WINNIPEG, MB: The Canadian Taxpayers Federation (CTF) today urged candidates to be cautious with their spending commitments as a $16 million annual pension expense is likely to hit city hall in the near future.
Over the past several years the City of Winnipeg has been drawing funds out of a surplus account and using them to help pay its pension obligation instead of paying the full share from general revenues. According to the benefits program’s annual reports, the surplus account was reduced from $130 million in 2006 to $60 million in 2012. The city indicated to the CTF that it withdrew $16.3 million in 2013 and is expected to withdraw about the same in 2014.
Based on this rate the fund should be empty in a couple years. However, the fund’s 2013 annual report and actuary valuation report have not yet been disclosed.
“Once the fund is dry the city will likely be left scrambling to find $16 million (or more) each year to fulfill its pension obligations,” said CTF Prairie Director Colin Craig. “That’s the equivalent of about a 3% property tax increase each year.”
“Candidates are currently having trouble finding $20 million annually for the proposed rapid transit expansion,” continued Craig. “Well, surprise! They’re likely going to have no choice but to start finding $16 million each year to pay for the city’s pension plan too. It’s pretty clear the taxpayer can’t afford everything that council candidates are promising.”
The city’s own 2013 Annual Report noted the following:
“Until recently the Winnipeg Civic Employees’ Benefits Program’s special-purpose reserves have been used to subsidize the cost of benefits. Since the inception of the Program, it has been recognized that these reserves would gradually diminish over time as they were drawn down, unless they were able to be replenished through actuarial surpluses generated by “excess” investment returns. In part due to the 2008 market downturn, the Program’s reserve position is currently insufficient to continue to subsidize the cost of benefits on a sustainable basis.”
Tax Increase Watch
Current Council-Approved Annual Increases:
2.0% - Increase for infrastructure each year
Impact of Other Expenses:
3.0% - Equivalent needed for a $16 million pension expense
4.3% - Equivalent needed to pay for $20 million annual rapid transit expense
