Last night during the Warwick city council finance committee meeting, the question was asked as to how the new roof costing $102,000 at fire station #2 would be paid for. The answer was that the funds would come from an old voter approved bond from 2006 which is a "City Building /Roof Replacement Program" bond.
The question was then asked what line item in the budget reflects where the expenditures are being extracted from to cover the costs of the new roof. The answer was that it's not in the Warwick General Fund budget and the funding was being pulled from city bonds. No one from our city council finance committee or city leadership who was present at the time could explain the bond indebtedness breakdown and how, or where, it could be found.
The way it was eventually explained at the full city council meeting (later last night) is that the city refinances its debt to pay off old debt and take on new debt, and the payments for bonding pretty much remain constant or within budgeted amounts.
Basically, what's taking place in the city of Warwick is that we are taking on new debt, and bonding payments are remaining constant, because the city repeatedly increases taxes and depletes our savings account to balance the budget to make its debt payments.
A day later and a little more digging around, more financial answers lie in the City of Warwick Financial Statements With Independent Auditors' Report for the period and fiscal year ending June 30, 2014.
What's most interesting about this "auditors" report is that the city's financial statistical information that is documented on twenty pages in the report, wasn't even audited. (see pages 176-196)
City of Warwick Statistical Section, last 10 years, (UNAUDITED) :
How any auditing company hired to provide a comprehensive financial report on a municipality, that does not actually audit the statistical components, would make anyone who knows better question the validity and merit of any such auditing report.
Warwick is the second largest city in the state of R.I. and it looks like Cranston will be surpassing us in the not too distant future. No one knows the last time any municipal department in the city of Warwick was thoroughly audited.
Our city council briefly had an auditor, and she resigned a few months ago. There has been absolutely no further discussion regarding the replacement of the city council auditor position. Who is doing the checking and balancing? Not anyone at Warwick City Hall. As far as anyone is concerned, the city's true financial operating numbers are more like rabbits being pulled out of a hat.
Now back to how that $102,000 fire station roof will be paid for.
The question regarding how a new fire station #2 roof will be paid for, is by no means being asked to diminish the necessity of the fire station needing a new roof. It's being called into question because when BIDS come before the city council finance committee on a monthly basis, the public, as well as our city finance committee, should be able to understand how, and easily pinpoint where, our tax dollars are being utilized to cover any and all city expenses.
The charts below (from the auditors' report) show the ten year trend of our city's outstanding bonded debt (what we borrow), to be used to pay for certain projects and repairs throughout the city (like a new roof for fire station #2).
What's important to note is that though the total outstanding bond debt amount has decreased from 2005-2014, our city's taxable value of properties has also decreased by approximately $450 million, and our property tax rates have steadily and substantially increased. We're getting hit good also with automobile tax increases to try and make up for the loss on taxable property value. The increase in automobile tax revenue collected by the city is $219,018,721 more than it was ten years ago.
Think about that for a minute.
We are paying off our bonded (borrowed) debt with less available taxable properties, and yet those properties that can be taxed, are paying more in taxes, year after year, to pay off our debt.
In simplest terms, the less available to tax means those that can be taxed, will be taxed more and more, to keep paying off all of the city's operational costs and debt, i.e.: GO bonds, city vehicles (lease purchases), pensions, retiree healthcare, city principal debt and interest, city debt services costs, salaries, healthcare, COLA's, etc.
We also currently have a middle-of-the-road credit rating which includes a negative outlook by Moody's investors. As stated in the Moody's report, what could make our city's GO (general obligation) bond rating go down are:
So what do you think is going to happen to our GO (general obligation) bond credit rating in the future when we have a city leadership running the show that has been kicking the can down the road for the past sixteen years?
There is no doubt our city departments will need new roofs, new vehicles, new equipment, new everything at some given point in time and they have and will receive it all, at any given point in time... but there is a tipping point. What Warwick taxpayers do not see at any given point in time is a proactive, concerted effort by Warwick city leadership and its municipal departments getting their financial spending under control.
Warwick city leadership is essentially sabotaging the city's own economic growth capability by failing to address its very serious financial debt issues and inequities. This in turn will only continue to decrease the city's tax base. How is this an attractive financial climate for small businesses and families?
City leadership is also well aware of what the elephant in the room is that is drowning us financially. What cannot continue to happen is that our remaining tax base keeps carrying the short-end-of-the-stick financial burden. We know it will continue to close businesses, decrease school population size, and have more families leaving the city of Warwick.
Those who are paying attention to all of this also know where and how the dividing line has been etched in our city, and this has allowed for business-as-usual to carry on for far too long in Warwick. It has kept certain individuals employed and at the helm of certain leadership and municipal positions who are either not qualified, or not willing and/or capable of getting the job done fairly and efficiently.
Dividing and lying to the people is far from what good and honorable leadership represents, and it's all reflected in the numbers and the deteriorating, weed filled lots and run down vacant homes and buildings, slowly consuming the city of Warwick landscape.
Warwick is still long overdue for a thorough, fiscal auditing. I can't imagine what would be revealed.
"You cannot just keep borrowing more and more and keep spending more and more without eventually having a day of reckoning." ~Wilbur Ross
Rating Action: Moody's affirms Warwick, RI's GO Bonds at A1; outlook remains negative
Global Credit Research - 13 Oct 2015
$42M in rated debt affected
New York, October 13, 2015 -- Moody's Investors Service has affirmed the A1 rating on the City of Warwick, Rhode Island's general obligation (GO) debt. The rating outlook on the city's GO debt remains negative. Concurrently, we have affirmed the Aa3 rating on two Rhode Island Health and Educational Building Corporation (RIHEBC) pool financings that the city is a participant in: those relating to the Series 2010A and 2010G bonds.
SUMMARY RATING RATIONALE
The A1 reflects the city's large tax base with slightly above average wealth levels, manageable debt burden, large pension and OPEB liabilities and below average reserve levels. The rating also takes into account the city's underfunding of its actuarially required pension contributions for one of its public safety pension plans.
The Aa3 pooled financing rating incorporates Warwick's A1 GO rating and as well as the ratings of the other pool participants. RIHEBC's 2010A and 2010G bond issues are unenhanced pools and are rated using a 'weak link plus' approach. The rating also takes into account that a portion of debt service that is directly paid to RIHEBC by the state. Additionally, the ability to intercept certain state aid related to construction of school facilities was factored into the rating. The rating of the two other participants, Town of Westerly (Aa2) and Chariho Regional School District (Aa3) lift the pool rating above the lowest rating of A1.
The negative outlook on the city's GO debt reflects our expectation that the city's already narrow financial position will continue to be pressured, partly attributable to the settlement of commercial tax appeals in FY2015 and 2016. Further erosion of reserves from current levels will place strong downward pressure on the rating. The outlook also factors in the continued underfunding of the city's largest pension plan.
WHAT COULD MAKE THE RATING GO UP:
- Surplus operations resulting in increased reserves and liquidity
- Full funding of pension liability
WHAT COULD MAKE THE RATING GO DOWN
- Operating deficits resulting in declines in reserves and liquidity
- Weakening of tax base
- Growth in fixed (pension, debt service, & OPEB) costs
Warwick is the 2nd largest city in the state with a population of 81,971. The city is located about 12 miles south of downtown Providence (Baa1 stable).
The city's outstanding debt is secured by a general obligation unlimited tax pledge.
The Series 2010 A and 2010 G Bonds are special obligations of the Rhode Island Health and Educational Building Corporation (RIHEBC), secured solely by the loan payments from the pool's borrowers under their respective financing agreements. Loan repayments which are due under each financing agreement are scheduled to be sufficient to pay the borrower's proportionate share of the principal, sinking fund installments and redemption price of and interest on the Series 2010 A and Series 2010 G Bonds. From the bond proceeds, each borrower received a loan. Each borrower also privately placed its general obligation unlimited tax bond with RIHEBC. There is no cross collateralization or cross default, therefore no borrower is responsible for the loan repayments of any other borrower and default of one borrower will not constitute default of any other borrowers. The other two pool participants in each of the series is Chariho Regional School District (Aa3) and the Town of Westerly (Aa2). The City of Warwick's percentage participation in each series is roughly 31%.
Favorably, a portion of debt service is directly paid to RIHEBC by the state. Additionally, the ability to intercept certain state aid related to construction of school facilities was factored into the rating.
Wonderful news today! Your taxes won't be increasing, your healthcare and medical costs will decrease, and everyone is getting a COLA increase!
So many wish that were true.
The unfortunate reality is Social Security recipients will not be seeing a COLA increase in 2016, and this will be the third time this is happening in the past six years.
Social Security Cost-Of_living Adjustments since 2008:
January 2008 -- 2.3%
January 2009 -- 5.8%
January 2010 -- 0.0%
January 2011 -- 0.0%
January 2012 -- 3.6%
January 2013 -- 1.7%
January 2014 -- 1.5%
January 2015 -- 1.7%
January 2016 -- 0.0%
That's approximately 65 million retired and disabled workers, disabled veterans, federal retirees along with their spouses and children, collecting Social Security benefits every month in the United States. More than two-thirds of seniors depend on their Social Security benefits for more than half of their incomes.
"Social Security recipients have lost nearly a fourth of their buying power over the last 15 years, according to the Senior Citizens League. Consider: The cost of housing, often a retiree’s greatest expense, rose 44% since 2000; heating oil, 159%; eggs, 117%; and gasoline, 76%. In contrast, Social Security COLAs averaged just 2.2% per year since 2000, or just 36.3% overall." -Robert Powell, Special to USA TODAY, October 15,2015
According to the 2014 ANNUAL REPORT OF THE BOARD OF TRUSTEES OF THE FEDERAL OLD-AGE AND SURVIVORS INSURANCE AND FEDERAL DISABILITY INSURANCE TRUST FUNDS (OVERVIEW):
There's more bad news for Social Security recipients: a no COLA increase means higher medical costs, and who pays more? Those that made more.
Hold Harmless Rule
According to NOLO: "There is a special rule for Social Security recipients called the: hold harmless rule, that ensures Social Security checks will not decline from one year to the next because of increases in Medicare Part B premiums. The hold harmless rule applies to most, but not all, Social Security recipients. Most people who receive Social Security disability or retirement benefits and Medicare Part B (coverage for doctor visits) are eligible for protection under this rule. Whether this rule comes into play in a particular year depends on the amount of COLA and the Medicare Part B premium increase.
The hold harmless rule applies to all Social Security recipients except the wealthy (defined as those earning $85,000 for an individual or $170,000 for a married couple) and those who are receiving Medicare for the first year. In addition, there are low-income Medicare recipients whose Medicare premiums are paid by their state Medicaid agencies, and those premiums are not protected by the hold harmless provision.
The hold harmless rule also does not apply to the Medicare Part D (prescription drug) premium, but that program just started in 2006 and has not seen significant premium increases yet."
There are approximately 30% of Social Security beneficiaries that do not fall under this "hold harmless" umbrella. This amounts to roughly 7.5 million retirees.
There seems to be quite a disparity between what Social Security recipients are facing nationwide ,versus what is happening locally with our municipal retirees.
The city of Warwick has four pension plans.
The (1.) Municipal Plan covers non-public safety employees. The retiree COLA is based on how well the pension fund is performing and if there are excess earnings. For the past seven years, municipal retirees have not received a COLA. This fiscal year however, active municipal employees received a three year, 3% compounded salary increase (9.53% compound increase which includes increases in FICA/Medicare by $85,729 over next three years.
The older (2.) Police/Fire I plan, the COLA is based on whatever raises active city employees receive. This fiscal year, police received a 3% salary increase and fire received a 1.5% salary increase (compounded increases over next three fiscal years).
In the newer (3.) Police II and (4.) Fire II plans, retirees automatically receive a three 3% compounded COLA. That means each year, a 3% COLA increase is applied to the previous year’s pension total, so the pension builds upon itself every year.
Additionally, Warwick taxpayers are also currently paying (this fiscal year), $2,648,820 for city employee FICA and $854,702 for city retiree Medicare.
That's $11,543,823 Warwick taxpayers are currently paying this fiscal year to cover the healthcare costs for 924 city retirees, and this total doesn't even include life insurance, severance pay and sick pay bonuses.
As is the case for Social Security costs exceeding incomes, so is the case for the financial health of the city of Warwick, for its : city debt is currently exceeding city assets.
Right now, the Warwick pension and healthcare unfunded liabilities are in excess of six hundred million dollars ($600,000,000)., and our city's healthcare liabilities (OPEB) are ZERO FUNDED.
(*Note: just last year alone, the city's unfunded healthcare liabilities buried us deeper into the financial debt hole by another $17,000,000, seventeen million. Five years ago, the healthcare actuary highly suggested the city start putting away $20.2 million per year to fund our OPEB. To date, the city has funded it by $0).
For years now, the healthcare experts and the citizens of Warwick have repeatedly shared their concerns, yet Warwick city leadership continues to drag its heels when it comes to cracking down on the ever increasing healthcare costs, and the spiraling *out-of-control* unfunded healthcare liabilities.
Local taxes have increased fifteen straight years and it doesn't look like there is any tax increase end in sight. Local leadership continues to fail, year after fiscal year, to implement the necessary changes that will protect and retain our active and retired city employees and local taxpayers.
Warwick cannot afford to continue to pay for city retiree healthcare while retirees and their spouse's pay nothing... it is unfair and unethical. Social Security retirees are not receiving a COLA and Warwick families and business owners face their own financial burdens associated with their own healthcare costs. How is it even morally logical, never mind fair, that some city retirees receive a 3% compounded annual COLA regardless, some get nothing, and others get what active employees get? It simply makes no SENSE.
I would love to know how many Warwick city retirees are still living in Warwick or anywhere in the state of R.I? How many Social Security recipients are still here and how many are planning to leave? How could we ever expect our retirees living on a fixed income, not receiving a COLA next year, to stick around? I wonder how many are just stuck here. What will Social Security recipients on a fixed income be cutting out of their spending budget next year? Yet, the city just increased its spending by almost five million ($4.8 million) this fiscal year.
It's no wonder why more and more are leaving the city of Warwick and /or the state of R.I... the costs of living are brighter elsewhere.
Other Sources: http://www.pbs.org/newshour/making-sense/social-security-cola-means-big-medicare-headache/
Warwick General Fund Budget, Fiscal Year 2015-2016
We need to stand together and hold our Warwick city leadership accountable and demand they take the appropriate action in ensuring our neighborhoods and watersheds are CLEAN, SAFE & NON TOXIC!
Please read the attached memo and make the time to attend the Warwick City Council meeting next week, Wednesday October 14th. ***Be at Warwick City Hall at 5PM***
Take a look at the Google Earth screen shot below and the streets surrounding our ponds and watersheds. SHARE THIS POST with those you know who live in the areas surrounding Warwick Pond, Spring Green Pond, Occupessatuxet Cove & Conimicut ---and if they "not do the social media thing" ---please CALL THEM and ask them to attend the Warwick City Council meeting on WEDNESDAY, OCT 14th @ 5PM.
We are all responsible for protecting our environment and we must hold our elected leadership accountable to take every action necessary in ensuring every residential property owner, every corporate entity, every local business, RIAC & RIDEM are doing what must be done to eliminate any form of pollution from draining into our streams, ponds and bay!
Are you going to show up and demonstrate how much you care? Or are you just going to sit back and watch the deterioration continue?
"Coming together is a beginning; keeping together is progress; working together is success."