Honoring Promises while Preserving the Future

I and my opponents had our first and only round of televised debates last Thursday on NewTV.  Over the course of an hour we were able to just scratch the surface of a variety of issues.  We didn't hit everything that has been in the City’s awareness over the past few years, nor were we really able to get into a lot of depth.  However, the voters did get a chance to begin to see how each of the three of us approach problems, understand our experience and strengths, and also perhaps a little bit about our values and priorities.

We also got the chance to ask our fellow candidates a question of our choosing.  Since we have already gotten the chance to discuss affordable housing, schools, and zoning, I suggested that we needed to discuss the City’s unfunded retirement and OPEB liabilities.

One item that I have not covered much in this blog is the financial issue the City faces regarding “OPEB” (other post-employment benefits) and other retirement liabilities.  Put simply, these pensions and other benefits represent a significant un- or underfunded liability hanging over the City’s balance sheet.  At latest estimate, Newton’s unfunded liability is somewhat north of $600 million.  To put this in perspective, the City’s entire annual municipal budget is slightly more than $300 million.

One commentator on another blog noted that I had asked the question, but – as a result – did not get a chance to answer.  I replied back to him as follows:

“The OPEB question is a difficult one, but not – I think – unsolvable. First, we should remember that the benefits in question are due to real people and promises that we as the City made over time. These we need to honor. We also need to remember that many of these obligations were made due to state requirements and as such we need the Commonwealth to be part of the solution.

I am a board member at MassEcon and we recently had the benefit of speaking with Michael Widmer of the Massachusetts Taxpayer Association. I asked him directly about Beacon Hill’s efforts to address OPEB and other such requirements. He said that the legislature has made a commitment to fully fund their own side of the liabilities by 2040. Clearly, there’s more work to do here.

It is important to note that time is a factor in OPEB. Compounding means that the more we address the problem today, the less of a factor it becomes in future. Conversely, the less we address it now, the problem becomes geometrically worse over time.

I propose that we need an approach that does three things: Address the statewide issue through serious work with Rep Balser, Rep Khan, and Sen Creem; reserve aggressively against our liabilities; and look for fair ways to share the health and retirement liability with future employees.

If I remember correctly, both Needham and Wellesley have successfully reserved against their OPEB liabilities. While granting that their budgets are vastly different from our own, I suspect it would be useful to at least look at how they went through their planning process.”

We have a lot that we want to accomplish as a community.  In order to do so, we must be careful steward of our financial resources and not foolishly grow liabilities which we have no means to repay.  However, at the same time, we need to remember the promises we made to those who served our City.

Chris Steele is running for the city-wide office of Alderman at Large, Ward 5.  You can learn more at www.steele4newton.org or by contacting him at steelch@yahoo.com