According to yesterday’s Daily Dispatch, the Henderson City Council’s recent decision to curb retiree benefits “could reduce the taxpayers’ legal responsibilities to the city employees from $14.9 million to $7.1 million by setting up a tiered system”.
In case you haven’t been paying attention, the city changed its policy on retiree insurance benefits. According to City Manager Ray Griffin, the change was made due to the new GASB (Government Accounting Standards Board) regulations requiring the reporting of employee insurance benefits as a liability in municipal budgets.
Home in Henderson reported on the issue last week.
Of course, the liability has always been there. The fact that it has to be reported in a different column changes nothing. It’s not like the city is seizing on a change of accounting regulations to trim some money off of its employee costs. It would be like an oil company raising the price of gasoline a few cents on the same day that a new fuel tax goes into effect in the hope that everyone will blame the government, which we all know never happens.
But I digress.
Prior to the council’s vote, a city employee with 20 years of service could retire at age 55 and receive insurance benefits for the next ten years. Now, any employee with less than 15 years of service will be required to pay one-half of their insurance premiums upon retiring at age 55, while those hired after January 1 of this year will be required to pay 100% of their premiums.
Apparently, fourteen years of service doesn’t show enough of a commitment to Henderson to rate a benefit that has been expected for, roughly, fourteen years.
How will Henderson retain quality employees, you ask? Two words: merit pay (someday).
Perhaps this isn’t a move by the Henderson City Council to convince its employees to seek jobs elsewhere or prospective employees to withdraw their resumes. After all, no human resources professional or chief finance officer applicant worries about trifles like health insurance. Those candidates are usually 23 years old and as healthy as oxen. But that’s not the issue. No one puts a gun to an employee’s head and makes them work for the city and, in theory, a city employee who doesn’t like having the benefit jerked out from under them is free to seek better benefits elsewhere. It’s coming out of the public purse, after all, so let’s consider the practical implications to the taxpayer:
According to the latest tax valuation, each cent on the tax rate represents $85,000 in city government revenue. If the city saves $7.6 million over the next twenty years due to the new policy, city taxpayers should see an average reduction in taxes of $0.447 per hundred dollars valuation per year for the next twenty years. Thus, if you own a property worth $100,000, you should save an average of $44.70 per year in city property taxes.
Admittedly, most of that savings will be on the back end as city employees “age out”, “wear out”, or “get the heck out”. It’ll be more if they are fiscally conservative enough to die, preferably at age 54 with nineteen years of service. That’s the best bang for your taxpayer buck.
Let’s make sure that the next budget reflects this savings to the taxpayer. Unless, of course, there is a number one priority city project that could use the money more.