EDITORIAL: Pension Practices Put Leominster in Driver’s Seat
As parties go, the one thrown at Leominster City Hall on Tuesday was as public-policy wonky as you can get. Yet the announcement by Mayor Dean Mazzarella, that the city will have fully funded retiree pensions, should have all city residents rejoicing.
Unfunded pensions have been a ticking municipal bomb for decades. Some communities squeezed by the limits of Proposition 2 1/2 have delayed those payments. That’s the equivalent of shoving a painful bill in the drawer. Out of sight, out of mind ... until the collectors show up.
Financial data Leominster officials handed out on Tuesday show the depth of the crisis. Neighboring Fitchburg holds a $152.8 million liability. That will cost the city $11.5 million in pension costs next year, rising to $24 million in 2032. Andover will see an $8.5 million bill next year, rising to $26.5 million in 2035. So too are Salem ($11.3 million in 2020, $20.5 million in 2031) and Arlington ($10.4 million in 2020, $22.6 million in 2034) facing serious issues.
Those costs will be unsustainable without taking drastic measures. And those projections come amid best-case scenarios. Inflation could wreak havoc with basic costs. People could continue to live longer, straining those cost projections. Will the market continue to perform well, and bring strong returns to our community’s investments?
Leominster’s path to this small bit of solvency was contentious at times. Rretirees and the city Retirement Board butted heads for years over the size of cost-of-living adjustments. That will no longer be an issue, the mayor promised.
Instead of pouring nearly $9 million down a “black hole,” as Mazzarella put it, the city will spend $2.5 million maintaining current retiree benefits, freeing up about $6 million in next year’s budget. And the city beat its own funding goal by two years.
Mazzarella credited City Comptroller John Richard, who in turn thanked former comptroller John Tata and a host of former and current Retirement Board members.
Every success can bring problems. Leominster’s problem now is: What can you do with or buy with that newly available $6 million? Keep tax bills low? Improve roads and bridges? Upgrade municipal buildings? Enhance education for Leominster students?
As problems go, that’s a pretty good one to have. And it’s a great debate for city residents to be engaged in as the 2019-2020 budget begins to take shape.
In the meantime, Mazzarella and company should consider one more revenue stream: Bottling whatever is in the City Hall water and selling it the rest of the state’s financially strapped communities.