Source: Grosse Pointe News Online

Legacy costs hit cities hard

by Brad Lindberg Staff Writer

January 31, 2013

CITY OF GROSSE POINTE — The city’s projected gap between expenses and revenues, due to even out at $500,000 over the next few years, is almost entirely attributable to employee legacy costs, according to Peter Dame, City of Grosse Pointe manager.

“The level of benefits being paid to retirees in terms of pensions and medical (coverage) are financially unsustainable,” Dame said.

Councilman Andrew Turnbull cited a solution being considered by Chicago Mayor Rahm Emanuel to shift the bulk of employee legacy costs to the federal government and taxpayers nationwide.

The plan shifts employees onto President Barack Obama’s Affordable Care Act government health exchange.

“Their plan is to take a $2,000 per-person penalty as an employer and offset about $23,000 per person (costs),” Turnbull said.

“(Chicago municipal) employees (would) pay less than now and the city pays a lot less, because all they have to pay is the penalty,” said Charles Kennedy III, city attorney.

“The loser is the federal government,” Turnbull said.

“We’re the federal government,” said Councilman John Stempfle, referring to taxpayers.