Sunday, August 08, 2010

The DROP Shell Game

Which nut has your money?



Please pass this on to those you know in Dearborn Heights.

Dear Taxpayer:

As a resident of Dearborn Heights you may be aware that in 1965 the voters adopted PA 345 of 1937, which allows for a millage in order to pay for police and fire personnel retirement benefits. Over the years, generous contracts with the promise of exceptional retirement benefits have been negotiated for Dearborn Heights police and fire personnel and the taxpayers have shouldered the costs for those benefits based on the vote of residents in 1965.

IF YOU DON’T WANT YOUR PROPERTY TAXES TO INCREASE PLEASE READ BELOW AND TAKE ACTION!

Please pass this along to your neighbors.

Scott Hagerstrom
State Director-Michigan
Americans For Prosperity
www.michiganafp.com

Background:

Three years ago during contract negotiations the City agreed to what is known as a DROP program (deferred retirement option plan). This program encourages police and fire personnel who are nearing retirement age to take an early retirement, thus moving the liability for their benefits off the regular City personnel budget and to the taxpayers through the police and fire millage provisions in PA 345. Once the burden of these employees’ benefits are moved off the City of Dearborn Heights’ books, the city frequently rehires the same personnel back as contractors.

The intent of PA 345 was to continue to support our city’s heroes once they have retired. That’s not what is happening today. Today, the City of Dearborn Heights is playing a shell game with your hard-earned tax dollars to fund EXISTING police and fire personnel benefits so they can make room on the city’s books for other expenditures.
In other words, while everyone else is figuring out ways to make the hard decisions in their personal budgets during this painful recession, the clever politicians at the City of Dearborn are simply moving liabilities off their books at the expense of the taxpayers through a loophole and NOT asking the taxpayers if they’re willing to support this.

Add to that the fact that in a down economy the investments and interest payments to the PA 345 funds are low, meaning the taxpayers must put more in to fund the liabilities. The millage this year alone increased by $2.30 for every $1000 in taxable property value, and because the recently arbitrated contract extends the DROP programming that millage rate is certain to continue to increase.

What does all of this mean in the real world? Former City of Taylor Mayor Cameron Priebe estimated that the PA 345 provision in their city meant that each retiree currently costs the taxpayers of Taylor more than $4.5 million (they currently have around 100 police and fire retirees). In Taylor, residents paid 1.2 mills in 1979 to support the PA 345 provisions; today they pay 6 mills and that number is expected to increase substantially. What does that mean in dollars and cents? A single resident in the City of Taylor with property valued at $150,000 will pay $450 this year just to support the police and fire retiree benefit provision of PA 345.

We MUST reign the liability of this fund in NOW. We can continue to support the retirements of the men and women who risk their lives to protect us within the provisions of PA 345, but the City of Dearborn Heights MUST get their house in order and stop using loopholes to shift the liability of the non-retired police and fire workforce to a millage provision.

Tell Dearborn Heights Mayor Daniel Paletko that you will support a referendum to repeal PA 345 if the DROP program is allowed to continue.

You can contact the Mayor of Dearborn Heights, Daniel Paletko, and city council in the following ways:
E-mail: dpaletko@ci.dearborn-heights.mi.us

Regular mail: City of Dearborn Heights
6045 Fenton
Dearborn Heights, MI 48127-3294
Telephone: (313) 791-3490
Facsimile: (313) 791-3491
Kenneth R. Baron
Council Chair
(313) 565-0420
FAX (313) 565-9184
(313) 791-9924
Janet Badalow
Chair Pro-Tem
(313) 791-9923 mailto:dh4badelow@comcast.net
Elizabeth Agius
(313) 791-9922
Tom Berry
(313) 563-6100
(313) 791-9925
Marge Horvath
(313) 791-9927
Margaret Van Houten
(313) 791-9928
Roy Pilot
(313) 274-4205

2 comments:

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Sandy said...

The City of Wayne. Mi is putting PA 345 on our ballot this year. is the drop program attached to this bill or is this something else?