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UNFUNDED LIABILITY DEBT TO TAXPAYERS IS WORSE THAN REALIZED, plus, GAS PRICES TO SOAR, BRIGGS’ BOULDER, and A CALL TO CITIZEN ACTION

BY DAN VALENTI

We won’t be done with the topic of unfunded liabilities until every dime is paid up or the debts are reorganized out of existence. That’s going to be a spell. Hope you don’t mind, but again The Planet confuses you with facts that the Boring Broadsheets’city hall  masters have told them not to touch.

The Massachusetts Taxpayers Foundation report from last week listed the obligations of the 50 largest Bay State communities. Total incurred debt: $20 billion. Pittsfield taxpayers are indebted to public service employees for $330,725,000, an obligation that represents 80% of the total bill, for which not a nickel in assets has been dedicated. That gigantic figure consists primarily of pension and health-care obligations (medical insurance, dental plans, vision coverage, and prescription drug plans). This bill will have to be paid by taxpayers.

Pittsfield: Another Terrible Distinction

Pittsfield is one of just three communities statewide (Lynn, Chelsea) with obligations less than 50% funded. In fact, Pittsfield is the most seriously under-funded city in the state, at the 80% level. The 50% mark triggers red alarms. If 50% induces bunkers and re alerts, what happens at 80%!?

For a city to be 80% unfunded for an amount that nears $331 million spells certain disaster is radical measures are not taken immediately. This applied triply is that city’s population is falling, its tax base shrinking, and good jobs disappearing.

It gets worse.

At that, Pittsfield’s $331 million debt (again, this is what taxpayers owes public-employee retirees) represents a “bargain.” The bargain is fake, because the reported $331 million is less than the actual number due to bookkeeping trickery and high discount rates. A 2010 study by Courtney Collins, assistant professor of economics at the Stetson School of Business at Mercy University, and Andrew Rettenmaier of the National Center for Policy Analysis, examined 153 state and local pension plans and recalculated unfunded pension liabilities more accurately using lower, more realistic discount rates and assumptions.

Bad as They Are, the Numbers are Under Estimated

Their study shows, for example, that unfunded pension liabilities nationwide are approximately $2.5 trillion, or five times greater than the numbers reported by states and communities within the states ($493 billion). The total unfunded liability when all benefits plans are included (not just pensions) is an estimated $3.1 trillion, or more than three times the “official” figures reported in the individual plans. Another estimate puts the total amount at $3.5 tillion.

Half trillion here, half a trillion there — pretty soon you’re talking real numbers.

Pittsfield’s reported $331 million debt is also underestimated because of assumptions on health care. The assumptions call for an annual five percent increase in health insurance costs. The actual rise in Massachusetts for years has been double to triple that amount. Consequently, the role of the “average” Pittsfield taxpayer as the insurer of this debt will be much greater than reported $331 million.

If city officials do not redefine benefits for public employees, eventually, some unlucky population of Pittsfield residents will be financially destroyed.

Given this picture, how can ANY increase in government spending be justified, especially a $15,000 pay raise for a current position within the mayor’s office?

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Turning to Gas Prices —

Pumping Your Pockets Dry: Gas Prices Soar

A week to 10 days ago, most Pittsfield gas pumps advertised a gallon of self-serve regular at about $3.15. Some are ALWAYS higher, such as the Sunoco station on Center Street. Cruise around today, and you will see prices of $3.30 and above. (An aside, who sells the cheapest gas in Berkshire County? Pittsfield? Which station is best overall?)

The predictions for oil prices this summer are dire. There’s the usual “Memorial Day Jacking of Prices,” and don’t forget to factor in the gouging done by unscrupulous merchants along the Byzantine oil and gas supply chain.

The guy selling it at the pump isn’t making the money, but almost everyone along the way from the moment companies find and extract oil to when gasoline gets in your tank will take a slice of the dollar. Yes, then there’s a insane salaries and bonuses the top dogs at the oil companies give themselves.

How High Will They Go? Not Even Chubby Checker Knows

How high will gas go? Most analysts say that, in the Northeast, it’s $4 a gallon for sure. Scenarios in the shaky Middle East, particularly if Saudi Arabia undergoes civil unrest, could drive $5 a gallon.

Here are the Massachusetts figures, current to today. On Feb. 14, the average price for a gallon of self-serve gas in the Commonwealth was $3.141. Going into this morning, that price jumped to $3.301 — up 15% this week and 67% from a year ago (source: eia.gov).

These “average” prices are obtained weekly by the federal government. Each Monday, Uncle Sam’s Energy Information Administration conducts a telephone sample of about 900 retail gasoline outlets. Prices are published at 5 p.m. that day.

If you troll the oil industry web sites and think tanks, the majority of analysts (we hesitate to say “experts”) predict gas prices will keep rising. They cite the shaky futures market and world political instability, particularly in oil-exporting countries.

Is $5 a gallon Inevitable?

Here are representative quotes taken today from various oil and gas industry watchdog sites:

  • “The wait for $150 oil won’t be long. Our latest report shows that it’s due to hit by July of this year. 

That means roughly  $4.50 for a gallon of gas, and huge windfalls for OPEC and Big Oil. 
Of course, it’s also bad news for the dollar and this fragile U.S. economic recovery.”
  • “Oil and gasoline prices have risen to their highest levels in two years, and analysts say prices could shoot up dramatically this year as the thirst for fuel grows in the U.S. and around the world.”
  • “The former head of Shell Oil has warned that gas prices could hit $5 a gallon by 2012 because of fast-growing demand in emerging countries such as China and India, where more and more people are buying cars, combined with restraints on drilling in the U.S. in the wake of last year’s disastrous Gulf oil spill.

The last quote was from earlier this year, before Tunisia, Egypt, Libya, etc. caught fire. Most “experts” say the U.S. will see $5 a gallon gas before the year is out.

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Voters of the City Unite: Take Back Control of Your Government

Pittsfield taxpayers, think of this year’s budget actions by the city council in light of these increases. Every time they say let another department skate, keep thinking of your gas prices going up. Keep thinking of the bills the council approved in your name to the unions, while you weren’t paying attention and entrusted them to act in your name.

Voters, do not let a single candidate escape with their political life who does not side for the taxpayers and against the Special Interests. Large turnout will let you take back your government. Become the Boss Again!

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Who Took Briggs’ Boulder?

We got more feedback on Briggs’ Boulder (see yesterday’s Planet) than we expected. Something about the sudden removal of a beloved stone monument in front of the courthouse on Park Square touched a lot of people.

BRIGGS' BOULDER can be seen to the left of the four-most pole. (PHOTO BY CLARK W. NICHOLLS)

In the e-mails we received (and comments to our online story), people were dismayed that someone of unknown origin could remove this treasure without public discussion. The most benign explanation for the missing monument is the Park Square renovation. This theory states that officials removed Briggs’ Boulder so it would not be damaged. The most sinister explanation is that someone removed it maliciously and dumped it in Silver Lake.

The Planet knows that government officials read or at least monitor this website. We ask: What happened to Briggs’ Boulder? All replies will be held in confidence, if that’s how you want to play it.

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The Planet: Unbought, Unbossed, & Open for Business

It occurs to us that lack of documentation and accountability is the common thread linking today’s three stories (unfunded liabilities, gas prices, Briggs’ boulder). City officials in many departments have been used to acting under cloak of darkness.

Just as it did in Egypt and Libya, social media is helping sites like The Planet get inside the seats of power. We can change the way government treats you, the bedraggled taxpayers. All it takes is one disgruntled employee or worker in the right place with a cell phone. They make the call, we get the info. The Planet welcomes this new transparency.

The Planet is non-partisan. We aren’t pushing anyone’s agenda. We are unbought and unbossed. We will take input from any and all sides of any and all stories. If it’s PCBs, we’ll listen with equal and rapt attention to 1Berkshire and the Housatonic River Initiative. You get our drift.

Workers, taxpayers, citizens, and Little Guys of the county, unite. If you have things to say and injustices to report, remember that The Planet is always open for business. We exist to help The Little Guy.

Afflict the comfortable. Comfort the afflicted.

8 Responses to “UNFUNDED LIABILITY DEBT TO TAXPAYERS IS WORSE THAN REALIZED, plus, GAS PRICES TO SOAR, BRIGGS’ BOULDER, and A CALL TO CITIZEN ACTION”

  1. eric vincelette
    March 1, 2011 at 2:00 pm #

    In one of your previous post you mentioned http://www.scribd.com as the source for some of this info…..Is this where the majority of the unfunded liability info for all MA towns can be found? If not can you please list where this info can be found so I can pass it on to some friends…thanks and keep up the GREAT work

  2. danvalenti
    March 1, 2011 at 2:49 pm #

    The scrib.com carried the MTA report. Try the Massachusetts Taxpayers Assn website for more of the data.

  3. ambrose bearse
    March 1, 2011 at 3:06 pm #

    Please define whom you mean by “The Little Guy”. I’m a worker, taxpayer and citizen, just want to know if I’m a “Little Guy”. I’m 5’11″ and weigh 240.

    • Liz Arrington
      March 1, 2011 at 5:58 pm #

      You are a Little Guy.

  4. PCP
    March 1, 2011 at 3:16 pm #

    Dan, I bet the Planet can be had for $331 million.
    How is the City going to borrow any money for a 150 – 200 million dollar school? THE BONDING COMPANIES will not lend the money
    unless 1Berkshire can bring EV’s 1,000 jobs to Pittsfield and all the false BB reported economic development plans/ projections, or the city goes bankrupt. I would like to CHALLENGE 1Berkshire to come up with a business plan to get the city out of its financial problems. A real business plan, not a political fluff cake,like Berkshire Blueprint.

  5. Ariste
    March 1, 2011 at 5:59 pm #

    Wow! all I can say is that this series by The Planet has been an eye opener. Thanks to Valenti for covering this story. The BB is clearly scared s***less,

  6. Joetaxpayer
    March 1, 2011 at 6:12 pm #

    I just hope the new Mayor and Council are up to tha task.The voters in the city must find out which councilors are willing to stop the spending on things we no longer can afford,We need a Mayor who is going to be a leader not a delagator.Stop subsidising downtown,buying buildings and stay away from matching grants.Time to consildate and sell-off properties we no longer need.Time for Pittsfield to go on Jenny Craig.

  7. Uncle Albert
    March 2, 2011 at 7:55 am #

    Just a guess: The mayor (lame duck) and the council (just lame, period) will not be up to the task. love joe’s line above “we need a mayor who is going to be a leader” same applies to councilors. If they don’t show signs of life in budget time make them pay at election time any who are going to run for reelaction and dont help us ordinary citizens