OPINION: Financial Advisory Committee Provides Council with Excellent Advice
At the May 31, 2013, Piedmont City Council meeting the report from the Budget Advisory and Financial Projections Committee (“BAFPC”), will be considered. In a letter to the City Council a resident emphasizes parts of the report.
The BAFPC committee has done excellent work as demonstrated in the Report before you. The financial professionals on the BAFPC did a remarkable job.
I. SEWER FUND
Page 11 references the ongoing transfer of a significant portion of the Sewer Fund to the General Fund: “This transfer has grown in response to regulatory mandates, going from $600k–$700k in years prior to 2006 to $900k for the current fiscal year, about 40% of the sewer revenue. Staff time attributed to the sewer systems is estimated rather than tracked directly.” Were this $900k not so substantial, the already penciled in November 2014 additional Sewer Tax would be absurd. Council should implement a time sheet and/or accounting system to replace the current “estimated” system.
Further the Report notes: “Long‐range projections undertaken by this committee and staff found, however, that as debt service is retired, revenues are projected to exceed expenditures beginning in FY23‐24 and the fund balance to turn positive by FY29‐30, even with no additional source of revenue. Thus, the fund balance problem is temporary.” At page 6 the Report notes the large number of Teir I employees retiring in the next 10 years which “should provide a downward trajectory for CalPERS benefit costs.” If Council continues to control compensation packages, the financial picture remains increasingly positive. Various forces are at play that insure that any decline in the Sewer Fund is temporary and that the General Fund subsidy from the Sewer Fund can likely be reduced. No additional taxes are required of the already heavily taxed Piedmont electorate. Current residents should not have to bear the entire cost of a 100 year system.
The city continues to comply with the EPA directives utilizing $340,000 for sewer projects plus $300,000 additional for emergency repairs. The Report notes emergency repairs costs at $352,000 average annually, well within current revenues. Since the Measure A Sewer Tax failed in Feb. 2012, the total mainline rehabilitation has gone from 60% to 64%. Regardless of City Hall characterization that only emergency work is being done, the mainline is being replaced/rehabilitated at a rate acceptable to the EPA. Evidently all work is labeled “emergency” as the most deteriorated parts of the mainline are logically given priority.
II. PENSION SIDE FUND
At p19 the reports states: “If the Side Fund were refinanced, the CalPERS rate would drop for the upcoming year to 28% and thus would be below the sharing cap. As a result, the City would be obligated for Side Fund payments and the employees would not provide any payment towards the CalPERS pension. As a result, without a contract change in the mechanics of the cap, the refinancing of the Side Fund would save the employees substantial money but actually cost the City more money.” Council should undertake the BAFPC Private Placement recommendation to refinance the Pension SideFund and commensurately renegotiate employee Caps downward . Refinancing the fund so only Tier I employees benefit on top of already lucrative packages makes no sense; refinancing the Pension Side Fund requires downward Pension cap negotiation.
Respectfully,
Rick Schiller, Piedmont Resident
Editors’ Note: The opinions expressed are those of the author and not necessarily those of the Piedmont Civic Association.
