During a recent trip to Montreal, it was interesting and appalling to read in the local media about a couple of pressing issues facing that city.
The deterioration of Montreal's infrastructure is obvious on the drive in to the city from the airport. The undersides of many overpasses are enveloped by steel mesh - both to catch chunks of peeling concrete from cascading on to the traffic below and to hold the remnants together. Doesn't instil a lot of confidence when passing underneath.
The papers reported that in June, two lanes of the Mercier Bridge were closed to traffic due to safety concerns about stability. Who would feel comfortable driving over the remaining lanes that are open?
Infrastructure repair and replacement is something this town has done well. Whistler's roads, pipes, etc. are relatively young; crumbling infrastructure is not the problem here that it is in many Canadian towns and cities. It was reassuring to see in the recently published 2010 financial statements that reserves, the municipality's savings accounts for replenishment of infrastructure, are being built back up after the Games spending spree of earlier times.
Also in the Montreal press was speculation that the city was about to go to war with its unionized staff over pensions. The statistics provide the rationale. According to the Montreal Gazette, in 2010, Montreal's contributions to its employee pension plans were $326 million; in 2011, $438 million; in 2012, they are forecasted to be $540 million.
In 2011, the city's pension fund costs amounted to 10 per cent of its operating costs. In 2012, the city will have to increase property taxes by 4.5 per cent just to cover the increase in its pension fund contributions.
Whistler belongs to the B.C. Municipal Pension Fund. The fund is a Provincial organization that receives contributions and administers pensions for just about all municipal employees in B.C.
The pensions are a "defined benefits" plan as opposed to a "defined contributions" one. A defined benefits plan guarantees pensions be a certain amount - in Whistler's case, a percentage of the highest five years of salary taking into account years of service. A defined contributions plan is similar to what most of the rest of us have with RRSP's - the pension depends on what the invested funds provide at retirement.
It makes sense to belong to a Provincial organization both for the administrative expertise of the fund and to smooth out the fluctuations of investment income and the numbers of employees retiring at the same time.
The problem for Whistler, as with many other public sector employers, is the defined benefits scheme. When salaries increase significantly the requisite pensions do as well - regardless of the performance of the investment of the funds to pay those pensions.
There is no upper limit. The magnitude of the problem is relative to the dollars involved.
In Whistler, according to the Statements of Financial Information (SOFI), the number of employees earning more than $75,000 increased from 61 in 2008 to 78 in 2010, and those earning more than $100,000 rose from 20 in 2008 to 42 in 2010.
The obligation to fund the pensions associated with those levels of salaries is a real concern. According to SOFI, employer contributions by Whistler to the fund increased from 2008 to 2010 by $250,000 - just shy of one per cent property taxes.
Another issue faced by the municipality, not related to pensions but to retirement, is the pay out of accumulated vacation and sick days. Most private sector employers live by a "use it or lose it" principle. Whistler does not and, according to the financial statements, the liability for these accrued benefits has increased from $995,981 in 2008 to $1.25 million in 2010.
Not as exciting as slabs of concrete breaking off bridges, but Whistler has its own structural issues that have to be addressed.