David's Blog

Monday, May 07, 2007

It's Time to Retire the City's Retiree Healthcare Liability

It is difficult to lead a community - or a union - during challenging times. Nevertheless, as community members we have a right to expect the best of both our city and union leaders during a seminal moment of unprecedented challenge within our beloved community. Duluth is still confronted by a shared, but ominous situation: i.e., the City of Duluth's employee and retiree unfunded healthcare liability. Some of those persons whom we have called on for bold leadership have risen to the challenge, while others have been a disappointment. Let's review the situation, starting with the positive factors.

Mayor Bergson has provided strong leadership in addressing the unfunded healthcare liability. Early on, he announced that he would forego the possibility of reelection in order to deal unflinchingly with this civic problem. Consequently, he was instrumental in moving an initiative for an irrevocable trust fund - i.e., an enhanced investment vehicle which will allow Duluth to generate a far better return on its investments - through the State Legislature. For this achievement, the mayor, area legislators, and ultimately the governor deserve our admiration and respect. The trust fund initiative constitutes one-third of the solution needed to resolve the unfunded retiree healthcare liability.

Another one-third of the solution has been attained by funding, at least partially, the liability through the transfer of Community Trust Fund monies (a.k.a. the Street Improvement Fund and the Casino Fund) into a fund that can be used only to pay for the city's healthcare liability. The mayor and our city councilors displayed bold leadership by transferring $12 million into this restricted account. The City Council has also set in place an automatic annual transfer of Community Trust Fund monies into this restricted account. It is clear that our city councilors have done their part to address the city's unfunded healthcare liability.

We, as Duluthians, have not been inactive. Indeed, we are doing our part in finding a solution to this dilemma. We are paying increased utility rates (e.g., for gas, water, sewer, and storm water) that will help to pay off the unfunded healthcare liability. In addition, we are paying an increase in our property taxes that will help in the same cause. The combination of the Street Improvement Fund allocation with the increased property and utility will provide for the second third of the city's unfunded liability. But what about the one remaining third?

Scant attention has been given to this remaining third, and two of the city's five unions are hoping that no community attention will be given to this as yet resolved problem. Over a year ago, the mayor and the city council appealed to the leadership of the city's five unions to transcend old stereotypes and break from the traditional practice of holding on to employee benefits despite the cost and regardless of the devastation. Three - the supervisory group, the confidential workers, and the firefighters - of the five unions rose to the occasion. I applaud and respect their leadership.

Unfortunately, however, two of the five unions have not become part of the solution. Apparently habit is stronger than reason for the local leadership of the American Federation of State, County and Municipal Employees (AFSCME), who represent the majority of city of Duluth workers. Surprisingly, the union representing Duluth's police officers has also refrained from affirming the proposed solution to the city's problem. The lack of needed concessions from these two unions should be of increasing concern to every Duluth taxpayer. Should home owners pay more taxes so these union members can continue to enjoy a healthcare benefit package that far exceeds what the city can afford and non-city employees can access? Increasingly, Duluthians are balking at the injustice, while, at the same time, Mayor Bergson is doing his best to wrestle the necessary concessions from these remaining unions. In fact, the Mayor has become so resolute in this matter of concessions and cooperation that the leadership of these unions is likely to delay serious contract discussions until a new mayor is elected in November.

Duluthians deserve better from the leadership of AFSCME and the police officers. The mayor has done his work well. The city council has also done all they can do. Taxpayers, too, are digging deeper in their pockets to do their part in resolving this difficult issue. And three of the city's five unions have demonstrated leadership in becoming part of the solution. Only two unions are preventing this community from a responsible resolution of this problem.

A panel discussion will be held to discuss this issue on Thursday, May 17, at 8:00 a.m. The panel will feature city councilors, the chairperson of the Post Employment Healthcare Benefits Task Force, the city's chief administrative officer, and a spokesperson for the city retirees. For more information, contact the Duluth Area Chamber of Commerce at 218.722.5501.

posted by David Ross at

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