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More and more it seems, I spend my Fridays talking. So if you wanted a little made-for-TV response to the pension board’s big decision Friday not to change its accounting practices and pass along a brutal bill to the city, here you go.
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My perspective on this is simple: This is only good news in the sense that reality has won and the city will now have to face up to the consequences of its leaders’ past decisions unlike anytime before.
You see, before now, the pension scandal has been largely been the stuff of drama — legal and political intrigue. Sure, it has had profound effects. In fact, Mayor Jerry Sanders is mayor because of it.
But the reason it was an issue in the first place is now about to be as clear as it possibly could be. It was a scandal because the city had, repeatedly, agreed to both shortchange its pension fund and give its employees more benefits at the same time. It was like buying a car and mortgaging your house to do it.
And that’s a big deal because, eventually, we were going to have to make up for this. We were going to have to pay.
Not to say we haven’t already paid. As discussed before, the annual payment the city makes to its retirement system has skyrocketed. The payments used to be in the $45 million range. In 2004, it jumped to just more than $160 million and they had it leveled out there for several years. They had figured out ways to keep it at that level.
Imagine if we’d have taken that $120 million difference and instead invested it in a massive infrastructure bond. Could have had all the sewers, libraries and Convention Centers we wanted. This was how big of a decision it was to do what past city leaders did without much of a public debate. They gave a massive chunk of the future of the city to employees without ever figuring out how they would pay for everything else at the same time.
Like a bad mortgage, at some point, you have to start paying it off.
The mayor had hoped the pension board would consider options that would have pushed the pain further out. But the fund’s trustees, rightly, prefer assets to promises. They have a fiduciary responsibility to ensure they protect the health of the fund and they did. And leaders now have an obligation to pass along the healthiest city possible to future generations. It’s one thing to owe money for a massive facility from which we’ll all benefit for decades. It’s another thing to pass along debt for mere operating costs.
Imagine, for example, making your kids pay off credit card debt for lavish dinners you never could afford but still enjoyed.
Now the big bills are going to come. To fund the benefits we’ve promised employees, we’re going to have to come up with hundreds and hundreds of millions of dollars every year. And it’s going to get worse. The pain the mayor’s staff says is on the way is only just the beginning.
So I said this on TV and I’ll say this again: The mayor and City Council now deserve our understanding and sympathy because they’re about to, finally, face down the most difficult financial situation they’ve ever faced. They will have to confront employees and taxpayers in ways that will take both courage and vision.
If they can pull it off, they will be municipal heroes. This is their opportunity and their challenge.
The mayor has a chance to be remembered for generations for guiding us through this period and reimagining a troubled city. He can use the intelligence and resources in his office to try to get out of it — to try to do everything possible to avoid hairy decisions — or he can chart a new course and change the city forever.
We should encourage him to pursue the latter.