City Council approves 2019-20 spending plan, but with flaws
Jeremy M. Lazarus | 5/18/2019, 6 a.m.
Another $3 million came from approving 1st District Councilman Andreas Addison’s idea of offering incentives to get some of the 200 city workers who are eligible for retirement to leave so they could be replaced by newer, lower-paid workers.
The only problem is the impact that proposal will have on the city’s struggling pension plan.
In 2014, City Council approved a similar, two-year plan with the goal of generating $6 million in salary savings. The plan generated only about $3.5 million over the two years after about 132 employees retired, but it cost the city’s pension plan $15 million, according to Leo Griffin, executive director of the Richmond Retirement System.
The city is spending about $790,000 a year to repay that cost, a bill that will take 20 years to pay off, he said.
Mr. Griffin said the RRS, which has assets of about $744 million, was not asked to evaluate the cost of the new plan, but he said he expects the assets of the system will take another hit with the latest program.
The new program comes at a time when the system is paring its expectations for investment returns, Mr. Griffin said, and also changing its mortality projections to reflect that retirees are living longer.
In a briefing for City Council on May 6, Mr. Griffin indicated the change is expected to drop the funded status of the system’s major benefit program from 65 percent to 60 percent, requiring the city to pay more in support each year as RRS seeks to reach a healthy level of funding, which is regarded as 80 percent to 90 percent.
That is bad news for city retirees, who have not received a cost of living increase in at least a decade, and who have previously been told that such a COLA would depend on the system reaching at least an 80 percent funded status.
Meanwhile, the council avoided taking steps to deal with the huge deferred maintenance issue the city faces.
For example, the council followed Mayor Stoney’s lead and provided $19 million for replacing roofs, boilers and air conditioning systems and dealing with other problems in the city’s aging schools.
But that was just for the 2019-20 school year, and the amount is far short of the $95 million the School Board projected is needed. Through 2024, the mayor proposed and council approved spending $4 million in the 2020-21 budget year for maintenance, $3 million in the 2021-22 budget year, $2.5 million in the 2022-23 budget year and nothing in the 2023-24 budget year.
In addition, as the mayor promised, he outlined a plan to spend an additional $650 million on new school construction through 2040, but that plan does not include money for maintenance of school buildings.
The street paving program follows a similar pattern. Bobby Vincent, director of the Public Works Department, has outlined a need for a minimum of $110 million to resurface the city’s streets and a need for $225 million to overhaul the streets’ fabric.
Council endorsed the mayor’s plan to provide $15 million in the 2019-20 fiscal year and also endorsed the mayor’s plan to cut that spending in each of the following four budget years to about $5 million a year.
And that doesn’t count a host of other capital improvement projects that are unfunded. For example, Fire Chief Melvin Carter hoped to get a start on planning to replace outdated fire stations, only to see most of the money stripped away so that the council could use it to balance the 2019-20 budget.
Councilman Michael J. Jones, 9th District, acknowledged as he reviewed council’s budget that “once again, we’ve kicked the can down the road” when it comes to dealing with maintenance and capital improvements. In his view, the council needs to come to grips with that problem.