The Unfunded Pension Liability
“Mayors don’t spend a minute thinking about the unfunded pension liabilities,” said a former mayor about Everett’s unfunded pension liability.
As of this writing, Everett’s unfunded pension liability stands at $118 million, a tidy sum of money even in a smaller city allegedly awash in casino dollars.
“It is simply paid out of operating funds as part of the budget every year. There’s nothing to worry about,” added the former mayor.
Is there nothing to worry about or not?
We wonder how the city’s Chief Financial Officer Eric Demas and his boss the mayor might consider a $118 million owe by the city as having no meaning on its financial well- being or otherwise?
We wonder as well how approximately 1,000 Everett city employees past and present, retired or still working might feel if a year came by and the city couldn’t afford to take the pension money out of the budget?
How would that go down, we wonder?
What happens if there is not enough money in the city treasury to pay our retirees in a given pay cycle?
Can’t happen?
Won’t ever happen?
An impossibility?
When everything crashed in 2007-2008, huge private pensions and giant companies were swept away.
The entire economy of the United States nearly tanked. Some municipalities went broke.
Does the city owe our employees paying into the pension system and those already collecting or do we not?
Is the $118 million unfunded pension liability real or imagined?
What do we say to those cities and towns whose unfunded pension liabilities are much lower than ours, that is, the cities and towns that owe far less than we do?
Are they being foolish because it doesn’t matter? Hardly.
Lower unfunded pension liabilities, lower by the many millions means it costs less for those cities and towns to meet their pension requirements every year out of the budget. Is an unfunded pension account down by about $118 million just a blip on the city’s flawless economic structure or is it about the structure of the city’s finances itself?
How is it an unfunded $118 million liability has no effect on the city’s bond rating?
How, we wonder, does Mr. Demas or anyone in a similar position, dismiss owing $118 million to the city’s employees for their pensions and do it with straight face, and then tells them: “Don’t worry about it. It doesn’t mean anything.”
When the School Department needed an additional $5 million because its budget was underfunded, Mr. Demas was reluctant to aid the city’s school kids at first blush because his boss, the mayor, told him not to.
On second blush, we wonder why a mere $5 million might matter when we’re behind $118 million for the city’s pension fund?
The bond rating was going to be effected by the $5 million.
The -$118 million doesn’t matter but $5 million does. Is this what Mr. Demas was asserting?
We begin to wonder if the leadership at city hall has even the slightest idea about what they are doing with the city’s money?
Why wouldn’t the mayor and Mr. Demas toss an extra few million at the unfunded liability every quarter until the city’s unfunded pension liability came down to a reasonable place? Bottom line, how does the city tally its cash position when a $118 million negative blip doesn’t matter but a $5 million blip supposedly does?
What special accounting practice allows the city’s -$118 million owe not to count on the balance sheet?
The Mayor, State Rep. Race
As of this writing, the mayor has been largely absent from city hall for about three weeks. This week marks the fourth week and he’s apparently away again.
As an old friend used to say to me, “How do you go on vacation when you’re on vacation?”
Mind you, it is likely better for everyone at city hall when the mayor isn’t there.
We are told he will be back doing whatever it is he does around the fourth of September.
“He doesn’t work during the summer months,” said a friend of the mayor.
How would the summer be any different for the mayor’s work ethic than the other seasons of the year, we are led to wonder?
Things are beginning to change for the mayor.
The city is a different place than it was ten years ago when he first got elected mayor.
There are new businesses, new players, new developments. It is hard to control an entirely new environment.
Most cities like Everett change from decade to decade dramatically and during ve year periods less dramatically.
The population is always in a state of change here – and again – everything about the city is different than it was ten years ago.
During that time the mayor has made his share of friends but he’s also made his share of enemies.
No one tells the mayor to his face they are not with him. That type of honesty just doesn’t work in the small city. We feel sorry for those who work inside city hall who must
always give the salute to the mayor as if to say, “I am with you.”
That is a hard act to follow from day-to-day and from year to year.
The voting demographic here is entirely changed during the past ten years.
The old families have either already moved out or are moving out – and this means the old voting demographic is shot.
The older folks who vote are leaving or dying off.
The younger generation growing up and living here don’t vote with the consistency of the old timers. In fact, many new Everett residents don’t register and they don’t vote.
What we are seeing is what the mayor sees when he drives around the city – a place and a people he is coming not to recognize.
Watching the rep race and how it is shaking out is symptomatic of how changed the city is.
There is the likelihood that only 3000-3400 men and women will come out and cast a vote in the primary.
It is believed by those who follow the local voting scene that 1400 votes is enough to win.
In the Everett of 20 years ago, these voting numbers would be almost double what they will be on September 4.
For Stat Smith, Gerly Adrien and the rep, pulling out the demographic – that is – getting out their vote is all that matters.
The first candidate to score 1400 votes likely wins.
And we repeat, the candidate working hardest and smartest should come out the winner in the rep race.
This is a race the mayor is watching. It is a bell weather of things to come. Nothing remains the same forever.
What Happens to the Lottery When the Casino Opens?
Many small store keepers here in Everett are all just a bit apprehensive, and rightfully so, when they think about what is going to happen when the casino opens In Everett.
Lottery sales were down in Everett last year but they have apparently been edging upward again during the summer months.
The general feeling among those who don’t really know is that Lottery sales fall when a casino opens.
This is not the case, at least not in Massachusetts, and not in Plainville, where the Massachusetts slots parlor Plainridge has had absolutely no effect on Lottery sales.
In fact, a state funded study released late in 2017 found that Lottery sale revenues grew slower in communities around the slots parlor in Plainridge than the rest of the state but increased significantly in the town of Plainville.
What does this portend for Everett?
Not much is going to change about Lottery sales here despite the opening of the casino next June.