Local Political Issues - Part One

I guess some people don’t trust others to do the public’s work without their direct input. Why else would they complain about just about everything? Somehow they make it sound like elected officials can’t make a good decision. Picking at their choices. Looking at the downside of every little thing.

This happens in our town. Without immersing themselves in all of the details of an issue, they cherry pick items they can highlight. Out of context the details don’t make sense. That doesn’t stop the complainer. Nope! He just keeps pushing with misinformation trying to make others look stupid.

Trouble is there are always some people who believe the complainer.

Buzz words or hot topics capture attention quickly: higher taxes is one; another is rising public debt; how about unfunded pensions? Or the biggest trap of all – change that isn’t good for us. Seems each of these topics is rooted in fear and fear is a commodity that can be manipulated.

If the chronic complainer means well he will join the effort to improve on problems. But he doesn’t. He’ll attend public meetings but only to raise doubts and more complaints. If public officials responded to all of these comments they would get little else done.

In the final analysis it is up to each member of the public to educate themselves on the issues and understand them. If they don’t they should seek more information and help others understand what they are learning. If the community is to move ahead with confidence citizens need to help elected officials rather than hinder them.

In our town we have these issues.

1. Struggling local economy; foreclosed homes and bank-owned homes standing empty; business properties changing hands; some vacant
2. Seasonal flooding threats
3. Dynamic surrounding environment competing with our businesses and land values; traffic congestion passing through town
4. Long term financial planning to meet the costs of government: maintenance and replacement of equipment and buildings; rising costs for police and public works operations; pension funding; economic development activities. 

There are other issues of course but these are the larger ones. Let’s take a look at some of them.

The national economy began its recession in 2007. Underpinnings of the recession occurred earlier in some areas but the national landscape for jobs, property values, mortgage melt down and business bankruptcies escalated as the recession took its toll throughout the nation. Warrenville, Illinois, was no different. Our people lost jobs. They found new work at much lower wages and grabbed onto second jobs to meet mortgages and family expenses. Standards of living dropped. Mortgages went delinquent. Medical expenses overwhelmed family budgets. Homes went into foreclosure and once proud owners were evicted or encouraged to leave.

Cars were repossessed. Diets turned to cheap unhealthy foods. Clothing became threadbare. Home furnishings were not replaced or repaired on a current basis. Entertainment was done on the cheap. The weekly pizza at Al’s and the Towne Tap became the weekly frozen pizza at home. Netflix movie rentals replaced trips to the theater. Fast food outings replaced visits to favorite restaurants. And vacations? They disappeared. Even Sunday drives into the country were forgotten to save on gas.

This economic condition was caused by huge dislocations in the national economy by three industries run amok: investment banking, mortgage industry, real estate. Investment brokers were closely allied with much of the problems related to the first three industries. A perfect storm of mismanagement and greed toppled the American economy in quick order. Political games were played for power grab purposes and little good work was done by Congress to manage the economic meltdown.

Every city, state and town suffered in this recession. A city council does not have the influence to stem the tide on its own. A lot of people and levels of government have to get involved to solve these problems.

But Warrenville took these key steps:

1. Balanced its budget and brought it to year end each year with surpluses; avoided expenses where possible and boosted revenues when available
2. Set aside funds for future projected expenses especially for capital projects with known depreciation end dates (water, sewer, roads, storm water management, etc.)
3. Embraced strategic long range planning to prepare for the future 10 years out and more; identified necessary long term funding needs; prioritized capital project needs
4. Engaged in economic development activities and research; became willing to invest in the success of the local economy; purchased a vacant commercial property to save it for higher economic use in the future; borrowed existing capital fund balances to pay for the property until another buyer could be found
5. Continued to fund pension obligations on an actuarial basis
6. And much more. 

To address any of these issues in part does an injustice to the issue and to the public that is being served.  An example:

Police Pension Funds: the city has funded these obligations on a current basis from the beginning. As the police force ages pension obligations rise. As the force expands and hires younger officers average ages decline and obligations offset the aging officers. Investment pools fluctuate with national market conditions. The recession undercut pension fund balances significantly. Replacing those funds were calculated into city-paid pension payments; as investment markets regained values lost in recent years pension investment pools are growing again and do not require full pension payments as originally calculated. Meanwhile national and state pension funds were found to be underfunded by major amounts. Embarrassment over this level of public malfeasance caused overcorrection. State laws were written to include municipal pension funds whether they needed help or not. Wild calculations were mandated to safeguard public pension obligations. Most do not accurately reflect the actuarial reality.

Warrenville’s police pension fund shortfall is calculated at $5.5 million. However, if the city ceased operations at this moment, much of that $5.5 million is not needed because the officers haven’t yet earned the benefits based on years of service or attained age at time of retirement. No; the calculation is like telling us your mortgage is fully due in 14 years and you need to set aside all of those funds now or as soon as you can. In other words, prepay the expense. 

Why then have a mortgage? Why not just pay the full asking price of the home in cash? Can you do that? Can any one except the wealthy or those who, with age, have paid off their mortgage and can sell the property and use the lump sum cash to buy the replacement home?

Let’s get real. The pension problem at the state level in Illinois is very serious. It may be similar in larger towns and cities. But not in Warrenville. Retirement obligations have been well funded and have followed the plan requirements over the years scrupulously. There is no pension shortfall in Warrenville.

I’ll continue discussion other issues in tomorrow’s posting.

March 28, 2013