There is outrage all over the country on the national debt. Where is the outrage in Buffalo over our debt? More specifically our unfunded liability driven by other post employment benefits (health care etc.) that is growing every day? Our city is on a course to make the Greeks look like disciples of Adam Smith but instead yesterday, thousands of people went to Ralph Wilson Stadium to see the unveiling of the new Buffalo Bills Team uniforms. We see the same level of passion when the Sabres change their jerseys.
On the flip side, in San Francisco there are two billionaires passionate enough to fight over the unfunded promises http://finance.fortune.cnn.com/2011/06/02/san-franciscos-pension-smackdown/ .
A new Bills uniform, a new Sabres uniform or even a new suit for Byron Brown won't change the numbers and the outlook for the future. Lets Get Real and start talking about the liabilities we are facing vs. the colors of our team logos.
Why do we compare San Francisco to Buffalo? Two cities with dramatically different economies? Lets start with the facts:
San Francisco:
Other Postemployment Benefits (OPEB) Liability is $4.36 billon
Population – 805,000 (Population “grew” 19% in last 30 years)
Median Household Income - $55,221
OPEB/Capita (Population) - $5,416
(OPEB/Capita) to Income – 9.8%
Buffalo:
Other Postemployment Benefits (OPEB) Liability is $2.15 billon
Population – 261,000 (Population “loss” of 27% in last 30 years)
Median Household Income - $27,850
OPEB/Capita (Population) - $8,238
(OPEB/Capita) to Income – 29.6%
Look at Buffalo's OPEB/Capita ratios and compare them to San Francisco. Time to Get Real and Deal. Let's break down Buffalo's liability to its major component parts.
City of Buffalo - OPEB liabilities, estimated at about $945 million for the City, with an
annual contribution of $58 million (as of last year) will need consideration
going forward. Despite the fact that funding is currently not required, its
impact will start to be felt in the next few years and a course of action to
deal with this issue will need to be contemplated.
Buffalo School District OPEB liabilities will loom large over the period. Current assessments put the OPEB liability at $1.2 billion, with an expected yearly charge of $137.6 million. The annual required contribution would increase the District’s annual costs by another $89.4
million. Although currently there is no requirement to fund this liability, its impact on
the district over time cannot be ignored as the costs are very significant, compound
annually and could eventually impact on the City of Buffalo credit ratings.
A new Bills uniform, a new Sabres uniform or even a new suit for Byron Brown won't change the numbers and the outlook for the future. Lets Get Real and start talking about the liabilities we are facing vs. the colors of our team logos.
