South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

Mehlville fire district proposes tax rate 42% less than legal maximum

Chairman Hilmer discusses proposal to help bolster pension plan
Aaron Hilmer
Aaron Hilmer

A public hearing on a proposed fiscal 2008 tax rate that is 14.6 percent less than the current rate and 42.3 percent less than the legal maximum that could be levied will be conducted later this month by the Mehlville Fire Protection District Board of Directors.

The Board of Directors will conduct the public hearing on the proposed fiscal 2008 tax rate of 59.6 cents per $100 of assessed valuation at 7 p.m. Tuesday, Aug. 21, at the fire district’s headquarters, 11020 Mueller Road.

The proposed “blended” fiscal 2008 tax rate of 59.6 cents per $100 of assessed valuation is 42.3 percent less than the legal maximum of $1.03 the board could levy and 14.6 percent less than the current rate of 69.8 cents per $100.

The proposed tax rate and preliminary 2007 budget were discussed last week by the Board of Directors.

During the Aug. 2 discussion, board Chairman Aaron Hilmer outlined a proposal to suspend contributions to the district’s 401(a) defined-contribution retirement plan — roughly $65,000 — to help shore up the district’s defined-benefit pension plan that currently is the subject of litigation.

Local 1889 of the International Association of Fire Fighters filed a lawsuit against the Board of Directors in March 2006 after the board voted 2-1 to adopt an amendment and two resolutions changing the district’s pension plan from a defined-benefit plan to a defined-contribution plan. Board Chairman Aaron Hilmer and Treasurer Bonnie Stegman voted in favor of the motions while former Secretary Dan Ottoline Sr. was opposed.

“… It’s no secret the pension problems we’ve been having here as far as underfunding, problems that have started long before we showed up,” Hilmer said. “So for next year, I’ve budgeted zero dollars to go into the defined-contribution (plan). We would suspend the contribution to the defined-contribution plan and use the proceeds to help shore up the defined-benefit plan. I know I’ve covered some of these pension numbers in the past, but in 1999, the pension fund had a surplus of $1.44 million. By 2007, it had swung $7.3 million, or 20 percent, to $5.88 million in the negative.

“Seeing that slow-motion financial crash in the making, I think that the No. 1 priority of this board from this point going forward is to see this underfunding fixed. And that’s why I propose we make that change on the 401(a) defined-contribution (plan). We’ve made a lot of progress toward slowing the bleeding of the pension fund. We’ve gotten rid of the disability gravy train, and while we wait for the wheels of justice to spin slowly on the last of our reforms to the pension plan, we really have to work on that underfunding.

“You know, like the old song says — it says: ‘Time is on our side.’ And due to the lengths of our terms, we will have plenty of time to take whatever path necessary to achieve these reforms. But in the meantime, we have to look at the unfunded liability and while transferring that $70,000 will help some, when you look at the context of $5.3 million, it’s like putting your finger in a dike in the dam with a lot of holes in it.”

The board chairman later said that perhaps the board needs to review the funding structure of the pension plan.

“… So as long as the continued litigation goes on over the reform, we need to look at other options out there — maybe like the public-school teacher retirement system for the state of Missouri,” he said. “What goes on there is the employer and the employee split what they put into the plan. It’s roughly about a 12-percent contribution that the teachers themselves have to put in there. And we could easily achieve that here through a payroll deduction and … then that could be put right into the pension fund so we’re not monkeying around with other benefits …

“As we look at that public-school structure, if they’re putting 12 percent in, we have to remember the teachers aren’t eligible for Social Security. So on top of the $1.9 million we’re putting in — we’re taking in pension tax — the district is also spending in upwards of $600,000 for Social Security matching contributions. So we’re spending $2.5 million for pension expenses here. And I want to look at that $1.9 million … if we agree on that amount to levy. If you divide that by 127 employees, that’s equal to almost $15,000 per person.

“As outrageous as that number is, it can’t even keep pace, obviously, from the size of the checks going out. Seeing that $15,000 number, I think it’s clear the residents can’t be looked to for any more money to feed such a unsustainable plan. We need to figure out a way … for the employees to put their share in considering they’re presently contributing nothing …”

Hilmer also discussed another proposal to reduce the maximum number of vacation days next to 16 shift days from 20 shift days.

“Twenty-four-hour employees here work roughly 120 days a year, so obviously it … equates to 10 days a month, making 20 days off equal two months of vacation time. I think it’s beyond outrageous …,” he said.

Besides reducing the maximum number of vacation days to 16 shift days, Hilmer said he is proposing providing new employees with two shift days of vacation per year.

The board will consider acting on Hilmer’s proposals as well as establishing the district’s fiscal 2008 tax rate when it meets Tuesday, Aug. 21.

The proposed fiscal 2008 tax rate is roughly 43.7 cents less than the legal maximum the district could levy. That 43.7 cents includes 33 cents that voters approved in November 2004. The 33-cent tax-rate increase, called Proposition S, was designed to address the fire district’s needs for the next five years.

The 36.5-percent tax-rate increase was formulated by the Fire District Advisory Committee for Tomorrow’s Emergency Services, or FACTS, during a two-month public-engagement process that involved about 100 district residents.

Hilmer discussed the board’s ability to continue to reduce the tax rate even in light of such factors as rising gas and oil costs.

Of gas and oil costs, he said, “Pretty mundane subject except in the past four years, we’ve gone up by a hundred percent what we’re going to spend on it. We’re budgeting $120,000 … In 2004, we were spending roughly $60,000. I want to point this out because we often hear non-stop from different school and fire districts that they need more taxes because of the rising rate of inflation and fuel costs. So I think this is a good example. Even with a 100-percent increase in the past five years, we proved it was possible not just to leave the tax rate alone, but to lower it — lower it by about 40 percent. What I find ironic is the people they’re asking for the money are dealing with the same problems, such as the high gas prices.”

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