate adding a financial burden to the city insurance plans... until people vote for legislators that repeal mandated benefits like this, costs will continue to sky rocket. Obama care is another example that will increase costs... shifting costs to employees will not solve the problem, is not fair, is not affordable, and not the best long term solution.

    As far as retirement, the social security system is a disaster... PERS and STRS is an ideal model, but the payout percentage is way too high... I hope social security is terminated and a new PERS and STRS system for all tax payers replaces it... but on a voluntary basis... it is essential from my perspective that social security is phased out completely...

     
  • Joe Baxter posted at 3:12 pm on Wed, Apr 20, 2011.

    Joe Baxter Posts: 1845

    Keep giving city workers fat pay checks and huge pensions and free health care for life, we can afford it. Put them on Social Security and let them fend for themselves like the rest of us do. Bust the unions demanding high wages and benefits. If the City doesn't take control of these costs now, it is only going to get worse.

     
  • Bob Bechill posted at 2:48 pm on Wed, Apr 20, 2011.

    Bob Bechill Posts: 41

    This web link is an excellent resources for the budget hounds in the audience:

    http://www.lodi.gov/finance/pdf/City%20of%20Lodi%20Budget.FY%2010-11.pdf

    Also great reading if you are suffering from insomnia...

     
  • Bob Bechill posted at 2:28 pm on Wed, Apr 20, 2011.

    Bob Bechill Posts: 41

    This is a tough one. Drastic cuts will need to be made but some fundamental changes must also be made or we will become a city without services whose primary function may turn out to be paying retired city employees.

    In 1999, I believe, the state changed its retirement formulas. Please note that every representative, Republican and Democrat, voted to change the formula. In order to compete in the market for talent, Lodi was essentially forced to come up with a similar retirement strategy. As recent events unfolded, it is clear that this system is not sustainabile. Yet, who has the courage the change it? (Also, legally, I don't believe it is possible to go back and retroactively change the formula for those who (a) retired under the system or (b) are currently in the present system.)

    So, what to do? It is apparent that the current retirement system must be changed for future employees. A matching 403B of some sort comes immediately to mind. Current city employees and retirees must contribute more to their health plans. Yes, I know that sucks. Additional revenue sources should be considered but the federal and state spigots will likely continue to dry up. It is doubtful that Lodi citizens will consider additional taxes so I don't see any relief there. So, what else is left? Well, since the biggest slice of the pie are police and fire services, it looks like we will need to cut those signficantly. Are we willing to do that? Does council have the courage to do it?Regretably, there are no good choices here. Accept pain now or defer it to later. Looks like we have deferred it long enough and the $11,264 that Mr. Chaney suggests (not sure of his math but sounds about right) will only get bigger unless it is addressed now.

    Would be interested to see what other "solutions" are out there.

     
  • Doug Chaney posted at 10:03 am on Wed, Apr 20, 2011.

    Doug Chaney Posts: 1232

    Wow, that translates to $11,264 per employee. I'd think with other corporations, businesses and employees in general all having taken wage, benefit and pension cuts, that this is the time for al cityl employees to share in the same fate as those in the private sector, including management and all department heads. There will be more cuts to come yet this second half of the fiscal year and twice each year for the next 4 or 5 years or so according the financial experts and the demands of the voting public that employees share more of the burden through retirement buyouts, paying 20% of their health care plans along with higher deductibles and larger co-pays, modernizing their gloated pension plans for new employees to reflect today's sour economy and reducing the number of employees who only hold positions that are no longer needed with the advent of computers and databank files and records. Lodi could do well by eliminating the billing for Waste Management that takes time from city employees who could be spending their time better on city business, and sometimes even working overtime due to work done for WM rather than conducting city business. The paltry $200K or so paid by WM doesn't even pay for overtime city staff and management overtime because it seems more important to do billing for a billion dollar corporation that's well capable of doing their own billing, doesn't it? Reducing staff overtime would mean more time for staff to conduct city business and could possibly eliminate the need for less employees to save money. Isn't that what this is all about, saving money for the city? Why for Waste Management for peanuts?

     
  • Charles Nelson posted at 9:12 am on Wed, Apr 20, 2011.

    Charles Nelson Posts: 259

    Looks like they're getting those water meters in just in time. They could use the extra money the increase in water costs will bring.

     
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