Councilman requests finance committee be sacked
According to District 1 Councilmember Marty McClain, you can’t have an FAC without the FACts. Therefore, there’s no reason to have one.
That was his view of a presentation brought forth by Financial Advisory Committee Chairman Don McKiernan during Monday’s Cape Coral City Council workshop at City Hall.
McKiernan made a presentation regarding the city pension and the Other Post-Employment Benefits and how, according to the FAC, they threaten to blow open the future city budget.
McClain took exception to McKiernan’s gloomy forecast, calling it partisan politics before making a promise.
“In two weeks, I’m going to bring up the disbandment of the FAC. There’s too much going on that’s not adding up,” McClain said.
After the exchange, McKiernan took things in stride.
“That’s politics. We did a study to verify returns now and in the future. The city is moving toward doing its own study,” McKiernan said. “We want to impress on them to study where Cape Coral can make adjustments.”
McClain said the FAC has been shouting about doomsday for two years when it isn’t true.
“They are here to inform us of the pros and cons. Not just one side,” McClain said. “It’s not the first time they’ve come to us with fiction or incomplete information.”
McKiernan told the council the city’s pension liabilities face the same problems as most pension plans nationwide the economy has led to pensions that cannot keep up with the expected rate of return.
“The problem with the pension plans began with the economy. Every plan in the country faces the same problem as Cape Coral,” McKiernan said.
He showed figures that he said show that from 2003-10 the annual required pension contribution to the city jumped nearly fivefold, from $3.7 million to $18.37 million, and that the unfunded actuarially accrued liability went from $10.74 million to $176.53 million, a 16-fold increase.
McKiernan said the boom days of the stock market from 1980-2000 were ancient history and it is time to lower their expectations.
“You haven’t made (an 8 percent return) in 10 years,” McKiernan said. “70 percent of retirement benefits come from the discount rate. You must make 8 percent compounded to make benefits. That’s unrealistic.”
Victoria Bateman, financial services director, threw up her hands in frustration when she reached the podium.
“I deal with facts and figures, not politics,” Bateman said. “People are assuming we’re like Rhode Island when it comes to pensions, and I’m frustrated to be having this discussion again.”
It was a sentiment echoed by many on the council.
“I call it ‘Chicken Little Management.’ The sky is falling. It’s hurting our city, and I’m sick of it,” Mayor Pro-Tem Kevin McGrail said. “It’s not the tail wagging the dog. It’s the tail beating the dog to death.”
District 2 Councilmember John Carioscia took it one step further with his exchange to KcKiernan.
“You gave us 40 minutes of doom and gloom. You’re either incompetent or have an agenda,” Carioscia said. “And if you do, we should ask for your resignation.”
“I’m glad you never got me in an interrogation room,” McKiernan joked to the former police officer.
“If we did you would have told the truth,” Carioscia deadpanned.
But it was McClain who fired the ultimate salvo.
“Revenues increased $8.3 million and expenses increased $3.2 million. Otherwise, we wouldn’t have the credit rating we have, not only getting lending but at the lowest rate,” McClain said before making his threat to the FAC.
McKiernan did have an ally in Mayor John Sullivan.
“How could anyone expect the market to be the same the next 20 years when the fundamentals have changed?” Sullivan asked. “Things have never been so bleak. Unless things change, we can’t continue for the next generation.”