The Actual Upshot
The Newport Daily News has the most thorough explanation of the outcome of Tiverton’s Financial Town Meeting that I’ve seen:
More than 800 voters packed Tiverton’s reconvened financial town meeting Wednesday night and approved a slightly amended budget of $41.7 million for fiscal 2009.
Voters also approved a tax-levy override of $1.6 million, which will necessitate an increase of 99 cents to the tax rate, making it $11.25 per $1,000 of property value.
The tax rate is 10 cents less and the excess tax levy is $250,000 less than the $1.9 million override proposal presented to voters at the start of the May 21 meeting. That proposal was defeated by a majority of the 465 voters in attendance. Town officials initially proposed a $42.1 million budget for fiscal 2009, which begins July 1. …
The amended budget that was approved includes a $100,000 cut to the school budget, a $100,000 reduction in the amount for uncollected taxes and a $50,000 reduction in the police pension fund.
The $100,000 from “uncollected taxes” will, presuming a revenue shortfall, have to be made up somehow in the future. The $50,000 not put into the police pension fund is even more of a mere postponement; if the pension is of the defined benefit sort (which I haven’t been able to confirm with a quick search, but which is likely presumable), then the money not put in is of no immediate concern to the participants. That leaves the $100,000 school budget cut, which a Caruolo Act lawsuit could erase.
In other words, the “compromise budget” is very Rhode Island.
Justin,
“The $50,000 not put into the police pension fund is even more of a mere postponement; if the pension is of the defined benefit sort (which I haven’t been able to confirm with a quick search, but which is likely presumable), then the money not put in is of no immediate concern to the participants.”
That $50,000 not contributed to police pension fund could end up $5 billion due to compounding interest in unfunded liabilities just like the current state retirement fund.
Yes, this doesn’t seem like much of a compromise at all. Unless I’m missing something here.
One of the reasons RI is in such poor financial shape today is the fact that the State and municipalties have failed to adequately fund their respective pension systems in the past. The compound interest earned on the pension funds is critical to sustaining the pension benefits promised. Our legislators and councilpeople have been absolutely reckless in this regard. Tiverton is compounding its problems for the future by playing ostrich today.
Of course the reason why “the State and municipalties have failed to adequately fund their respective pension systems in the past” is because it is IMPOSSIBLE to “adequately fund” a defined benefit plan which allows people to “retire” at 41 (not to mention those who “become disabled” in their 20’s and 30’s) with full pensions, COLA’s and health care for life. Impossible. It’s just a pyramid scheme which will collapse in 5-10 years.
Mike,
It will happen sooner. Vallejo, here we come.
These figures/budgets do not include the “unfunded” health benefits that will need to be accounted for in future budgets. Sigh.