Additional Observations on Shores Issues
June/29/2009 12:59
As a novice webmaster and blogger, I am surprised at the power of this modern and unique means of communication. The initial response to the Shores Recall Web site in terms of the volume of web site hits as well as the number of residents expressing interest in supporting the recall campaign is most gratifying. Please spread the word to your Shores friends and neighbors!
Shores resident John L. Booth, II has had a long interest in civic affairs, and is a frequent attendee at our Shores council meetings. John replied over the web with the following astute observations in response to my last blog posting. John was kind enough to grant me permission to post them on the site for everyone to contemplate. When you look at the overall picture, the present and future financial situation of the Shores does not look all that rosy. I find John’s second remark particularly alarming. Here are his points listed below, highlighted in italics:
From: John Booth
Subject: Other Grosse Pointe Facts
Message:
#1 The GPS Pension, fund marked to market as of December 31, 2008, was approximately seven million dollars underfunded to meet its long term pension liabilities.
#2 The current amount required to be paid this fiscal year out of the general fund to address this pension shortfall is approximately $570,000 which is an increase of over 28% from the previous year and almost 10% of the GPS gross revenues. Because of an accounting practice known as "smoothing", major increases in annual contributions are delayed into the future. As recently as 2003, the GPS pension plan was over funded, requiring zero annual contributions.
#3 The GPS harbor renovations were funded by a loan secured by a pledge against general revenues. The loan only requires interest payments for the first three years. In just two years the Village will have to come up with money out of the general fund to meet required principal payments on a loan of 3.25 Million dollars.
#4 The Council raised the millage to replenish depleted capital fund reserves which had been set aside for street maintenance and other large future projects. In other words, over the past three years as the Village ran operating net losses, the budget was balanced by transferring funds from these necessary reserve and set asides, thereby postponing and avoiding the need to reduce any operating expenses for three years. These reserve funds which represented an earned surplus from many years are now exhausted.
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Thanks for sharing these important thoughts with your fellow Shores residents, John. I looking forward to hearing from others with their opinions on these important civic issues.
Shores resident John L. Booth, II has had a long interest in civic affairs, and is a frequent attendee at our Shores council meetings. John replied over the web with the following astute observations in response to my last blog posting. John was kind enough to grant me permission to post them on the site for everyone to contemplate. When you look at the overall picture, the present and future financial situation of the Shores does not look all that rosy. I find John’s second remark particularly alarming. Here are his points listed below, highlighted in italics:
From: John Booth
Subject: Other Grosse Pointe Facts
Message:
#1 The GPS Pension, fund marked to market as of December 31, 2008, was approximately seven million dollars underfunded to meet its long term pension liabilities.
#2 The current amount required to be paid this fiscal year out of the general fund to address this pension shortfall is approximately $570,000 which is an increase of over 28% from the previous year and almost 10% of the GPS gross revenues. Because of an accounting practice known as "smoothing", major increases in annual contributions are delayed into the future. As recently as 2003, the GPS pension plan was over funded, requiring zero annual contributions.
#3 The GPS harbor renovations were funded by a loan secured by a pledge against general revenues. The loan only requires interest payments for the first three years. In just two years the Village will have to come up with money out of the general fund to meet required principal payments on a loan of 3.25 Million dollars.
#4 The Council raised the millage to replenish depleted capital fund reserves which had been set aside for street maintenance and other large future projects. In other words, over the past three years as the Village ran operating net losses, the budget was balanced by transferring funds from these necessary reserve and set asides, thereby postponing and avoiding the need to reduce any operating expenses for three years. These reserve funds which represented an earned surplus from many years are now exhausted.
---------------------------------------------------
Thanks for sharing these important thoughts with your fellow Shores residents, John. I looking forward to hearing from others with their opinions on these important civic issues.