Stephen Eide, a senior fellow at the Manhattan Institute, has penned Connecticut City Pensions: The Affordability Gap challenging urban governments. He conducted an analysis of Bridgeport, New Haven, Hartford, Stamford, and Waterbury declaring “The case for dramatic retirement benefit reform–meaning phasing out retiree health care and transitioning workers from a defined-benefit to a defined-contribution plan–may be more urgent for Connecticut’s biggest cities than for the state.”
Connecticut state government’s pension struggles are well understood: deep levels of underfunding have led to credit-rating downgrades, tax increases, recurring budget deficits, and an inability to fund essential services. What has been overlooked, though, is the challenge that the state’s five largest cities by population–Bridgeport, New Haven, Hartford, Stamford, and Waterbury–face in paying for their own retirement benefit promises.
KEY FINDINGS
All five of these cities have promised hundreds of millions of dollars in benefits, a promise that is backed, ultimately, by their tax base. With the exception of Stamford, however, they all have weak economies and elevated rates of poverty.While the state’s record of pension mismanagement is well documented, cities have been guilty of mismanagement as well. However, for the state’s five biggest cities, the question of affordability is more important than mismanagement.
Despite rate increases, property tax revenues have not been keeping up with pension costs in New Haven, Hartford, and Stamford. Hartford’s property tax revenues, for example, grew by $2.7 million from FY08 to FY17 in real terms, while its pension costs grew by $16.7 million. Though annual costs for retiree health care have not risen as dramatically, they are still high, totaling $132 million for all five cities combined. This is a questionable expenditure, considering that the private sector has largely phased out health-care benefits for retired workers.
The case for dramatic retirement benefit reform–meaning phasing out retiree health care and transitioning workers from a defined-benefit to a defined-contribution plan–may be more urgent for Connecticut’s biggest cities than for the state.
Full report here.
I told you so.
Hush! This is a topic on the OIB blogosphere, right?
If you don’t believe me, ask Stephen Eide.
Its not that easy. There are contracts in force here. Most of the employees pay varied amounts towards their health care. All the crap going on and they study this subject. Why not look at the state system where you get a pension close to your working wage.
As a retired firefighter I paid 8% of my salary weekly including overtime to the City of Bridgeport which the city used to pay its bills. In return for my giving them 8% of my salary I was promised a percentage of my salary when I retired. I fulfilled my part of our arrangement and I fully expect the city to honor it’s commitment to me.
There was no way that you could have just told the City that you 2% of that money back because you had others bills. It was 8% every week that bail the City out of a lot of problems while at the same time firefighters were putting their health and safety on the line for the residents every day, 24 hours a day 365 days a week. Firefighters kept their part of the deal.
To the three retired firefighters, rah, rah, you protected and saved many during your years on the job, you deserve a pension that was negotiated in good faith, for as long as you all shall live!
*** City’s mismanage the money that is suppose to go into the retirement funds all the time for different reasons knowing & not caring, that in time it would come back & bite them in the ass! This is the fault of the city & town’s politicians & the foolish agreements they make with the unions aswell. The workers vote & agree to different give backs & cuts through-out their careers to help with city budgets, only to get screwed later at retirement! Binding agreed to contracts by both sides have no room for excuses later in time. ***
The few say “we wuz promised”, while the many say “we wuz robbed”.
The AFLAC workforce of today enjoys the nanny economy of tomorrow.
Mackey, Day and others point out that they contributed to their pension fund while employed. So did taxpayers. They are collecting now based on a formula (defined benefit) that is not sustainable. They no longer pay in to the system but taxpayers continue to pay for their pensions.
The findings of this research is essentially what Dave Walker tried to call attention to. Is anyone listening? Certainly not Democrats and government employees with defined benefit pensions. After all “I fulfilled my part of our arrangement and I fully expect the city to honor it’s commitment to me”. (Donald Day, Seymour CT resident, OIB, 6-22-2018)
Tom being White, the difference between us and the taxpayer that you alluded to, our pension money went to pay the bills of the City of Bridgeport while the taxpayers money goes into a separate account that the residents of Bridgeport didn’t get any benefit from. We also owned cars and homes and paid taxes just like the taxpayer’s that you alluded to, thus making us the taxpayer’s that you alluded to.
Our pension money that we paid went to funding schools, paving roads, paying the salaries of all Bridgeport employees, picking up trash and paying every other expense associated with running the largest city in Connecticut. The taxpayer that you alluded to, Not So Much.
Don you notice white being Tom didn’t tell us about those same taxpayers risking their health and safety in their jobs for the City but that doesn’t matter. Now the City could do away with a paid fire department and have just volunteer firefights and the City could save even more by doing away with the police department and use the Army Reserve.