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Feeding Audrey

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Seymour Krelhorn.gifMayor Nutter is beginning to look more and more like Seymour Krelborn.

Does the name ring a bell?

Seymour was the nerdy floral clerk in the musical Little Shop of Horrors who had the great misfortune to come into possession of a Venus fly-trap-like plant that he named Audrey II.

As he later found out, Audrey had an insatiable appetite for human blood, which forced Seymour into a desperate search to find, um, food to feed it. As Audrey grew, her demands grew until the plant consumed poor Seymour himself and (in the original Broadway production) headed into the theater to eat the audience.

Of course, the mayor did his best not to sound like poor Seymour when he presented his budget for fiscal 2011-12 to City Council this week.  He was -- as he often is -- upbeat about the city's present and its future.

He put some lip-gloss on the budget, but the document is basically a Plain-Jane, stand-pat proposal.  There are a few modest initiatives -- a new police cadet class, money to complete the botched reassessment of property values -- but basically it freezes most city spending at current levels.

Except, of course, for Audrey.

 As the Mayor's Five-Year Plan explains, the city paid $220 million towards its employee pension fund in 2000. By 2009, it had increased to $459 million. This year, it is $492 million.  In FY 2012 it will rise to $554 million and in FY 2013 it will be $661 million.

Despite pumping this blood -- I mean, money -- into the fund, it is still not enough to meet its obligations to current and future city retirees.

As Sam Katz pointed out in a recent column for The Philly Post, for every dollar the fund will owe retirees it only has 45 cents on hand.  The difference between what we owe and what we have is called the accrued unfunded liability.

And guess who will have to make up the difference? We do. The taxpayers --also known as Audrey's dinner.  

This is not new.  In fact, the story over the last decade in city government has been to strip money away from the budgets of city departments in order to feed Audrey.

"The situation is untenable and unsustainable," is the way the Mayor's Five-year Plan puts it. "More and more city resources go toward paying pension costs and cannot be used to provide services."

I'll say.

This chart shows trends in city spending over the last decade. To summarize, in order to feed Audrey, we have had to cannibalize the city's capacity to deliver services.increases-decreases.jpg 

Here's another set of numbers.  In 2001, 17 cents of every dollar in the city budget went to pay employee benefits. Today, it is 26 cents.  Two years from now, it will equal 32 cents.

Untenable and unsustainable.

On another front, there are health and welfare costs. The administration is convinced it can lower these costs by negotiating a new payment structure with city unions -- and by getting them to self-insure for health costs, as opposed to using third-party providers.

As a consequence, it is showing little or no increases in H&W in coming years.  And it has budgeted zero percent for wage increases, at least for non-uniformed city employees.

That savings is easy to put down on paper in the budget document, but harder to get in real life in real contact negotiations.

Most city employees have gone without a contract for three years.  Somehow I don't see them sitting down at the table now and making concessions on wages, health and pension benefits. 

So, the "savings" projected by the city, while not quite illusory are certainly theoretical.

This is not new either, but there is a twist in the plot.  The five-member Pennsylvania Intergovernmental Cooperation Authority (aka PICA), the state agency that oversees the city budget, has changed. Member and Chair Jim Eisenhower exited and to fill that vacancy Gov. Corbett named Sam Katz, the author of the abovementioned piece on the pension situation.

So, Seymour -- I mean, Mayor Nutter -- is going to have to convince PICA that he is doing his best to tame Audrey and get her to join Weight Watchers.

Something tells me Audrey won't like that.

Life is going to get hard in our Little Shop of Horrors.

 

-- Tom Ferrick

 

 

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