2011-05-19 / Front Page

Council takes aim at pension woes

By Phil Zahodiakin

Jamestown will probably have to spend more money to meet its pension obligations and support its water-service budget in the coming years, the town’s councilors learned during a pair of meetings on May 16.

The first of the Monday sessions was the Water and Sewer Commission meeting, which was followed by a lengthy Town Council meeting.

During the council meeting, Town Administrator Bruce Keiser advised the councilors that the state Retirement Board has determined that there is a growing gap between the town’s pension obligations and the assets available to meet those obligations.

The gap in town-employee pension obligations is currently $4.5 million, and it’s increasing because of declines in mortality rates and returns on stock market investments, Keiser told the council. He added that the Retirement Board has increased by 62.4 percent the level of contributions necessary for Jamestown to reduce the gap. That would be an additional $150,000 as of July 1, 2012 for town-employee pension obligations.

The teachers’ pension obligations, which are jointly funded by all school districts and the state, are also increasing in comparison to contributions. To bridge the gap, Jamestown would have to increase its share of the contributions by an additional $170,000 as of July 1, 2012.

Keiser pointed out that the $320,000 increase in pension outlays projected for fiscal year 2012-13 is far greater than the $90,000 increase in town spending for the upcoming fiscal year. Keiser stressed that “the pension deficits are not due to any failure on the town’s part to meet its annual contribution requirements over the years,” and he warned that, “We cannot hope that the [stock] market will rebound robustly to make up for the sluggishness of the last 10 years.”

A second unknown in the resolution of pension-funding gaps is the fate of pending state legislation that could ease the increase in contributions by dispersing the higher outlays among multiple revenue sources. Nevertheless, it’s clear that pension funding will be a significant issue during the town’s budget de- liberations in 2012.

Meanwhile, the councilors will also have to address a recommended increase in the town’s support for water and fire-suppression services. The increases were outlined for the councilors during their meeting as the water and sewer commissioners by consultant David Bebyn, whose General Rate Study report recommends increasing to $200,000 the $100,000 that the town is currently paying for fire-hydrant rentals,alongwitha5percentincrease in the rate for excess water usage.

Commissioner Bill Murphy pushed back against the rental increase, saying he would have to see the data supporting the rationale for an increase of that magnitude.

Murphy also warned against a geographic expansion of town water service when there are still undeveloped lots within the Jamestown water district.

Commissioner Bob Bowen pointed out that the people using the most water are effectively subsidized by the people using the least amount of water because those who use the least water still pay a minimum fee. Before using any rental-increase revenue to moderate the proposed increase in excess-use fees, “it would be worth finding out how many people are at that minimum [wateruse level],” Bowen said.

Town Finance Director Tina Brown said she would look into those numbers and Commissioner Mike Schnack noted that the rate analysis “was only a way to get us started to plan ahead [for projected revenue needs].”

A confirmed revenue reduction – albeit one with a much smaller impact than the projected water-use reductions among water district residents – came to light during the council meeting. That reduction is the loss of some property-tax revenue as a result of successful appeals against the most recent round of Vision Appraisal property re-assessments.

Keiser said that the re-assessment reductions provided by Vision

Appraisal itself totaled $3.5 million; an additional $3.6 million worth of reductions resulted from disputes that proceeded to the Board of Appeals. “So, there was $7 million shaved off the [property tax base], which will represent $60,000 in actual tax billings,” Keiser said, adding that the $7 million reduction “is a fairly modest amount.” He also noted that there are still two pending challenges that will be heard in Superior Court.

A Water and Sewer Commission decision to approve the Cross-Connection Control Plan won’t have any impact on town revenue, but it will affect residents who fall under its mandate.

Under state law, all Rhode Island towns must adopt plans to eliminate actual or potential cross-connections between public water supplies and contamination sources. Under the Jamestown plan, which is based on a state Department of Health template, the town will require specific steps to implement backfl ow-prevention rules, which must be in place by the end of June.

Residents will learn if they are affected by the plan – which will require the installation of backflow prevention valves – as the town performs an inventory of residential and commercial cross-connections. Although the valves aren’t expensive, it is estimated that the cost for a plumber to install the value would be around $400.

To enact the plan, the commissioners could have initiated a process to amend the Code of Ordinances, but chose instead to adopt a package of regulations when the package is presented to them in their capacity as town councilors on or before June 20, which is the date of their next meeting. The commissioners chose this approach because it’s the quickest and easiest route to meet the state deadline.

Town Solicitor Peter Ruggiero has already drafted an ordinance amendment. He will turn the draft into a regulatory package. It is likely that the package will be adopted when the council meets in special session to approve the appointment of a new police chief, which will occur shortly after – if not before – the Financial Town Meeting scheduled for June 6.

In one other piece of financial business, the councilors agreed to approve for submission to the voters a bond with a not-to-exceed value of $1 million to pay for the closure of the North Road landfill.

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