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Opposition doesn't prevent OPEB funding approval at Town Meeting

Date: 5/15/2012

May 14, 2012

By Chris Maza

chrism@thereminder.com

LONGMEADOW — Residents approved the transfer of more than $250,000 to the Other Post Employment Liability Trust Fund at the Annual Town Meeting on May 8, but it wasn't without some resistance.

Article 27 of the warrant requested the transfer of $258,464 to the fund from the treasury, water, sewer and solid waste retained earnings and the ambulance fund.

The fund, which was initially set up at the May 2010 Annual Town Meeting, was established as a way to address an unfunded liability of up to $40 million in benefits given to town retirees.

"We have a liability, depending on the funding mechanism, that ranges from $20 million to $40 million on this issue," Finance Director Paul Pasterczyk said. "Proper funding of this as determined by the actuarial group would require an additional $1.1 million out of the town budget to properly fund this over a 30 year period.

"There is a debate about how to fund this — is it a pay-as-you-go system, which we are currently doing, as opposed to putting aside some amount of money, not necessarily the amount that the actuarial study recommended, to address this issue in the future," he continued.

At the time of its creation, a sum of $150,000 was appropriated into the account, which had a balance of $153,469 as of the Annual Town Meeting. With the approval of the transfer, the fund's balance now stands at $411,933.

While the finance committee recommended the article, committee member Richard Liasse spoke against it at the meeting.

"I object to this not because it doesn't have to be done. It has to be done in some way, shape or form. I think that support for this is recognition that this is an encumbrance to the town that is so great, we have to do something to start off and take care of it, but this is not that something," he said. "Every so often you'll see or read about a water main break someplace ... You never see anybody in their right mind start to fill in that sink hole until they shut off the water. This is what this thing does."

Liasse also pointed out that the $250,000 could be used to fund capital projects that the town otherwise needs to borrow money to complete.

"This $250,000 would take care of about 80 percent or more of [the cost of projects approved in Article 12 of the warrant] without encumbering the town for additional money," he said.

Liasse also criticized the sources of the transfer.

"You hear the term free cash, well there's no such thing as free cash. Those are your tax dollars that are appropriated to some project and returned to the town," he said. "If you look at all the problems we have with our water system and our sewer system, I don't think we should be taking money out of those areas to put into a sink hole. Also, that ambulance fund is to run our ambulance service, not to go into a debt of the town."

Resident Lawrence Starr questioned the effectiveness of throwing $250,000 at a multi-million problem.

"If we stop today having anybody take additional benefits, we'll have a $40 million bill that will come due. This is a big problem that is going to have to be solved at a greater level than just the town level," he said. "This gives us $400,000 on a $20 million [bill], at the lowest level, liability and that will have, really, no affect. The question we have to ask is: Would this $250,000 be better used for other things?"

Residents also approved a level town budget of $56.3 million for fiscal year 2013.

The original budget printed in the warrant was $56.2 million, however, two new collective bargaining agreements boosted that number by $104,669. A new agreement with School Department employees reflected $75,000 of the increase, while the new Fire Department contracts made up the remaining $29,669.

Residents also approved the spending of $890,000 for clean up related to the Oct. 29, 2011 snowstorm.

Select Board Chair Mark Gold explained that $790,000 of that money would be used to pay off the estimated $2.8 million the town would be on the hook for after receiving 75 percent reimbursement of the storm's $12 million total cost from the Federal Emergency Management Agency.

The remaining $100,000 would go toward the interest associated with the borrowing the town did to complete the clean up.

A host of capital projects were also approved, including road reconstruction and paving at a cost of $300,000 and sidewalk replacement with a price tag of $125,000.

A total of $297,750 will be transferred for 10 projects, including some school construction and improvement projects and the improvement of wireless systems in town buildings.

An additional $872,048 was approved to be spent from real estate tax revenues for 11 other ventures, including the road and sidewalk projects, three new pick up trucks and guardrail replacement.



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