DIXON – The city will likely hold off on deciding a path for a big-picture solution to growing pension obligations to see what changes might take place on the state level in the next year or so.
The City Council recently discussed how to address increasing pension costs, but the majority are leaning toward keeping the status quo for fiscal year 2020, which begins May 1.
Councilman Dennis Considine said staff spent a lot of time creating a balanced budget and they shouldn’t rock the boat at the “11th hour.”
The council has had a handful of budget work sessions the last few weeks, and a draft budget will be put on file Monday, with the council scheduled to vote on it next month.
Mayor Li Arellano Jr. said they’re not doing enough and they need to pay more than just the required annual contribution, which totals about $1.9 million for police and fire pensions.
Arellano said he isn’t comfortable moving forward without a longterm plan, and it’s better to pay more into the pensions in a good economy rather than waiting for a downturn.
“If we let our funds tread water in a good economy, we’re not doing enough,” he said. “The time to invest is when we’re doing well, and pensions are the ultimate long game.”
The city should be looking at cuts, a hiring freeze, and a variety of other ways to put more money toward pensions, Arellano said.
Councilman Ryan Marshall said they’ve had months to discuss pursuing a big solution but didn’t, and small amounts aren’t going to do much.
The city’s fire and pension systems are about 51 percent funded, and throwing an extra $500,000 into them would move the needle up 1 percent, City Manager Danny Langloss said. Putting $3 million into them would increase the funding level about 6.5 percent and lower the annual payment by more than $300,000.
Possible state legislation includes changing the city pension systems mandate to be funded 80 percent by 2050 rather than 90 percent by 2040, which would ease the annual pension costs for municipalities.
The city’s pension contributions are based on being 100 percent funded by 2040, but another option being discussed is to fall back to the 90 percent model. Arellano said the savings from going that route should be injected into the fire pension system to try to get closer to the $10 million fund mark that would allow for more flexible investing opportunities and possible higher returns.
The council is also discussing changes for FY20, which include hiring an extra employee and putting more money toward grant writing.
The new street department position, which would cost about $70,000, would split the employee’s time between doing public works projects and maintaining the riverfront with the goal of shadowing John Groshans, who the city contracts with to maintain the riverfront.
Groshans, who was named Dixon’s Citizen of the Year in 2016 for his passion and hard work on the riverfront, had a heart attack last year but returned to work shortly after.
The city is hoping to have a plan in place before he eventually retires.
The proposed budget also earmarks $30,000 for grant writing, and $20,000 of that would go toward a grant writer. The other $10,000 would be for a benefit cost analysis that would be needed if the city chose to apply again for the U.S. Department of Transportation BUILD (Better Utilizing Investments to Leverage Development) grant to build a pedestrian bridge across the river and extend the bike path.
The City Council next meets at 5:30 p.m. Monday at City Hall, 121 W. Second St.
Go to discoverdixon.org or call City Hall at 815-288-1485 for an agenda or more information.