May 15, 2007

$82 Million redux

OK, before we were so rudely interrupted (see the last post) I was explaining how Dare County finds itself with an $82 million unfunded liability for its "generous" (their words not mine) retiree health insurance benefit. The County budget proposes to establish, but not fund, a trust fund that would eventually be used to pay the expenses associated with this commitment. The plan also recommended that the County change its policy (isn't that brilliant) and only provide health insurance for retirees who have worked for the county for 20 years. This change would apply to new employees and anyone who has worked for the county for less than 5 years. Why 5 years? Because current legal thinking says they aren't required to fulfill their commitment to employees who have worked for the county for less than that length of time. Employees are vested in retirement benefits after 5 years. If the employee is not vested the employer can change the rules. This bit of legal wisdom is credited to the Local Government Commission and the Institute of Government (expect the courts to get involved on this point somewhere in the down the road)
This response sounds like the right thing to do. Start planning and immediately change the plan to reduce future costs as much as possible. It sounds right but I think its wrong on both counts, not entirely wrong but wrong none the less.
First, lets start funding the trust. A one cent increase in the county property tax raises about $1.6 million, if my math is correct. I suggest bumping the tax rate up 2 cents and putting that money in the fund. Every year the liability is unfunded it will grow. That's how these things work. If you start saving for college now you it will cost you less than if you wait until the expenses are due, same principal. Start reducing the long term cost by starting to pay for it now. It will save tax dollars in the long run.
Second, honor the county's commitment to its current employees. This will increase the liability slightly but it absolutely is the right thing to do. When these people were hired they were told what the rules were. They accepted the job based on that deal. It may be legal to change the rules after the fact not but its not fair.
I suggest adopting a policy for new employees that provides access to health insurance for anyone who retires from the County. Phase in a county contribution depending on how long the retiree has served. Have you tried to get private health insurance, its hard and VERY EXPENSIVE, By providing access to the County's group coverage they would play a small part in solving a major national crisis.
The County needs to treat its employees fairly. Fair treatment builds morale, increases productivity and increases worker longevity. It means that we get better service for the taxes we pay. It will pay off in the long run and its the right thing to do.

Labels: , , , , ,

7 Comments:

At 5:08 PM, Blogger Overwash said...

Bob,
Are you aware that the total of all ad valorem taxes collected by Dare County falls short of enough to pay the current county payroll, plus employee benefits. 700+ employees and $45,000,000 isn't enough. Ok, why don't we just rename ad valorem taxes, "citizens payroll taxes" and hire, hire, hire and tax, tax, tax. Find me another county in NC that has this same tilt. Betcha can't.

 
At 9:30 AM, Blogger BOBXNC said...

OW, I am interested in your offer of a wager. Please explain what you think in so unique about the structure of the county budget and the stakes that you would propose. I am aware that property taxes make up about a third of the revenue stream for the Dare towns. The personnel costs run about 60%+ so your assertion doesn't surprise or alarm me. Actually it pleases me that the towns,m and I expect the county, have developed revenues sources that reduce the need for property taxes. Dare County has the lowest tax rate in the state. Yes, some of this is due to high property values but it is also do the the revenue the county gets from our extremely healthy tourism (beach tourism) based economy. Let that go in the tank and see what happens to property taxes.
Thanks for taking the time to comment. Let me know what the bet is and I will consider it.

 
At 10:22 AM, Blogger Kevin Schwartz said...

Okay, this sounds like you may be thinking of running for something!

 
At 5:00 PM, Blogger Overwash said...

Bob,
My bet was for you to find another county in NC that uses 100+% of its ad valorem taxes to fund its payroll/benefits. Seems you are mixing towns with county here. In Dare County, ad valorem tax revenue makes up about 45% of the general fund budget, not 1/3. Considering the fact that Dare has 6 contiguous towns (no other county in the State has such) and less non-municipal populous to serve vs. ablility via revenue source(s), is it any wonder many think too much $$ is squandered in this county? How much do you think the county payroll/benefits have increased in Dare over the past ten years vs. other counties? Sad part is, the pressure from county gov't actions in this regard, has filtered itself down into our local muncipalities and, politics being as they are, have resulted in our beach towns being strapped with many of the same expenses...e.g. full family medical (unheard of elsewhere) which will be a huge liability for many years to come. To wit: the county lialility for retires...who served for only five years, etc...Is Nags Head in the same boat?...You were there...you should know.
Finally, Bob, I am astounded that you are proposing raising taxes by 2 cents to fund this liabllity. A simplier approach would be to cut the county payroll by 2% per year, wouldn't it?

 
At 5:01 PM, Blogger Overwash said...

Bob,
My bet was for you to find another county in NC that uses 100+% of its ad valorem taxes to fund its payroll/benefits. Seems you are mixing towns with county here. In Dare County, ad valorem tax revenue makes up about 45% of the general fund budget, not 1/3. Considering the fact that Dare has 6 contiguous towns (no other county in the State has such) and less non-municipal populous to serve vs. ablility via revenue source(s), is it any wonder many think too much $$ is squandered in this county? How much do you think the county payroll/benefits have increased in Dare over the past ten years vs. other counties? Sad part is, the pressure from county gov't actions in this regard, has filtered itself down into our local muncipalities and, politics being as they are, have resulted in our beach towns being strapped with many of the same expenses...e.g. full family medical (unheard of elsewhere) which will be a huge liability for many years to come. To wit: the county lialility for retires...who served for only five years, etc...Is Nags Head in the same boat?...You were there...you should know.
Finally, Bob, I am astounded that you are proposing raising taxes by 2 cents to fund this liabllity. A simplier approach would be to cut the county payroll by 2% per year, wouldn't it?

 
At 11:15 AM, Blogger Overwash said...

Mayor Bob,
As you can see, I am a newcomer to Dare County politics and I really want to become a mover and a shaker. Do you know anyone in the county who can introduce me to the right people, right contacts, and get me some power and influence?
I am willing to pay into the 6 figures for the right kind of contacts. I can be emailed at ...overwash@gmail.com...and I or my assistant, Mr. Undercoat will respond as necessary.

 
At 1:26 PM, Blogger BOBXNC said...

Kevin, apparently you didn't get the memo. Not this year, thats a promise.
OW. Not sure what that last comment was about so I will ignore it. As to a wager. You have stated the premise, that no county in NC spends more on salary and benefits (all funds including education supplements) than it steals in property taxes. OK what are the stakes. For me to pour through all those financial reports could take hours. Make it worth my while and we might even find out a shared truth. What is it worth to you?
For the record, I don't think I was confusing towns and counties, I was just using what I know to be true from my own experience, towns in DC (and a lot of other places in NC) spend more on personnel costs that they levy in ad valorum taxes. Not sure about counties, make it worth my while and we'll find out!

 

Post a Comment

Links to this post:

Create a Link

<< Home