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Longboat Key Wednesday, Nov. 28, 2012 5 years ago

Our View: Firefighters' delusion


The government has nothing of its own to give, for it is not a producer of wealth. In granting one citizen a special advantage, it automatically creates a disadvantage for other citizens …

It is obvious that in handing out special privileges, the government is doing what it ought not to do; it is using its power not for the purpose of dispensing justice, but for the purpose of creating injustice.
Frank Chodorov
“The Income Tax: Root of All Evil”

That passage from Chodorov’s 1954 classic — recommended reading for all, by the way — came to mind in the course of digesting yet another news story this past week on the never-ending story of Longboat Key’s pension negotiations with the International Association of Fire Fighters, Chapter 2546.

Thanks to this tiring saga, Longboat Key Town Manager David Bullock recently graded his first-year performance with a “C.” He had hoped to have this matter resolved by now.

Welcome to Longboat Key and dealing with the mostly intransigent Suncoast Professional Firefighters and Paramedics of IAFF 2546. The organization’s leaders, and presumably its members, continue to cling to the delusion that union members deserve to keep what they have, namely a defined-benefit pension plan.

This is the type of plan that guarantees a set rate of income regardless of how the pension fund’s investments perform, the very type of plan that obligated Longboat Key taxpayers to pay more than $24 million in unfunded future pension liabilities.

But the union is willing to compromise. Instead of the town operating the pension plan, the firefighters want to switch to the state’s public employee Florida Retirement System — another defined benefit plan that still would leave Longboat Key taxpayers at risk and at the mercy of the Legislature.

Apparently they’re serious. And delerious.

Those days are over. Taxpayers all over the United States have caught on to their mistakes — of giving public-union employees more than taxpayers will ever be able to afford. And, indeed, just about every day we all read and watch our future out on the Left Coast, where the number of cities filing for bankruptcy spreads. Last month, David Kotok, chief investment officer at Sarasota-based Cumberland Advisors, was quoted telling the State and Municipal Finance Conference attendees in New York: “In California, we have a disease, and the disease is spreading.”

Longboat Key and most of Florida’s cities are nowhere near the predicaments of California municipalities (although the city of Sarasota would qualify as one of the weakest in our state). Still, the town’s unfunded pension liabilities, and having no hope of reducing them to a manageable amount, are cause for dramatic change. We can’t keep doing the same thing and expect different results.

That’s why the firefighters’ union idea of shifting the town’s firefighters into the state-run, defined-benefit plan should be a non-starter. Longboat Key citizens don’t want the town to be in the pension-management and pension-risk businesses. The town has proven it’s no good at it.

Those tasks should fall on the responsibility of individual employees — just as they do in the private sector, where individuals manage their pensions in 401k/defined contribution plans. In defined contribution plans, there are no guarantees, no risk of unfunded liabilities.

To that end, Town Manager Bullock has offered a great package. It would freeze and guarantee what firefighters have earned up to this point (and they should consider that a plus). It also would shift the union members out of a defined-contribution, guaranteed pension plan into a 401(a), the equivalent of a self-managed 401(k) plan in the private sector.

If you read through Bullock’s proposal above, you easily should reach the conclusion that what he is offering is as good as and probably better than what many of this region’s small businesses offer their employees. Rare is the small business around here that offers to contribute 10% of every employee’s base pay into employees’ 401(k), much less the small businesses that are able to contribute 13%!

From the union’s perspective, Bullock’s plan won’t cut it. The union wants to negotiate more, apparently intent on holding its outmoded, high-risk defined-benefit pensions now and into the future.

Bullock and the town shouldn’t budge. All town employees should be shifted to 401(k)-style, defined contribution models.

As all municipalities have learned, defined-benefit pension plans did little in the way of dispensing justice and did what government largesse always does — created injustice, benefited a few at the expense of the many.

• All benefits in the current fire pension plan would be frozen.
• All employees keep all vested benefits
• No new benefits would accrue beyond the date the plan is frozen.
• Employees hired after the date the plan is frozen would not be eligible to participate in the Chapter 175 defined benefit “frozen” plan.
• The freezing of the Chapter 175 defined benefit plan would have no impact on the retirees or employees who retire before the plan is frozen.
• A new defined contribution retirement account is established for every employee in the bargaining unit.
• The town would contribute 10% of the fire employee’s base salary.
• There would be a mandatory employee contribution of 3% to the 401 (a) plan.
• The town would match the next 3% of employee contribution dollar for dollar.
• Maximum town contribution is 13%
• Employees may contribute up to the maximum legal limit.
• The town will continue to pay Social Security for the employee.
• Vesting in the town’s contribution would be 100% after five (5) years of continuous service.
• Current employees would receive past service credit toward the five-year vesting requirement.
• If an employee leaves before five (5) years, he would get all of his contributions back, including interest, and can take it with him/her when they go to work for another employer or cash it in and pay the required penalties.
• Employees would control the investments of their accounts by selecting from a wide range of funds.
• If the employee leaves who is fully vested, the entire amount, including all town contributions and interest, are under the employee’s control in accordance with applicable law.
• Since the mandatory contribution for the plan is lower (3% instead of 10%), employees who make only the mandatory contribution will see an increase in their pay.
• The balance in the employee’s account upon death is inheritable by the employee’s beneficiaries.
Source: Town of Longboat Key
Business owners know that anyone whose business has survived, prospered and persevered for 45 years has achieved a noteworthy accomplishment.

And to do that in a family business in which the family has stayed together is noteworthy on an even higher level.

So we heartily congratulate the Moore family for reaching both of those achievements this month — successfully owning and operating Moore’s Stone Crab Restaurant at the end of Broadway on north Longboat Key for 45 years.

Those are two milestones over which to crack a mound of cold stone crabs.

When we saw Alan Moore last week, he reminisced about how he and his brother, Paul, used to stand on crates to wash the dishes when they were 8 and 9. Their father said he would pay them 50 cents an hour.

Knowing even then how family members don’t always get paid as well as others in the business, Alan says that whenever the clock struck 12, he and Paul would walk out of the kitchen, track down their father, hold out their hands and say: “Where’s our 50 cents?”


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