Boise’s disingenuous accounting defines a bond approval as not a tax hike

Boise’s disingenuous accounting defines a bond approval as not a tax hike

by
Wayne Hoffman
September 5, 2014
Wayne Hoffman
Author Image
September 5, 2014

Cities across Idaho are poised to reap a windfall, and although that windfall will have potentially huge consequences, it is unlikely you've heard about it. Nor will you; some cities have the money spent already.

The state pension system, PERSI, will soon decide whether to reduce the rate cities pay into the firefighter fund. If that occurs (and it appears likely it will happen, since the pension system has already notified cities of the likelihood), cities stand to save millions of dollars. The rate reduction is made possible because pension system officials believe the firefighter fund, which closed to new enrollees in 1980, to be more than fully funded, based on market performance projections.

Pension officials want to lower government contribution rates from 17.2 percent to 5 percent. As I've said previously, I think PERSI officials are overly optimistic about their projected fund performances and although I'd welcome a reduction in pension costs, I'm skeptical about the wisdom of this move. That's somewhat beside the point of today's commentary.

In Boise, reducing the pension contribution rate may mean a savings of $2 million, according to IdahoReporter.com. In Nampa, the savings is expected to be $827,000. Idaho Falls may pocket $894,000. The savings in Coeur d'Alene will be around $450,000 and around $550,000 in Pocatello. I won't take the time to list all the affected cities here; there are close to two dozen scattered throughout the state.

Even though the PERSI board doesn't vote on the rate reduction until Sept. 16, the city of Boise is already positioning to spend the money on new fire stations and fire training. The city is planning to ask voters to approve a debt financing plan funded entirely from the money that used to be spent on firefighter retirement, which is how the city came up with the disingenuous claim that the bond proposal would not cost taxpayers anything.

It's bothersome that Boise isn't waiting until the PERSI board vote to reach a decision. It would be mildly amusing to see the PERSI board delay its decision until November, just to see what Boise does to get its horse and cart in proper alignment.

It is more troubling that Boise didn't bother to engage its residents on other possible outcomes. Sadly, Idaho's capital city is not alone.

I'm told that other Idaho towns are also behaving similarly—quietly drafting plans to spend money previously earmarked for the firefighter retirement fund, and shutting out locals until the plans are made and the money spent. They're keeping taxpayers in the dark, lest those taxpayers begin to entertain unauthorized ideas. Other cities are merely waiting for an official verdict from PERSI.

Failure to discuss openly the pension decisions constitutes a missed opportunity, and what an opportunity it would be. It is an opportunity to discuss spending priorities. It is an opportunity to reduce local government tax burdens. It would be an opportunity to discuss rising pension costs, generally, costs that won't go away regardless of what happens with this particular fund at this particular time.

Here's hoping Idaho cities will still seize the moment.

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