Fair Taxes First Information
Last Updated May 29, 2009
MORNEAU SOBECO PRESENTATION VINDICATES FTF STANCE
Pension Experts’ (Morneau Sobeco) latest Presentation To Council Supports Our Position on The Need For an Independent Audit Before Trying Anymore Band-Aid Solutions
Morneau Sobeco:
- When looking at the problem, we recommend that Council determine the root problem and address it rather than simply look at the associated symptoms
- Focusing on the symptoms will lead to short term solutions which will not fix the long term issues.
- We suggest that this problem is symptomatic of a deeper underlying issue that is much more complex
- Instead of solving the current dilemma caused by the symptoms (we) suggest that (you) deal with the real problem
- We believe that a simple tactical “fix” to the current crisis (cut these benefits, increase those contributions) will fail to address the real root causes and likely result in future crises arising
- Simply cutting benefits/increasing contributions today without first enacting enhanced policies will not move the City of Saint John further ahead in dealing with the long term problem
These pension experts’ statements support FTF’s ongoing position that:
The only way to solve the real problems with the Pension is to conduct a truly independent audit so it can be determined what the deeper underlying issues are so they can be avoided in the future. Unless the true facts of why the Pension Plan was going in the red when other plans were recovering (before the latest market downturn) how can positive steps be taken to repair the Plan ?
As the gist of John Ferguson’s presentation to Council three years ago was, “what are the underlying problems with the Plan”. Strange that asking questions on taxpayers’ behalf got the former councillor sued rather than lauded for trying to fix the problems. The continued spin doctoring that the recent market downturn is the problem when Ferguson was asking questions in 2006 shows this is not the case. There has to be a complete change in the ‘party line’ of the conflicted City Staff members sitting on the Pension Board, and the council members who go along with them in supporting maintaining the status quo!
Morneau Sobeco:
- Continuing to delay action on the problem will not serve the long term interests of the City of Saint John or the plan’s stakeholders well.
- Ultimate accountability and responsibility for the Plan has been, and remains, with Council
Fair Taxes First has advocated immediate action must be taken since our formation in 2008.
Without speedy and effective implementation of an independent audit the cost to the taxpayers will be devastating. Talk of an additional 32 cents needed on the tax rate to pay to the deficit mentioned in the presentation would be devastating to taxpayers!
The proposition that if major changes are not made to the Plan the City’s residential tax rate will need to increase by 32 cents to pay $16 million a year for 15 years on the Pension Plan Deficit is beyond belief.
It is time for action! No more dodging the problem or ‘head in the sand’ posturing!
Fair Taxes First is a non-profit group made up of grassroots Saint John taxpayers who are concerned with many serious long-standing issues which have grave financial implications for our City’s Fiscal well being.
When Saint John taxpayers received their 2009 Property Tax bill many were in shock. Most increases we heard of from our members were in excess of 11% and some have been hit by increases of over 20%. Council’s 1/2 of a percentage point drop in the 2009 rate was tokenism at best.
It was alarming to read recently that 60% of our City Budget is allocated to fund employee wages and benefits.
That is why the first issue we are addressing is the City of Saint John Pension Plan and the growing Pension deficit we are obligated to make up. At year end 2008 the Pension Deficit was $146.7 million and with the market dive since then it is rumoured to be over $200 million. Morneau Sobeco’s presentation to Council May 27th shows that if the Deficit is the same at year end 2009 we will have to start paying the first of 15 years of payments of $16 million each year! That equates to well over 10% of the City Budget and means a total of over 70% of our taxes will now go to fund employee wages and benefits.
There are major problems in our City and Council has been made aware on numerous occasions that they will need to raise our tax rate for 2010 if they proceed with their spending plans without making offsetting cuts but they are bulling along and ignoring taxpayers’ wishes. But where is there to cut from Program Spending? If only 30% of our tax dollars go to paving our streets, clearing snow, collecting garbage, buying construction equipment, fire trucks, police cars, installing water and sewer lines, maintaining rinks, subsidizing Harbour Station and the Trade and Convention Centre, etc. - just where would the cuts come from?
Many of our councillors are not listening to the people who elected them when they ran on a platform of bringing Accountability and Transparency to City Hall.
In the March 24th. Telegraph Journal, “Coun. Carl Killen said he was entirely satisfied by the pension board presentation and didn’t have any outstanding questions of the board or the fund’s significant deficit, pegged at close to $150 million” while Mayor Ivan Court “said the pension presentation was fully transparent.” Well, the presenters failed to answer questions and hid some of the truth about what happened to cause the ASSETS of the Plan to drop by $100 Million. How was the presentation transparent?
The going concern deficit of the Plan is greater than the City’s annual operating budget and the Pension Plan is not sustainable in its present form.
It is only public awareness followed by public pressure that seems to move our City’s politicians to act. Does anyone really think the information (PR) meeting held January 31st. would have ever taken place if John Ferguson hadn’t asked questions about the Pension Plan which made us taxpayers aware that the Pension Board seemed to be operating in a vacuum with no accountability to us, the Plan sponsors?
Former Deputy Mayor Hooton recognized these Pension Board problems were not easily solved. Watch the video below to see what Michelle Hooton had to say on our Pension problems.
Mayor Court on the other hand sees nothing wrong with the Pension Plan and says our City’s Pension Plan was the second most successful Plan in the country. He clearly states “you should hear the truth” and he is right there, the truth is what is needed before any more Band-Aid solutions are applied. Watch Mayor Court talk on the pension by watching the video below. You can also see him talk about the cost of the early buyouts in the Ferguson Video under “The Pension Story” tab. On the video he states five Fire Chiefs received $700,000 to retire early!
He was Chairing the January 31st. meeting but made no attempt to throw light on misleading answers given by the hired experts when asked, “How much has the last two buy outs cost the Pension Plan?” having previously stated that five Fire Chiefs were paid $700,000 to retire early. Mayor Court, Councillor Titus and Deputy Mayor Chase along with several senior members of City Staff sat at the January 31st meeting and said nothing to correct the misinformation given in answer to John McNamee’s question 32.b; “Has the City Manager negotiated a separate retirement package from the rest of the City employees? If so, how does this impact the Pension Plan?”
Their Answer: “The City manger has the same entitlement under the Pension Plan as every other member. The Trustees have no involvement in or knowledge of any supplementary arrangement between the City and any employee.”
That answer is clearly not correct as was pointed out by former City Solicitor Frank Rogers who pointed to the Council meeting of May 13, 2002 when Ivan Court, Chris Titus, Stephen Chase, Terry Totten, John Nugent, Andrew Beckett and Patrick Woods were present and where the three Council members voted in favour of the City Manager receiving a “Supplemental Pension”, a perk which Mr. Rogers says may cost taxpayers in excess of $500,000 extra.
Mr. Rogers efforts to get the Council Resolution rescinded have been rebuffed with City Solicitor John Nugent suggesting at the May 25th Council meeting that a simple resolution of Council was sufficient to create this special pension. Mr. Rogers clearly is not of the same opinion yet Council chooses to accept Mr. Nugent’s advice without digging deeper. Why?
The January 31st. meeting was more like a Public Relations effort to spin the Pension Plan story in a favourable light rather than an exercise at providing truthful answers to concerned taxpayers’ questions.
Too many questions were disposed of at the January 31st presentation by the presenters saying they could not answer because the responsibility for past decisions rested on Council’s shoulders rather than the Pension Board’s including the serious effect of the early retirement buyouts of over 50 employees with its cost to the City.
Concerned taxpayers need to let our Mayor and Councillors know a truly independent Audit of the City’s Pension Plan is needed by experts who can look at the information and understand what happened for the Plan’s Assets to have lost money well before the market collapsed.
The Pension Plan needs to be amended so that we, the Plan sponsors will be paid back any money we have to make up before any enhancements are made to the Plan as has been done in the past.
To say that something is not right with the Pension Plan is an understatement!
Please take the time to let Council know your concerns with the unsolved problems with the City’s Pension Plan. There are many problems that have been ongoing for over 30 years which you can read about under the “Pension Story”, information which was gathered from Common Council minutes on the City’s website.
Let’s let our Council know it is time to fix the problems now!
You can write to:
Mayor and Council
City of Saint John,
c/o Common Clerks Office,
P.O. Box 1971,
Saint John, NB
E2L 4L1
If you wish; send a copy of your letter to
“Fair Taxes First”
P.O. Box 22043
Saint John, NB
E2K 4T7
or
email it to us at comments@fairtaxesfirst.com
And, please let us know if it is O.K. to reprint your letter on our web site.
We also invite you to join Fair Taxes First and help solve the problems associated with our notorious high taxes.