In my last blog post, I promised to share with you some of my takeaways from the different seminars I attended while at the 94th Annual League of Municipalities Convention in Atlantic City. While attending the seminar on Retirement Planning and Employee Benefits and Services, I learned that the IRS is currently cracking down on individuals receiving pension payments while still working for public entities. In some cases, the NJ Division of Pensions has sent bills for hundreds of thousands of dollars to individuals who went back to work after retiring. Every effort is being made to identify retirees who are in violation of the state's pension laws so as to recoup benefits paid. There are also ongoing discussions about preventing law enforcement officials from retiring at such a young age only to go on to lucrative second careers in the private and public sector.
The state's pension plan has over $75 billion in assets and is currently solvent. However, the Public Employees Retirement System (PERS) will see a 14.75% increase next year due to unfunded obligations. Those municipalities who opted for the deferral last year will have to begin repaying in 2012 at an interest rate of 8.25%.
When it comes to furloughs, non-civil service municipalities can do whatever they wish; however, the legal and proper way for civil service municipalities to institute furloughs is through the collective bargaining process. If an agreement on furloughs cannot be reached, municipalities can implement temporary layoffs by closing whole departments for a certain number of days, this does not require agreement from the collective bargaining units.
Fraud in government is a hidden tax that gets passed on to tax payers until it is discovered. One of the seminars focused on best practices to prevent and detect fraud and on the technology that can help municipalities in this area. It is important for the Administration, with support from the Council, to explore this technology and to put it in place as an internal control procedure.
Another seminar looked at performance measurement techniques as a way to compare municipalities. There is proposed legislation that includes a mandate to develop benchmarking standards that would be used in distributing certain state aid to municipalities on the basis of comparative data. Municipalities were encouraged to establish benchmarks and to implement a system of performance measurement. However, it is important for municipalities to work with the public when establishing benchmarks so that the established benchmarks would be suitable to them. This is something that we desperately need in Plainfield.
As for the 2010 budget process, presenters focused on the need to significantly increase local revenues and reduce expenses in view of dwindling state aid and the rising costs of municipal services. Municipalities were encouraged to establish significantly new recurring user fees, explore shared services, transfer whole departments to the county, demote employees and reduce working hours.
Maplewood implemented 12 furlough days in the summer for non public safety employees. City Manager Al Greco of Clifton reported eliminating 10 unfunded police positions, police demotions, implementing a wage freeze for non union employees, increasing the co-pay for prescription benefits so as to encourage the use of generics, a 10% cut in Mayoral and Council pay, and the give-back of days to the city by members of his police department. He reported eliminating 102 positions in the last budget year.
What is very clear to me, and should be clear to all, is that in these very tough times elected officials must be willing to make some very hard and painful decisions. This is not an easy task but it is a necessary one. It requires leadership by example and sacrifice on every level, in every department, and from top to bottom. Property owners must also be willing to do with less of the non-essential services. What are these services? The answer to this question can only be decided after input from residents.
Here in Plainfield, what must we, the Administration, the Council, and other employees be willing to do? Here are some suggestions:
1) Implement temporary layoffs by closing entire departments for one day per week, one day per month or two days per month. This should be done if there is no desire on the part of unions to contribute to the cost of health benefits or to give back days by way of furloughs. This might also be a way to prevent layoffs. This does not require consent from the collective bargaining units.
2) Since furloughs won't work for Police and Fire, they should be willing to give up some of their accumulated absences, contribute to their health benefits, and reduce their longevity percentages. These are some of the things our public safety employees should be willing to do in order to avoid layoffs within their units.
3) Health benefits for all future elected and appointed officals within the City of Plainfield should come to an end, by legislation, within the first 100 days of 2010. Plainfield's mayor, city council, and appointed commissioners all serve on a part-time basis and yet receive full benefits. This is a situation that, statewide, has been partly responsible for the huge financial hole we find ourselves in. No It must come to an end. However, elected and appointed officials in office on January 01, 2010 should be given "grandfather" rights in order to ensure support for such legislation. Additionally, elected and appointed officials receiving these health benefits should contribute 1.5% of their salary to their costs.
4) Since early retirement incentives (ERI) are illegal (I don't know how Newark was able to do it a couple years ago), the Council should pass a resolution in early 2010 requesting the state legislature to create the necessary legislation that would make ERI legal. We should solicit early support from our 22nd Legislative District elected officials (Senator Scutari, Assemblyman Jerry Green, and Assemblywoman Linda Stender). This is one sure way to reduce the cost of government.
5) I will be seeking the support of my colleagues to add money to the council's budget for the purpose of conducting a forensic audit of the city's financial operations.
6) I will be seeking support from my colleagues for a resolution to return Route 28, a state highway, back to the state so as to relieve Plainfield's taxpayers of the burden of maintaining this state highway.
7) Finally, it is time to do away with longevity in all union contracts. There is no longer a need to offer longevity as an incentive to attract and retain employees. The time to end longevity has come.
These are some of the ideas that I will champion during the budget deliberation process and in the coming year. I encourage your thoughtful feedback.