In addition the cost of providing retiree health benefits is increasing. This is leaving the healthcare trust underfunded (VEBA)
The problem: The County must budget an additional $5 million contribution to the pension plan and health benefits plan in the next 4 years and for several years thereafter until some of the retirees die and reduce the amount the County must contribute.
The County has a $200 million budget but about 60% of the budget is spent on mandatory programs that cannot be cut. The County administrator estimates that she would need to cut about 70 people from the budget in order to cut $5 million. It may be argued that not all of the cuts need to be from personnel but this is the figure that the administrator has given the County Commissioners.
The proposed solution: The County Commissioners are set to approve, at their July 10, 2013 meeting, the issuing of $345 million in unsecured bonds, which will cost an additional $239 million in interest over the next 25 years. Most of the money will be invested in the stock market with the hope that it will make enough income to pay at least the interest on the debt.
The new State law allows the Commissioners to issue this huge new debt without a vote of the citizens of Washtenaw County. The County Commissioners are rushing through the approval because they want to be able to issue the new debt before December 31, 2013 so that they can use it to fund the 2014 budget and to take advantage of current low interest rates.
The voters can have a say only if we can gather 15,000 signatures from registered voters in Washtenaw County to put the question on the February 2014 ballot.
The proposed resolution
What will the interest rate be on the bonds?
What is the County’s history of returns on their investments?
Are there alternatives to borrowing $345 million?
A Video Timeline of the Discussions of the Retirement Bonding
Issue by the Washtenaw County Board of Commissioners
We successfully recruited many new volunteers for the petition drive and made connections to other non-profit organizations who may help with the petition drive. Special thanks goes to Donald Salberg (pictured), Shawn Letwin, John Klink, Joseph Miriani, and Ken Warner who helped staff the booth.