Garbage fee on Omaha ballot?

Omaha Mayor Jim Suttle is considering a garbage collection fee to help shore up the city's troubled police and fire pension fund, but he may have a tough time selling it to the City Council.

Suttle wants to put a household garbage fee on the November ballot.

If approved by voters, the $10 monthly residential fee would generate an estimated $15 million annually — enough to cover the city's higher pension contribution to police and firefighters.

“Putting a garbage fee to a vote of the people … is the most equitable solution for the city's share of the pension shortfall,” said Ron Gerard, a spokesman for the mayor.

But City Council members interviewed by The World-Herald said they were uncomfortable not only with the garbage fee but also with a provision in the proposed police contract that calls for a nearly 34 percent pension contribution by the city and about 15 percent by police.

The city currently contributes about 20 percent to the pension, with police kicking in just under 15 percent.

The city's higher pension contribution would amount to an extra $7.3 million in the police contract; the total for both police and firefighters would be $13.5 million. Suttle is still negotiating the fire contract.

Councilwoman Jean Stothert said she's troubled by the financial implications of the police contract for taxpayers.

“I'm a taxpayer too,” she said. “It's going to be difficult to impossible for the citizens to agree that this is a good deal for them. There is no one who doesn't agree that there is a large price tag on this contract for taxpayers.”

The police and fire pension fund has a long-term shortfall estimated at $500 million, a problem city officials say could eventually bankrupt the city if left unchecked.

Under the proposed five-year contract, police would accept new pension rules — and lower benefits — that would save about $13.5 million a year, city officials say.

Most of the benefit changes in the contract, including an older retirement age for full benefits, would affect officers hired in subsequent years.

Officers on the force now would receive smaller pensions, though other benefits would stay the same. City officials say the practice of “spiking'' pension benefits in the last years of employment would end.

Some council members question whether the city's contribution rate increase violates a city code provision requiring that police and city pension contributions be “substantially equal.''

City Attorney Paul Kratz said there is no violation. He said there is parity between the value of benefits given up by police and the city's financial contributions to the fund.

Even so, Stothert and Councilmen Franklin Thompson and Pete Festersen take issue with the difference in contribution levels. Thompson said he wouldn't vote to approve the contract because of it.

Gregg Rueschhoff, the city's actuary, described the revamped police pension as “backloaded'' for the city.

Over the next 40 years, he said, the city will see substantial benefit savings with officers hired in subsequent years. That's because they will receive lower pension benefits than officers currently on the force.

Stothert, however, said Rueschhoff also has told council members there is only about a 50 percent chance that the contract would solve the pension shortfall over a 40-year period. Other variables, she said, include future contract negotiations and the stock market performance.

She said because of those factors, she would have a tough time selling the contract — as well as a garbage fee — to her constituents.

Suttle is seeking a new funding source for the city's share of contributions into the pension fund.

The mayor had pinned his hopes on a half-cent city sales tax increase, but state lawmakers balked at that idea. As a result, no sales tax bill was introduced in the current legislative session.

Plan B is a $10 monthly residential garbage fee. Suttle is expected to ask the council to place the measure on the ballot. A state law passed in 1992 bars Omaha from levying a garbage fee unless voters approve.

Council President Garry Gernandt said no matter what the council decides, he doesn't think the fee will fly with voters.

“I don't think the people would vote to tax themselves,” he said.

Councilman Ben Gray said he would support putting the fee to a public vote, but he doesn't support the fee itself. He said it would create a hardship for low-income residents of his north Omaha district.

Festersen said he wouldn't consider supporting the fee until he's satisfied that the police contract is a good deal for the city.

A garbage fee was one of three funding options proposed last year by a task force that examined the city's pension fund. The others were a half-cent sales tax hike or a property tax increase.

Suttle isn't giving up on the sales tax. Gerard said the mayor will push lawmakers again next year to allow the city to raise its 1.5 percent sales-tax rate.

He said a last resort would be a property tax increase.

Contact the writer:

444-3100, maggie.obrien@owh.com

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