Longview council calls for bond election to settle firefighters’ pension fund | Local News
Longview residents will vote in May on whether the city should borrow $45.6 million to help settle unfunded debts in the Longview firefighters relief and retirement fund.
Longview City Council voted unanimously on Tuesday to set the election for May 7 at the same time as the council election. District 2 Councilman Nona Snoddy and District 5 Councilor David Wright were absent from the meeting, with Mayor Andy Mack saying Wright was absent due to a medical emergency.
If approved, city officials said the debt would be repaid in part through an estimated 2-cent tax rate increase. The current tax rate is 55.89 cents per $100 of assessment. The Town of Longview said the higher tax rate would result in a $33.37 increase in taxes paid on the average home of $166,867 in Longview with a homestead exemption.
The debt would also be partially paid with a change in how the town of Longview distributes the money it contributes to firefighters’ pensions. The city contributes the equivalent of 19% of firefighters’ salaries to the pension fund. Part of this sum would rather be devoted to the reimbursement of the deposit. Fire department personnel also contribute to the pension fund.
Council members began discussing the firefighters’ unfunded pension liabilities in the fall and the state’s requirements to address them. The council hired a consultant to assess the fund for the city. The pension board was already working with its own consultant.
The city consultant said the fund had $49.4 million in assets, with funding liabilities of more than $117.7 million. Kolby Beckham, chairman of the pension board, said the unfunded liability was $70.6 million. The consultant also said the pension plan is expected to run out of money over the next 20 years if unfunded liabilities are not resolved.
The consultant recommended that the city borrow money to bring the plan into line with state requirements for the pension fund.
“Over the past decade, the Town of Longview and Fire Pension members have taken progressive steps to narrow the gap between pension assets and liabilities,” the town’s information said. “Through these steps, the pension obligations of new firefighters are fully funded. However, there is still a funding shortfall known as the unfunded accrual, which is primarily associated with existing retirees and long-serving firefighters.
Council members didn’t have much to say ahead of their vote on Thursday, with District 6 Councilman Steve Pirtle saying he’d be ‘dropped’ if he did anything that could endanger the cover provided by firefighters by voting against the bond referendum.
“I thought about that a lot. I really need it, ”he said, adding that he had to think of the people who need the fire services. In addition, he noted that the city had promised pension fund benefits to fire department personnel for decades.
“Whether I like it or not, I have to respect that and vote for what we have to do,” he said.
At Thursday’s meeting, former councilman Tommy Finklea spoke out against the bond proposal.
He asked council members if their constituents could afford a tax rate increase and replied that the answer was “no”.
“Let’s have the city staff withdraw the money, find the money in the budget and pay as you go and don’t call the bond at this time because we’re having a hard time putting our wants ahead of ours. needs,” Finklea said.
Beckham said firefighters appreciate the council’s decision to move forward and let Longview residents decide the matter.
Current interest rates provide a “unique opportunity” to issue debt, noting that Longview ISD made a similar move to call a school bond election.
“It’s an opportunity to do things that you wouldn’t normally be able to do,” Beckham said. “It’s not a wish… It’s something we already have to and we’re going to have to…
He asked voters to be willing to support serving and retired members of the Longview Fire Department, which also operates the town’s ambulance service, with their financial support through their tax dollars.
Beckham said it will “secure that retirement for people who have already retired and future retirees. It’s a great tool to help us recruit new firefighters, who will continue to serve the citizens of Longview going forward.
“The sooner we can right the ship, the cheaper it will be to right the ship,” Beckham said.
Earlier Thursday, the pension board met to review the fund’s investments with the company it hired in 2017 to oversee them, Robert Harrell Inc. That review showed a return of more than 4% in 2021, by more than 10% in 2020 and by nearly 16.5%. in 2019, taking inflation into account.
The pension board also voted to approve a memorandum of understanding with the city council which Beckham said would prevent future changes to the benefits offered by the pension scheme. He pointed to changes made in 1999 to increase benefits that contributed to the unfunded liability today. These changes, he said, were in line with legal requirements at the time and noted that the fund was then approaching 100% funded.
These changes were followed by the bursting of the tech market bubble and then 9/11.
“It really broke things down,” he said.
The MOU requires “stricter windows” for when changes to the plan can be made based on its unfunded liabilities and requires three consecutive years of actuarial studies to assess the fund and determine whether “improvements in the diet” can be made.