HomeMy WebLinkAboutMinutes 10/22/2002 4782
CITY COUNCIL SPECIAL MEETING
Port Angeles, Washington
October 22, 2002
CALL TO ORDER - Mayor Wiggins called the special meeting of the Port Angeles City Council to order at
REGULAR MEETING: 7:00 p.m.
ROLL CALL: Members Present: Mayor Wiggins, Councilmembers Braun, Campbell,
Headrick, Rogers, and Williams.
Members Absent: Councilmember Erickson.
Staff Present: Manager Quinn, Clerk Upton, B. Collins, D. McKeen, T.
Riepe, Y. Ziornkowski, M. Sanders, J. Mason, B. Wheeler,
P. Rose, M. Twitchell, J. Abram, T. Reid, B. Knight, J.
Patterson, S. Coyle, and T. German.
Public Present: T. Price and P. Lamoureux.
PLEDGE OF The Pledge of Allegiance to the Flag was led by Clerk Upton. Mayor Wiggins noted the
ALLEGIANCE: symbolic rose that had been placed on a seat in memory of Leland Lee, who recently
passed away. The Mayor asked for a moment of silence, after which he announced the
memorial service to be held November 2nd, 2:00 p.m. at the Crab House. A presentation
will be made to Mr. Lee's widow at the November 19th City Council meeting.
Initiative 790 Initiative 790: Mayor Wiggins asked for public input concerning Initiative 790,
regarding the placement of management of the Law Enforcement Officers' and Fire
Fighters' Retirement System, Plan 2, in a board of trustees consisting of six plan
participants, three employer representatives, and two legislators.
JoAnn Beck, a 23-year Port Angeles resident who taught school for 32 years and since
retired, was present on behalf of the Washington State and Clallam County School
Retirees Associations. Ms. Beck endorsed 1-790, reviewing how the board would be
constituted and indicating the firefighters, police officers, teachers, and PERS members
currently have no voice, vote, or authority over their pension system. Ms. Beck
explained that the Initiative places a cap on state and local funding at 50%, with 50%
from the police and firefighters. She related that pension benefit increases are allowed
within the current contribution only if certified by the LEOFF II actuary and subject to
approval by both houses of the Legislature. Ms. Beck stressed there is zero cost to the
proposal if implemented, as it is carefully designed to be fiscally responsible and to
protect the plan from mismanagement. She noted how the retirees in the State have tried
for years to improve benefits, but to no avail. She added that the firefighters were able
to block the State from raiding their pension fund of over $1 billion, and she cited
teachers' experiences in taking the State to court to remedy the situation of pension fund
raids. Stressing it is an untruth that the proposed Initiative would cost the State and the
City money and feeling that the pension funds should be used to the benefit of the
members, Ms. Beck urged the Council to support the passage ofi-790. Brief discussion
followed, with Councilmember Rogers expressing frustration in not understanding why
the teachers' union has been unsuccessful in gaining representation.
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4783 CITY COUNCIL SPECIAL MEETING
October 22, 2002
Initiative 790 (Cont'd) Mike Sanders, City employee and President of the Firefighters Local, endorsed the
passage of 1-790. He agreed with commentaries offered by the Previous speaker and
elaborated further, feeling the proposal is very simple in that it would basically create
a new representative board that is proportional in relation to the funds paid into the
pension system. Private pension programs in other states have representation in pension
systems; Washington is one of four states that has no such representation. He felt the
board is not given any unusual powers, as there are checks and balances in the form of
legislative review and approval for any increases in pension benefits. Also, the
Governor has the ability to veto any improvements or cost increases. Mr. Sanders
reviewed limitations placed on the board's action, specifically a 10% limitation for
employees, 6% for the City, and 4% for the State. If the board wishes to go beyond that
level, it is subject to more extraordinary measures to further increase rates. It was his
understanding there are no cost limitations on the present system, so the Initiative would
be an improvement. A greater degree of security would be in place by virtue of up to
three actuarial analyses of the pension system. One of the major concerns of the
firefighters is that the LEOFF system has not been exempt from State raids, and
representation on the board would assure this not happeningin the future. Lastly, Mr.
Sanders understood the City' s concern with cost impacts; however, he urged the Council
to remain neutral and impartial on the Initiative, as the voters should decide its fate.
Mayor Wiggins read a portion of the Bill wherein the board can increase benefits which
are to be presented to the Legislature on January 1st of each year. The increased benefits
are to be effective within 90 days unless a bill is enacted in the next session of the
Legislature, and questioning the reality of any bill being passed within a 90-day time
frame, Mayor Wiggins expressed concern with this language and the fact the increased
pension benefits would, therefore, be automatic. Mr. Sanders' understanding was that
any such increase must have basis through an actuarial study; he was uncertain how the
Legislature would address the 90-day requirement.
Councilman Headrick appreciated Mr. Sanders' point of view regarding the retirement
plan; however, he expressed concern with the majority representation on the board
between the police and firefighters. Secondly, Councilman Headrick noted the increased
costs that could be expected by the City. Referencing the legislation, he noted the
language suggests there willbe a rate increase. Additionally, he cited the cap that would
be placed on contributions at 20% of the salary - 10% to be paid by the employee and
the other 6% and 4% by the City and State respectively. Language in the bill specifies
that the State and contributing employer shall maintain the minimum benefits, and
Councilman Headrick questioned whether a sound financial balance would be
maintained should the costs exceed 20%. He had concern relative to excess funds where
it is specified those funds shall be used for additional benefits which he could not
envision without additional cost. He felt it to be unacceptable to say there will be no
additional costs, when there are no figures available in substantiation.
Mike Sanders addressed Councilman Headrick's concerns by reiterating many of the
previous comments relative to a proportional representation on the board, the notion that
projected costs are politically motivated, plus the fact there will be additional costs
incurred whether the Initiative passes or not. He indicated the fund needs to grow at a
long-term rate of 8%, and the rates will need to be increased in order to fund the pension
to certain levels. He felt the projected costs are over-stated, and the checks andbalances
will provide protection against escalating costs. Lengthy discussion and debate followed
between Councilman Headrick and Mr. Sanders who stressed that, as the pension fund
value grows, anything above and beyond would be reinvested in the plan. There is no
intention to increase the benefit, as such an action must be based on sound financial
judgment and basis. Excess funds, in the past, have been viewed by the State as being
available for other state projects which the police and firefighters feel is inappropriate.
Councilman Braun inquired as to whether this is a fiduciary fund, to which Mr. Sanders
responded in the affirmative. He wondered if there is State law requiring the fund to be
CITY COUNCIL SPECIAL MEETING 4784
October 22, 2002
Initiative 790 (Cont'd) actuarially sound, and he expressed the opinion that it must be a violation for the State
to use excess funds for other projects. Mr. Sanders indicated there are other ways
around an obstacle, and Councilman Headrick noted that contribution rates have been
lowered by virtue of excess funds. The result, therefore, is that the State and City save
money, ultimately consuming the excess funds in the trust fund. Mr. Sanders addressed
the projections that the City could be paying up to $400,000 more in the upcoming year
and that employees could be paying as high as 26%of their salary toward the pension
which he maintained would not be realistic.
Mayor Wiggins sought input from Finance Director Ziomkowski, who indicated the
AWC projections were used in determining what the increase to the City might be if
minimumbenefits were to increase. Manager Quinn spoke with the State Actuary Office
to obtain further information and was informed that the figures provided were based on
an assumption that all earnings of the trust in excess of the actuarial assumed rate of
investment return shall be used exclusively for additional benefits. The State uses an
actuarial amount of 8% as a projected interest earning, so if any amount above 8%
occurs, that money had previously been reinvested in the fund. This bill exclusively
takes anything above the 8% and uses it for benefits, so the Actuary determined that a
new and realistic investment interest must be incorporated. For purposes of the
projections, a 4% figure was used, resulting in the rather large projections. The increase
is not because the proposed board wouldbe adding new benefits, but it is strictly a result
of the investment interest not being reinvested to pay forthe existing benefits. He felt
Mr. Sanders was correct in his statement that doing nothing will likely result in an
increase in rates due to the state of the economy. Discussion followed.
Councilman Campbell felt there is no question that the act has the intent of providing
additional benefits for the police and firefighters. However, the employee is making an
investment in retirement income, but the employer and the State are making the
contributions. For every dollar an employee invests in the retirement plan, he gets a
dollar from the State and from the City. The annual return, including the 8% interest,
is 116%, so the incentive would clearly be to increase the contributions. Given the fact
there aren't good checks and balances, there is a possibility of serious abuse which was
of concern from the City's perspective. Mr. Sanders felt the checks and balances are
especially good, due to the allowance for three independent actuarial studies.
Councilmember Rogers again queried as to why there is no representation, and Mr.
Sanders reiterated past unsuccessful efforts to attempt to gain representation.
Councilman Braun felt it could be attributed to the Legislature wanting to maintain
power, and Councilman Williams agreed the Legislature likely doesn't want to
relinquish control in view of the availability of the "piggy bank". He expressed
sympathy for all of the systems across the board, but delineated various concerns with
the legislation, such as placing majority control in the hands of the LEOFF II members.
He was concerned that the Legislature must act affirmatively to repeal any of the actions
which will prove to be difficult, plus he was concerned with the intent of the legislation
to provide additional benefits subject to cost limitations. The board would be in a
position of control for one system only, when there is a systemic problem across the
entire retirement system; Councilman Williams would have preferred legislation for all
of the pension systems. He discussed concerns related to an administrative staff and
acquired office staff, all of which would be funded by the Department of Retirement
Systems. Mr. Sanders responded to Councilman Williams' commentaries and again
urged the Council to remain neutral on the issue.
Paul Lamoureux, 602 Whidby, posed a question as a taxpayer represented by police,
fire, and the City. He inquired as to the prime reason, discounting representation, that
this issue has arisen. He wondered if there had been a problem with the pension system
that brought the Initiative to the front or if this was merely an issue of representation.
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4785 CITY COUNCIL SPECIAL MEETING
October 22, 2002
Initiative 790 (Cont'd) Pat Clark, Business Representative for the Teamsters, responded to Mr. Lamoureux by
summarizing the difference in pension benefits for the State of Washington as compared
to other systems along the west coast. Citing specific benefits in Portland, he noted the
pension income could be as high as $4,000 per month, when Washington benefits could
be in the range of $1,600 - $1,800 per month in a best case scenario. He understood the
City's concern with maintaining fiscal responsibility, but the bottom line from the
perspective of the employees, when the State kept cutting contribution rates, is that the
employees have substandard retirement benefits. He indicated the employees want to
retire with dignity at a decent age. Mayor Wiggins asked if the groups in the other states
have the same plurality on the boards, and Mr. Clark was uncertain as to the structures
of the other boards. Councilman Headrick concluded that the bottom line is, in fact,
increased benefits, to which Mr. Clark agreed. Lengthy discussion followed, and
Councilman Headrick pointed out that deferred compensation programs are available
to the employees in order to gain additional retirement benefits.
Jamie Mason, an employee of the Fire Department, asked for further information
concerning the deferred compensation programs. Manager Qninn offered clarification
in that the City has these programs available, and there is a provision for non-union
employees for a 50% match up to $100. Mr. Mason felt 1-790 is very important, because
law enforcement officers and firefighters in the LEOFF II system don't pay into Social
Security which makes the LEOFF II pension even more important to the employees
when planning for retirement.
JoAnn Beck returned to the podium and reviewed contribution rates when she started
teaching as compared to the much lower rates currently being paid. The teachers
previously had a board controlling the pension fund, but the Legislature took that board
away. She surmised the firefighters may have had a similar board at some point in time,
and Finance Director Ziomkowski indicated this would have applied to LEOFF Plan I.
Ms. Beck reiterated the fact that contribution rates have been significantly lowered, and
Director Ziomkowskistated that, in the City's case, if contribution rates are lowered they
are also lowered for the employees. Discussion followed concerning contribution rates,
and Director Ziomkowski offered clarification concerning present deferred
compensation programs, available to the employees, indicating there are other programs
available to LEOFF II employees beyond that particular pension program.
Bruce Knight, an employee of the City Police Department who has 24 years in the
LEOFF II system, noted little has been done in the Legislature to improve the system.
Efforts have been taken every year to attempt resolution at the Legislature, and the
results have been shameful. He supported 1-790, hoping to see improved benefits; he
felt the Legislature has not accepted responsibility for problems created in 1977.
Further discussion ensued between members of the Council and Mike Sanders as
representative of the firefighters. Individual Councilmembers expressed opinions on the
proposed Initiative, after which Mayor Wiggins asked for a straw vote as to the
Council's position. All Councilmembers, with the exception of Councilman Braun,
voiced opposition to the passage of Initiative 790.
Break Mayor Wiggins recessed the meeting for a break at 8:25 p.m. The meeting reconvened
at 8:40 p.m.
Initiative 776 Initiative 776: Mayor Wiggins asked for public input concerning Initiative 776, which
would require license tab fees to be $30 per year for motor vehicles, including light
trucks. In addition, certain local-option vehicle excise taxes and fees used for roads and
transit would be repealed.
Paul Lamoureux, 602 Whidby, referenced a previous vote of the public wherein
approval was given to $30 license tabs. It was his opinion that the public had spoken,
and their wishes should be adhered to by the State.
CITY COUNCIL SPECIAL MEETING 4786
October 22, 2002
Initiative 776 (Cont'd) Tad Price, 111 W. 12th Street, spoke of previously paying $740 for license tabs. He was
pleased to now pay only $50-$100, which is much better than $740.
Councilman Williams had obtained further information from Dan DiGuilio of Clallam
Transit and learned that the greatest impact would be on the Seattle metropolitan area
and Sound Transit. There would be no impact on Clallam Transit, but it must be
recognized that the legislation would repeal certain RCWs when there is no reference
to what is being repealed. Mayor Wiggins expressed concern specifically related to the
bond payments, wondering where the money for the payments would be generated.
Director Ziomkowski noted, however, that the City could be impacted by virtue of the
fact the County could no longer levy the $15, a portion of which is shared with the City.
In addition, if State funds are reallocated, the City could lose some transportation grants.
Councilmember Rogers affirmed the fact that the voters would lose their ability to
initiate a local excise tax. After further brief discussion, Mayor Wiggins asked for a
straw vote as to the City Council's position. All Councilmembers expressed
opposition to the passage of 1-776.
Resolution Setting Public Resolution Setting Public Hearing for Vacation of Right-of- Way- Port of Port Angeles -
Hearing for Vacation of STV 02-04 - Portion of Tumwater Street North of Marine Drive:
Right-of-Way
Resolution No. 14-02 Community Development Director Collins briefly reviewed the nature of the proposed
street vacation, after which Mayor Wiggins read the Resolution by title, entitled
RESOLUTION NO. 14-02
A RESOLUTION of the City Council of the City of Port Angeles,
Washington, setting a hearing date for a petition to vacate a
Portion of Tumwater Street south of the north margin of First
Street.
Councilman Braun moved to pass the Resolution as read by title. The motion was
seconded by Councilman Campbell and carried unanimously.
ADJOURNMENT: The meeting was adjourned at 8:50 p.m.
Wiggins, Mayor B e cky-J.' U(a~n,(l~ty-C]'e