7 million (per year) short of a solution?

I don’t subscribe to the Star Trib but I received this bit of intelligence from that paper today in an email. Its a year old. Anyone who thinks our City’s municipal problems are a thing of the past ought to reconsider. I believe I read that the latest census will reveal that we have lost another 5,000 people since the 2000 Census. That will hike the tax burden on those of us remaining while the State prepares to dump Local Government Aid.

Between that and the Red Plan Duluth still has a few hard years ahead.

Here is an excerpt from Star Tribune, 1/2/2011, that isn’t available on-line. The story is about public pensions.


First, elected officials from both parties often chose to hie the cost of these agreements from voters, often for decades. That’s how a $32 mill liability in Duluth in 1998 became more than $300 mil by 2009, raising the spectre of a potential bankruptcy filing.

Second, wages, pensions, and benefits are the result of collective bargaining. Ultimately, elected officials approved the contracts. Blame should be shared equally and any change will have to be negotiated mutually. Vilification is a standard negotiating tool, but not an effective opening gambit.

In Duluth, the city negotiated with the unions to end free retirement health care for anyone hired after 2007. It also negotiated the right to move all employees to a single health plan, and then did the same with retirees. Those changes have reduced the city’s projected shortfall from $350mil to $208 mil.

“It’s the difference betwee bankruptcy and solvency,” said Mayor Don Ness.

Ness is perhaps more optimistic than he should be. The accountants say the city needs to put aside about $17mil a year to meet current and future obligations, but the city can only afford about $10mil. The outlook worsens if health care costs rise faster than current projections, or if the MN Supreme Court overturns lower-court rulings that allowed the city to shift retirees into one plan.

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