Council Approves Deferral Plan
With much trepidation, the City Council voted Tuesday for a pension deferral plan that will save $2.7 million for the 2009 fiscal year, but will put the city in debt for 15 years beginning in 2012.
Facing a $3.2 million shortfall in the yet-to-be-passed budget for the year ending June 30, the alternative would have been to make drastic cuts in police, fire and public works staff, City Council President Rashid Burney said.
The city hopes to create a reserve that will lessen the impact of the future debt by allowing early repayment, officials said.
Tuesday’s special meeting to take action on the matter was necessary to meet tomorrow’s deadline, City Administrator Marc Dashield said. The council’s resolution will be faxed to Trenton Wednesday (April1, 2009).
Dashield said one of the advantages of the plan is that it will allow the city to look into the future and make cuts.
But Councilwoman Annie McWilliams said the city might better set a percentage of budget reduction and put that into the reserve. McWilliams called the plan “just really debt that my generation will have to take on.”
Councilwoman Linda Carter agreed, but added that seniors who want to stay in Plainfield will also be affected. However, she said, “We just find our hands are tied.”
Members of the public sympathized with the council’s plight, but were also dubious of the outcome.
“I don’t envy any one of you,” Dr. Harold Yood said. ”I’m glad I’m not sitting in your seat.”
Yood said the city is going into “uncharted waters” because the interest rate on the debt is not known.
Resident Frank D’Aversa asked whether the city had negotiated with unions or considered pay furloughs, among other cost-cutting strategies.
Even while admitting he is a union supporter, D’Aversa said, “You got to cut back until it hurts.”
Dashield said the city has held four sessions with unions and noted that most union contracts come due this year, saying, “actually it gives us a great opportunity” to do a lot of things.
Resident Robert Darden was less sanguine, saying pensions had been underfunded for some time.
“That’s a big hole we are digging for ourselves,” Darden said.
At the end, the council voted unanimously to seek the pension deferral, with Dashield saying the move “gives us the ability to start planning ahead,” while Councilman Adrian Mapp called the plan “a horrible piece of legislation.”
But with the 2009 budget “between a rock and a hard place,” Mapp joined his council colleagues in approving the resolution “with a great deal of reluctance.”
--Bernice Paglia
Facing a $3.2 million shortfall in the yet-to-be-passed budget for the year ending June 30, the alternative would have been to make drastic cuts in police, fire and public works staff, City Council President Rashid Burney said.
The city hopes to create a reserve that will lessen the impact of the future debt by allowing early repayment, officials said.
Tuesday’s special meeting to take action on the matter was necessary to meet tomorrow’s deadline, City Administrator Marc Dashield said. The council’s resolution will be faxed to Trenton Wednesday (April1, 2009).
Dashield said one of the advantages of the plan is that it will allow the city to look into the future and make cuts.
But Councilwoman Annie McWilliams said the city might better set a percentage of budget reduction and put that into the reserve. McWilliams called the plan “just really debt that my generation will have to take on.”
Councilwoman Linda Carter agreed, but added that seniors who want to stay in Plainfield will also be affected. However, she said, “We just find our hands are tied.”
Members of the public sympathized with the council’s plight, but were also dubious of the outcome.
“I don’t envy any one of you,” Dr. Harold Yood said. ”I’m glad I’m not sitting in your seat.”
Yood said the city is going into “uncharted waters” because the interest rate on the debt is not known.
Resident Frank D’Aversa asked whether the city had negotiated with unions or considered pay furloughs, among other cost-cutting strategies.
Even while admitting he is a union supporter, D’Aversa said, “You got to cut back until it hurts.”
Dashield said the city has held four sessions with unions and noted that most union contracts come due this year, saying, “actually it gives us a great opportunity” to do a lot of things.
Resident Robert Darden was less sanguine, saying pensions had been underfunded for some time.
“That’s a big hole we are digging for ourselves,” Darden said.
At the end, the council voted unanimously to seek the pension deferral, with Dashield saying the move “gives us the ability to start planning ahead,” while Councilman Adrian Mapp called the plan “a horrible piece of legislation.”
But with the 2009 budget “between a rock and a hard place,” Mapp joined his council colleagues in approving the resolution “with a great deal of reluctance.”
--Bernice Paglia
posted by Bernice at 11:06 PM
6 Comments:
A better response may have been: Our hands are tied if we all still want to go to Atlantic City and stay at the best hotels at the League of Municipalities in November.
GB
Pension deferrals are on the agenda in many communities and they are a risky proposition for reasons stated at the council meeting. Lowering pension contributions has been a "fix" in past budget crunches. In the past, however, high returns on the investment of the funds were plausibly projected. How will the investment income that is lost due to the referrals be made up?
We need some imaginative financing, as well as practical spending. Can someone please answer the question as to why the Mayor has 1 full time assistant and 2 part time assistants?
Seems to me we can save money right there.
The question of how the City will come up with the money to pay the deferral in the future, when things look bleak for a while to come is a good one. What I have heard is the City (we) will be paying 8.5% interest on the deferred amount.
8.5% is the same as what Roselle will be paying.
Isn't Adrian Mapp the chief finance officer in Roselle?
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