Home > Crank, Economics, Editorial > The Pension Squeeze, Placemaking And A Resilient City

The Pension Squeeze, Placemaking And A Resilient City

Yesterday, UpNorthLive covered Commissioner Mike Gillman’s call for action on Traverse City’s long-term pension problem in their Fact Finder–TC’s $38 Million Crisis. The commissioner also had a forum piece in the Record Eagle a few months back and mayor Chris Bzdok described it as the pension squeeze on the Plan for TC website.

I didn’t wake up thinking about the City’s pension problems and I’m not ready to dive into number details. I’m not ready, because the details aren’t really accessible enough and presented in a clear enough way to encourage engagement. I suspect that is part of the problem. I appreciate the passion by commissioner Gillman, however, what are we citizens to do about it? Does it help for me to worry over it late into the night?

I don’t trip over a pension problem when I walk across town and a pension problem isn’t going 40-mph down my neighborhood street. The pension problem isn’t polluting Grand Traverse Bay like the countless surface parking lots we have around the city. I  understand this campaign is his attempt to communicate the problem, but as such, it is also narrowly framed from his perspective–that is not a criticism, it’s perfectly acceptable. However, for the citizenry to be involved, as he voices he wishes it was, we need some contrasts to weigh and we need some action items to respond to.

Citizen Engagement

How would the commissioner like citizens to be involved? Is there a task-force coming up with possible action items? What support does he need? In the three posts linked above, I don’t see specifics to respond to and only the mayor offers a brainstorm of options and how to achieve them. Actually, what I see in the articles is that commissioner Gillman deserves praise for working so hard on the issue. Good work; keep it up.

Until there is a call for help from the commission, I’d really appreciate that during this “crisis,” as we continue to spend over $1-million a year on constructing and reconstructing infrastructure, that we get it right and build an equitable, comfortable and convenient place for people to enjoy each others’ company and to help each other achieve our goals. And yes, that does include parks, sidewalks, bike paths and the use of modern-day technologies, like roundabouts. In the long run, these investments will play a major role in our financial solvency. The more equitable, resilient & connected city we build, the stronger our city we will be and the more able to counter serious financial issues like this pension issue.

The idea of focusing on placemaking during difficult financial times is not new or unique to Traverse City. It is something we’ve written about before and it’s a connection in need of refining. Recently, the Strong Towns BLOG has been discussing how resilient communities are able to respond to financial issues in stride. Two of the relevant Strong Towns posts are linked below and there are others they have published:

Admittedly, I’m no number-cruncher. I’m open to criticism. Ideas. Discussion.

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Your Comments Matter

Comments: we welcome your comments, please don’t be shy. The more questions, perspectives and general participation we have here the better. What’s on your mind?

  1. Rick Shimel
    January 13, 2011 at 3:06 pm

    Gary, I would argue that Gillman did a very good job of laying out the issue. The difficulty in understanding is the complexity of the material and that awful math thing. I had to read Gillman’s forum piece three times to get an understanding of what he was saying and I have spent time studying the issue. Pot holes and bike lanes are easy to see and get a grasp of. Legacy costs not so much.

    First, we are not in a crisis. Some cities and states are but TC is not. We are flush. If we went out of business today we could meet our legacy obligations. The city owned Light and Power Company could be sold for many times what we owe. The last I checked L&P was sitting on more than 20m in cash. That’s one component part of TC. We have lots of mystery pools of money.

    It makes for a great read to say “every man, woman, and child in TC would owe x amount of dollars in legacy costs if the city stopped doing business today.” It’s just wrong. If TC went out of business today every man, women, and child would get a check from the city. We have more assets than liabilities.

    Second, we need to look at this issue before it becomes a crisis. Thank you, Mr. Gillman. I just don’t think many people are willing to put in the work necessary to come to an understanding and form an educated opinion one way or the other. Both Mike and I observed how easy it was to get 25 people at a commission meeting passionately lobbying for bike lane stripes on 8th street and yet shortly after that the city was in budget meetings and nobody showed up. It’s not that people don’t care. It’s just too much work for the average citizen to put in.

    Third, are we talking about legacy costs or union busting? I think the answer is both and we need to have an honest discussion about our motivation. Half of our national workforce (75 million people) makes 25k or less per year. 50 million people are uninsured. Over 40 million people are on food assistance. The middle class is quickly disappearing. Unions built the middle class. This is exactly the wrong time to bust them up as convenient as it may be to those who are ideologically predisposed to do so.

    Finally, I think your readers would be well served if you would run a series of three interviews; Mike Gillman (city commissioner), Bill Twietmeyer (city treasurer), and John Scrudato (retired teachers union, er,I mean association). Mike and Bill are very approachable and I don’t know about John. Gary, thank you for stretching beyond your usual boundaries with this post.

  2. January 14, 2011 at 10:01 am

    Thank you for providing some countering perspectives. You articulated the response to the commissioner’s costs per individual comment how I would have liked to, but couldn’t find the right words to do so.

    Interviews aren’t my strong suit, but I’m certainly open to the idea. When I find the time and the energy I certainly agree that they could be interesting/useful discussions.

  3. Katie
    January 14, 2011 at 4:34 pm

    Hi Folks, excellent discussion on the pension issue. My only comment to the infamous ‘$38 Million’ is that figure is a consequence of the problem, not the problem itself. The real issue, as outlined in Bzdok’s excellent article from last November, is the Defined Benefit pension system that exists, in today’s world, primarily only in the public sector (employers supported by tax dollars).

    In the private sector, DB pensions have virtually disappeared in the 1990’s, and been replaced by DC pensions (if anything at all). So, most folks working in a machine shop/ law firm/ bank/ restaurant/ hotel, etc., have no defined benefit pension at all, and rather are personally responsible for saving up $$ to retire. Remember, a DB pension is a ‘promise’ by the employer to send the retiree ‘X’ amount of money per month until he/she dies. And, the general rule of thumb is that over 80% of U.S. workers are in the private sector (the other 20% are in some form of public sector — federal, state, or local). So, the vast majority of the taxpayers that are ‘on the hook’ for fully funding the DB pension plan promises over the upcoming decades, are generally not recipients of a lifetime monthly pension themselves. Hence the disconnect! As it stands now, without any pension plan changes, this is going to go on and on for decades–our children could be paying for these DB pensions that were earned decades ago. The urgency is to get public sector employees on a DC plan, or at least come up with something that is more equitable to the economic realities of the world in which we live today. I don’t see it as having anything whatsoever to do with union-busting (there are unions in the private sector, that have gone to DC already), and there are plenty of public sector people on a DB plan who are not in a union. Nobody is talking about not paying out the pension figures that are already accrued by the recipients (how much have you earned so far)….but instead, to design a new plan, that makes changes to pension accruals & methods in the future. There has to be a way to be fair to the current DB employees, to recognize their work & service, but in a way that fits with economic & other realities of today as well as the future.

    As Gary says, it doesn’t help for any of us to lie awake at night and worry about this, but I think it would be great if more folks pay attention to the issue, and be supportive of the Mayor and the Commission as they try to take care of business in addressing this thorny problem which impacts all of us in TC (actually, everybody in the USA). Maybe there will be a call from them for task force, whatever….until then, other problems exist to worry about!

    Thank you, indeed, to Gary for this opportunity to comment!!

  4. Rick Shimel
    January 15, 2011 at 12:13 pm

    Katie,excellent post!

  5. January 15, 2011 at 2:10 pm

    In the latest New Yorker the Financial Page provides a birds-eye view of local economics as it’s seen through the current perceptions of Unions, as well as other institutions. Related to this discussion, albeit tangentially. http://www.newyorker.com/talk/financial/2011/01/17/110117ta_talk_surowiecki

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