City Council OKs Budget Despite Concerns About Pension Liability
Almost a month before the start of the new fiscal year, the city of Springfield, Massachusetts has a new budget in place. The city will be hiring more police and firefighters amid questions about whether the city can meet its pension obligations to future retirees.
The city council voted 11-2 this week to approve without changes a $616.8 million budget recommended by Mayor Domenic Sarno. He described it as a “sound budget” and, in urging the council to adopt it, he highlighted funding to hire 60 police officers, maintain parks and outdoor recreation programs, and increased spending for pre-kindergarten education and after-school activities.
"We feel we have put together a budget that moves the city forward," said Sarno.
Many councilors rose and praised the mayor for producing a balanced budget with no layoffs that does not tap the city’s cash reserves and for delivering it to the council in late April, the earliest in city history.
The budget vote was postponed for two weeks after several councilors, led by Finance Committee Chairman Tim Allen, raised concerns about the city’s unfunded pension liability. Allen, warning the city faced a serious situation, urged the city administration to act with more urgency on the city’s pension fund, which at 26 percent funded, ranks last out of all the municipal public employee retirement plans in the state.
Sarno said the administration was not ignoring the pension fund liability and had committed to increasing contributions to it by 8 percent in the next fiscal year and by 14 percent in each of the next two fiscal years. But, Sarno warned additional payments to the retirement account would mean cuts in the operating budget.
" I am not looking to kick the can down the road. We are going to continue to address it ( the pension liability)," said Sarno. " But in the meantime, I want to make sure we keep the proper police force on the streets and the fire department. You all have libraries in your neighborhoods, you want those open. You want the parks and pools open. You want trash picked up. You want streets plowed."
Allen proposed a plan to set aside $4 million to increase the city’s scheduled $30 million contribution to the pension fund through a combination of budget cuts, an increase in the hotel room tax, and use a projected $3.2 million cash surplus from this year’s budget.
None of his proposals were voted on, but Allen said he was happy the pension fund liability issue received attention.
" I think I made my point," said Allen. " Nobody in this room can now say they don't really understand the seriousness of this issue."
Allen and City Council President Mike Fenton voted against the budget. Fenton said the budget is a “good sound financial plan” for the next fiscal year, but does not address the city’s long term problems.
" The approach from the administration has been: ' nothing to see here, move along, move along.' But the longer we move along and don't address the issue the bigger the problem becomes," said Fenton.
Springfield has until 2040 to fully-fund its retirement account to comply with state law, but has set a goal to achieve full-funding by 2034.
The city council, under the charter, can only cut from the mayor’s proposed budget.