Georgetown Airport Issue Being Escalated!

The Airport Concerned Citizens group of Georgetown are concerned about many aspects concerning the future use of the airport. They believe the Texas Department of Transportation(TxDOT), acting as an agent for the Federal Aviation Administration, and the City of Georgetown has in the past and continues to violate the National Environmental Policy Act (NEPA). A letter to TxDOT identified their concerns. The letter is part of the July 24 post in this blog.

The lack of response by the City of Georgetown and TxDOT has caused the Airport Concerned Citizens(ACC) to lodge complaints with Congressman John Carter and with the Associate Director for NEPA Oversight in Washington D.C.  An ACC member traveled to Washington DC this month and expressed their concerns directly with Carter's staff and the Associate Director for NEPA and his staff.

Congress established the Council on Environmental Quality within the Executive Office of the President as part of the National Environmental Policy Act of 1969 (NEPA). In enacting NEPA, Congress recognized that nearly all federal activities affect the environment in some way and mandated that before federal agencies make decisions, they must consider the effects of their actions on the quality of the human environment.  Thus, NEPA has oversight over all federal agencies and departments and that includes the FAA and EPA.

The Airport Concerned Citizens group has become aware of other airports around the country that have apparently violated NEPA requirements and are networking with 2 of them to exchange information and approaches to resolving the issue of airports not complying with NEPA requirements.

One approach is to get the mainstream media engaged so that the public is made aware of the issue. A member of a community organization involved with litigation against a New Jersey airport, who attended the meeting with the Associate Director for Oversight, has contacted the television news program 20/20 to start an investigation into this issue of non-compliance. A similar effort is underway here in Central Texas to engage the local media.

If the City Council and staff are smart, they will try to get ahead of this potential freight train(The Federal Government) and solve the ACCs concerns without Federal or State involvement.  In my view, when Big Government gets involved, it is expensive and very time consuming for the City and the residents.

City is Expanding Staff Again

As part of the FY-16 city budget, the city staff is planning on moving the operation of the water treatment and waste treatment from contract to in-house city employees, without objection from the council.  The city projects this move will save $5,000,000 over the next 5 years.  So far as the public is concerned, this savings is an "assertion".  No analysis has been presented to justify the savings or change in operation.

The city needs to do a rigorous cost-benefit analysis and share the results with its citizens before making the change.  A rigorous cost-benefit study would include the following as a minimum:

· The study comprehensively measures direct costs.

· The study comprehensively measures indirect costs.

· Tangible benefits are monetized to the extent possible.

· Intangible benefits are monetized to the extent possible.

· Costs and benefits are measured against alternatives or a baseline.

· Future costs and benefits are discounted to current year values (net present value).

· Key assumptions used in calculations are disclosed.

· Sensitivity analysis is conducted to test how the results would vary if key assumptions were changed.

In addition to calculating the pension and health care benefit costs over the expected life of the employees, an attempt should be made to value the loss in flexibility for the city to adjust staffing levels if there is a reduction in revenue caused by external economic forces.

Also, what is the value to the citizens of maximizing private industry's participation in providing city services in a competitive environment as opposed to using city employees?

Engage your city council and request a rigorous and comprehensive cost-benefit analysis be performed and shared with the citizens before deciding to transition the operation of these plants to city staff.

Top Level 2016 Budget Analysis

The Georgetown budget has been on a roller-coaster ride the last 10 years because of the collapse of the housing market and near financial collapse of the major US banks and the subsequent recession.  The following chart shows the budget over the last 10 years.

Even with the non-linearity of the budget over time, it increased at a 8% annual rate.  A more realistic picture of the budget growth can be observed over the last 4 years as the economy recovered.  Here is that chart:

Whoa - look at that growth rate, 12.4% compounded annually.  At that rate the budget doubles in 6 years!  There will be many "excuses" put forward justifying this growth in the budget, including taking over Chisholm Trail water service, the Emergency Medical Service and more bond funded projects.  These are not justifications for an increasing budget, each function and project has been deliberately and consciously added by the council knowing full-well that they would grow the budget.

Finally, let us look at the population growth rate.  The census bureau just revised upward, the population numbers for Georgetown for the last 5 years.  We will use those most recent population estimates to compute the growth rate.

Thus it is observed that the population is increasing at a 4.8% annual rate over the last 5 years.  With inflation increasing at a 2.3% rate over the last 10 years or so, the budget should increase no more than population growth + inflation, which is 7.1%.

The City Council needs to seriously reduce the budget to a level consistent with population growth + inflation.  That is likely not doable in a single year, but, that budget growth curve needs to be bent toward the sustainable goal of population growth + inflation.

Contact your councilperson and let them know that the budget growth needs to be reined-in.

Proposed Georgetown City Budget is On-line

For those into self flagellation by perusing pages of mind-numbing numbers, the proposed city budget is at the following link:

City Budget

"Frozen" Tax Under Fire by City Staff and Some Council

The City of Georgetown enacted a freeze on property taxes in 2004 for people over 65 years, those who Homestead their property, those who are disabled at any age, and for disabled veterans.  These "frozen" taxes manifested themselves in the 2005 tax year.

Some city staff and council persons are concerned about the uneven tax burden on city residents caused by the "frozen" taxes.  The following analysis was provided by city staff to council members at the last council workshop to support their concern.  Notice it focuses on assessed valuation, not tax revenues!

The staff calculates the city is missing out on collecting $2,870,000 from the property owners because the Assessed Valuation is frozen for those entitled by Texas state law.

A look at the Sun City residential property tax revenues, provided by the Williamson County Tax Assessor/Collector, shows that any unevenness in tax receipts is likely caused by other factors.

It is easily seen that actual tax revenues collected in Sun City from the "frozen" property owners grew at a compounded annual rate of 10.88% from the initial freeze year.  Approximately 80% of the Sun City residences were "frozen" in 2013.

The city budget has grown at approximately 8% plus over the last 8-10 years.  Clearly, the "frozen" tax revenues are growing faster than the city budget.  Any uneven tax burdens placed on city property owners is not caused by the "frozen" taxes.  Any perceived unevenness between those with "frozen" taxes and those whose taxes are not "frozen", could be alleviated by reducing the tax rate, as that would only affect those whose taxes are not "frozen".

Let your city council person know that they need to focus on tax revenue extracted from residents, not tax rate!  The city budget should not be increasing faster than inflation plus population growth!  Right now inflation + population growth is 7.2%.  The city needs to pass a budget that is less than or equal to 7.2% over the last budget!  The State of Texas has done that, why not Georgetown!

City Violating Federal Law with respect to Georgetown Airport??

The Airport Concerned Citizens group of Georgetown are concerned about many aspects concerning the future use of the airport. They believe the Texas Department of Transportation(TxDOT), acting as an agent for the Federal Aviation Administration, and the City of Georgetown has in the past and continues to violate the National Environmental Policy Act (NEPA). A letter to TxDOT identifies their concerns.


July 23, 2015

Mr. David S. Fulton, Director Texas Department of Transportation, Aviation Division 125 E. 11" Street
Austin, TX 78.701

Re: Letter dated June 30, 2015 from David Morgan to David Fulton

Dear Mr. Fulton:

The referenced letter, dated June 30, 2015 from Mr. David S. Morgan, City Manager, City of Georgetown to you, requests federal grant assistance in total amount of $3,475,000 for “safety” improvements for fiscal years FY 2016 and FY 2017 for Runways 11-29 and 18-36 at the Georgetown Municipal Airport (GTU). It is well understood, by TxDOT's past responses for GTU “safety” improvements, that your agency responds with 90% federal grants for such requests. This request by the city has a dual purpose: (1) a minor purpose of repair of surface cracks in the two runways and (2) an overriding primary purpose of expanding capacity at GTU by adding a whole new family of larger, heavier and noisier aircraft to the air fleet mix and, thereby, expanding aviation operations. As has been emphasized to you many times in the past, all improvements financed in part by the FAA has entailed significant and potentially significant direct, indirect, and cumulative impacts, and yet no legitimate NEPA review has been completed.

On behalf of the Airport Concerned Citizen (ACC) and all citizens both inside and outside the City of Georgetown, who will be adversely impacted by implementation of these two fiscal year capital improvement programs (CIP's), it is requested that any proposed use of federal funds for their implementation be only subsequent to their inclusion in the preparation of a comprehensive Environmental Impact Statement (EIS) that encompasses all federal grants awarded for GTU improvements including the current pending GTU 2015 CIP. This request, for a comprehensive EIS, is in accordance with provisions for use of federal funds for local projects as provided by the National Environmental Policy Act (NEPA) due to lack of documentation of NEPA compliance for any of these past and currently proposed federal grants.

The current Airport (GTU) Master Plan, prepared by GRW-Willis, Inc. and approved by TxDOT AVN, by its provision of a 90% federal grant for the plan's Airport Layout Plan, is the origin of all subsequent TxDOT approved federal grants since 2005 for GTU's development and accommodation for expanded air fleet operational needs for the 20 year period of 2004 to 2024. Regarding the specific runway repairs addressed in the referenced letter the current master plan states:

1.”Currently Runway 18-36 is capable of supporting 30,000 pound single-wheel aircraft which is in the low end of pavement strength required to accommodate business jets in ARC C-II category.” Note: Airport Reference Code (ARC).

2.”The operational restrictions for Runway 11-29 being closed indefinitely to aircraft 12,500 lbs of over was issued as result of design standards required for GPS non-precision approaches to Runway 11–29.”

3.”It is recommended that pavement strength of Runway 18-36 be upgraded to 60,000 pounds dualwheel loads. If necessary upgrade Runway 11–29 to 30,000 pounds single-wheel loads. The consequences of this improvement are (1) operational benefit resulting from the capability to accommodate almost the full range of business iets in ARC C-II category, (2) noise benefits in the north-south direction resulting from the capability of Runway 11–29 to share some of the high noise operations.”

4. “At the present, Runway 18/36 is designated to accommodate C-II aircraft while Runway 11/29 is for B-II aircraft.”

5. From Table 2-13, page 2.16, Projection of Fleet Mix (2003-2024); 2024- Single Engine-86.25%, Multi-Engine-6.25%, Turboprop-3.50%, Jet -2.5%, Helicopter 1.50%, Total – 100%.

These statements from the current GTU master plan contradict the referenced letter which included the statement: “This improvement will accommodate 60,000 pound single-wheel aircraft, which is consistent with our current fleet mix and consistent with our current airport design category”. When one examines a new 60,000 pound single- wheel load capacity, it translates to a new expanded group of aircraft types within the GTU's fleet mix with gross weight aircraft up to 150,000 pounds with dual wheel loading. Most aircraft of 20,000 pounds to 200,000 pounds, are dual wheel aircraft. The GTU runways have different ARC category designations which are based on each runway's accommodation of wing spans and approach speeds.

An examination of the city's estimated costs, for these two fiscal year programs, demonstrates that when the costs for design and repair of pavement surface cracks for Runway 11-29 are applied on a pro rata basis to Runway 18-36, to attain equal preservation of both runway's design pavement strengths, the total cost for repair, rehabilitation and marking of the two runways is $879,715.

This examination demonstrates that the city's estimated cost for strengthening Runway 18-36 from its current 30,000 pound single-wheel loading capacity to the proposed 60,000 pound single-wheel strength is estimated at $2,595,285. Or, about 75% of the entire cost of the dual fiscal year program cost.

The GTAB and the City Council have intentionally and consistently refused to provide the public and the press a full vetted discussion of the size, weight, and noise ranges of the new GTU fleet mix these new proposed capital improvements would generate and the primary purpose of the request to expand GTU aviation operations.

Extraordinary circumstances apply to the GTU which include, but are not limited to the following:

1. The GTU and its over 650 acres is located in the planned middle and heart of the 2" fastest growing city over 50,000 population in the nation. It currently is virtually surrounded by homes, schools, churches, medical facilities and businesses. The city's 2035 Thoroughfare Plan describes the city's plan to completely enclose GTU into the heart of the growing city;

2. To date, Georgetown has refused to adopt any airport related zoning ordinances, land use, or building restrictions for properties near or directly adjacent to GTU property lines. The city's noise and nuisance ordinances completely avoid and ignore airport issues;

3.The total GTU property lies atop the Edwards Recharge Zone (ERZ), the geologic formation that provides surface water recharge to the Edwards Aquifer, a drinking water source for over two million people including the citizens of Georgetown. For many, the Edwards Aquifer is their sole drinking Water SOurce.

Additionally, the ERZ's caverns and solution channels provide habitat for an abundance of species some of which are listed on federal threatened and endangered lists.

Additionally, the ERZ is especially sensitive to pollution from hazardous materials and substances. The city has GTU existing tenant leases with aviation industrial operations that use hazardous materials and has been recommended by its financial engineering consultant, CH2MHill, Inc., to substantially increase its tenant lease properties as a means of increasing GTU revenues. The city has no pro-active ordinances or tenant contract requirements requiring city inspections for storage, use, capture and disposal of hazardous materials. Instead, the city refers through its GTU tenant contacts that the tenant be totally under the control of the Texas Commission on Environmental Quality (TCEQ) for compliance with that agency's rules and inspections. A “catch me if you can” environmental compliance requirement.

4. Any consideration of federal grant approval by TxDOT of the referenced letter's request would recognize the requirement for a new GTU Part 150 Noise Compatibility Study. The new family of larger, heavier and noisier aircraft of all engine types that the proposed upgraded Runway 18-36 would accommodate would make the existing 2001 Part 150 Noise Compatibility Study completely inappropriate. The existing 2001 noise study previously provided to you was shown to be defective as described in my Draft ROI Response dated January 12, 2015. This new proposal by the city would completely negate it for any consideration of continued consideration.

5. The GTU is a well documented environmental problematic facility with numerous citizen opposition protests spanning over 30 years protesting any expansion of aviation operations. Any approval consideration by TxDOT for use of federal funds for maintenance and/or new construction at GTU would be cumulative to an existing pattern of NEPA violations that began by FAA funding for land acquisition under threat of condemnation, relocation of Lakeway Dr. and extension of Runway 18–36 during the period 1987 to 1991. This was prior to TxDOT's State Block Grant Program (SBGP) participation for FAA federal grant management for Texas. As described in my Draft ROI Response dated January 12, 2015, citizen protests in opposition to expansion of aviation operations at GTU have continued through the current date and will continue until NEPA compliance by the city, TxDOT and FAA is demonstrated and documented.

6. The proposed federal grants, requested by the referenced letter, would be cumulative to past federal grant actions whereby TxDOT refused to consider indirect, direct, and cumulative significant degradation of the human environment by increased airport demand resulting from its federal funded improvements. The indirect, direct, and cumulative growth inducing impacts by ground facilities expansions, runway extensions, 24 hour LED airport lighting, air traffic control tower, state of the art navigational aids, and terminal customer accommodations all increase airport demand and aviation operations. Regarding the referenced letter, it is well understood by FAA that new, extended and substantially strengthened runways are the most effective capacity-enhancing feature an airport can provide.

7. My letter dated September 10, 2014 to Mr. Greg Miller, TxDOT AVN, Planning and Programming Director, described the agency's inappropriate use of “segmenting” as a means to improperly describe, examine and assign a determination of categorical exclusion for a pending federal grant action from full NEPA review and examination of practicable alternatives. That letter remains unanswered by any TxDOT official to this date.

8. As of this date the FAA has not responded to my Draft ROI Response dated January 12, 2015 documenting critical and essential issues associated with the GTU and identified NEPA violations. In addition, FAA has not responded to my letters of February 21, 2015 and May 26, 2015 requesting a full federal regulatory and fiscal audit of all GTUI federal grant actions To this date the city, TxDOT and FAA have not produced any documentation of EA's and resultant Findings of No Significant Impacts (FONSI's) or EIS's and resultant Record of Decision's (ROD's) or any newspaper notices of public hearings specifically for the purpose of public participation and input regarding proposed use of federal funds for GTU improvements for any past, current, and pending federal grants.

In conclusion, it is imperative that a complete and legitimate NEPA review be conducted for indirect, direct and cumulative adverse environmental impacts, social and economic impacts and examination of all practicable alternatives not only for the referenced letter's request for new federal grants for the GTU, but for a comprehensive NEPA review and examination for all past, current and pending federal grant actions.

Respectfully Yours,

Hugh C. Norris, Jr. 4400 Luna Trail Georgetown, TX 78628 (512) 868-2718

Cc: Mr. H. Clayton Foushee, Director, FAA Office of Audit and Evaluation 
Ms. Gina McCarthy, EPA Administrator 
Mr. Michael O'Harra, FAA SW Deputy Regional Administrator 
Mr. Horst Greczmiel, Associate Director for NEPA Oversight, CEQ 
Mr. Craig Weeks, EPA Region VI, (6EN-X) 
Mr. Dean McMath, Mgr., Regional Environmental Programs, FAA, SW Region 
Mr. Ted Houghton, Chairman, Texas Transportation Commission 
The Honorable John Carter, Congressman, 31*. District for Texas 
The Honorable John Cornyn, Senator for Texas 
The Honorable Ted Cruz, Senator for Texas 
The Honorable Dale Ross, Mayor, City of Georgetown 
Mr. David Morgan, City Manager, City of Georgetown

Item 1 in the letter is of particular significance.  The airport is in the middle of the 2nd fastest growing city over 50,000 population in the U.S. History proves that cities in similar circumstances in prior years around the U.S. have experienced citizen turmoil and ultimately lawsuits to restrict or eliminate aircraft operations.

It is also worth restating that strengthening the main runway will allow larger aircraft to operate into and out-of the airport.

The city should only expend funds to maintain the existing airport capability while conducting a long-term analysis, including local citizens, as to whether the airport capacity should remain as is, expanded at the current location, or moved to an alternate location. The long-term ownership and operation of the airport by the city should also be addressed.

Levity For The City Council

In light of the ordinance prohibiting the feeding of deer within the City, the following sign is submitted to the Council for implementation!

More Georgetown Pension Analysis

The previous posts on Georgetown's pension obligations, as measured by unfunded liability and funded ratio, focused on how the health of the system depends explicitly on the assumed growth rate of the pension fund managed by the Texas Municipal Retirement Fund(TMRS). The Comprehensive Annual Financial Report(CAFR) for 2014 provides the actual performance achieved in 2014. For the year ended December 31, 2014, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expenses, was 5.85%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

Using the TMRS reported pension liabilities and assets, the 7% interest rate, and the 30 year amortization period one can calculate the performance using the actual 2014 investment performance. Sparing the reader the mathematical details, the results are:

unfunded liability  $57,000,000

funded ratio  60.2%

Thus it is clear that the health of Georgetown's pension fund is substantially less than reported by TMRS. A funded ratio of 60.5% is far less than the reported 83.3%.

The 10 year return for TMRS is 6.5%, below the 7% target return. The surging stock market since 2009 has allowed TMRS to earn 8.6% over the previous 3 years and 7.4% over the previous 5 years. It is apparent the annualized return is quite volatile and is very depended on the time frame selected over which to average the returns. The 10 year return includes the market crash in 2008 and 2009. Moodys for instance recommends an average amortization period of 13 years.

There are other more disturbing revelations in the 2014 CAFR. The TMRS Executive Director states "The Systems portfolio is under a process of diversification and has shifted from an income-oriented strategy to a total return approach similar to most pension funds. The portfolio is diversified across all segments of the U.S. and international equity markets (both developed and emerging). The fixed income portfolio consists of core and non-core investments. The System also invests in real return assets (currently global inflation-linked bonds), absolute return strategies and real estate".

This is "financial speak" for hey, we can't get 7% returns on conservative U.S. equities and bonds, so we are increasing the risk to try and get higher returns! For example, Real Return can include such investments as: commodities, inflation linked-bonds, oil & gas, timber, agriculture and precious metals.

Private Equity can include investments in distressed and bankrupt companies, providing venture capital and leveraged buy-outs.

Absolute Return primarily involves investments in hedge funds and includes various types of arbitrage as well as short selling.

Even though these asset classes, including real estate will only comprise about 25% of the portfolio, they will significantly increase the risk. Just two years ago, the portfolio held 1.9% in Real Estate and 4.9% in Real Return and nothing in Absolute Return or Private Equity.

The following table indicates TMRS target asset allocations. The portfolio is still currently over-weighted in U.S. Equities and Core Fixed Income and there are no investments shown in Private Equity.

Asset Allocation Table • Strategic Targets

Asset Class                     Minimum %    Target %        Maximum %

U.S. Equities                   12.5%        17.5%           22.5%

International Equities          12.5%        17.5%           22.5%

Core Fixed Income               25.0%        30.0%           40.0%

Non-Core Fixed Income            5.0%        10.0%           15.0%

Real Estate                      5.0%        10.0%           15.0%

Real Return                      2.0%        5.0%            10.0%

Absolute Return                  0.0%        5.0%            10.0%

Private Equity                   0.0%        5.0%            10.0%

Cash Equivalents                 0.0%        0.0%            10.0%

The TMRS is aggressively moving its portfolio to higher risk investments in search of higher returns.

Even though the pension fund may not be in serious trouble right now, the pension fund is not in as rosy a position as reported. The City of Georgetown needs to be watching their pensions and make sure their liabilities are assessed using realistic investment return rates. Also, watch the risk being assumed by TMRS to meet unrealistic goals.

Tidbits From Special Council Meetings

The city staff indicated that the growth in sales tax revenue for the city has substantially slowed. From about 10% last year to about 2.5% this year. They confirmed that trend by checking both regionally and state wide. It remains to be seen if this is a precursor to a broader economic slow-down in the months ahead.

Kudos to the new city manager, David Morgan, for his initiative in restoring the road maintenance line item back into the baseline budget and presenting it at the Friday meeting. He also created a "special fund" for the surplus FY 2015 money for the council to distribute within 90 days after the end of FY 2015 which is September 30, 2015. These moves are consistent with the budget policy established by the city council last year.

The council also provided direction to the City Manager and Police Chief to bring forward the proposed agreement to participate in a regional SWAT team with Cedar Park and Leander. That proposal will be on a future regular city council meeting agenda. (Editorial comment: The council should also request the Police Chief develop written guidelines as to when and how the SWAT is to be deployed!)

Finally, it appears the staff is working on a plan to assume operation of the water treatment and waste treatment plans with city employees. They orally indicated they believe they have the technical capability and that $5M will be saved over the next 5 years. The City operates three water treatment plants and five wastewater treatment plants. Water Services retains ownership of
these plants and contracts for their operation. The City’s current utilization of its water supply is 35% ground water and 65%
surface water.

A rigorous cost-benefit analysis, which includes the lifetime health insurance and pension benefits of the city employees required to operate the plants, needs to be done and presented to the citizens/council before any changes in operation of the plants is proposed.

The City will be determining a source of revenue to fund the EPA Phase II regulations (salamander rules), the Regional Stormwater Plan, and other requirements regarding stormwater control within municipalities. The most likely revenue source is through a combination of stormwater fees and developer fees paid in-lieu of onsite detention. The other option is to add $1.25 per month to each resident's stormwater bill.

City Council Violates Own Budget Policy

At the special city council meeting on the budget last night, the city staff presented a budget for 2015-2016 that included projected unspent funds from the 2014-2015 budget. Historically there have been $1M-$2M of surplus funds at the end of the fiscal year. This comes about because of conservative revenue estimates at the beginning of the year or reduced expenditures for a variety of reasons, such as delays in filling vacant positions, etc.

Last year, the council instituted a new budget policy with respect to the end of year surplus funds. The new policy was very clear that any end of year surplus dollars could not be used by city staff as a fund source for the next fiscal year. The council would direct the use of those end of year funds into one time projects or debt reduction within 90 days after the end of the fiscal year. Yet, last night, the council allowed the staff to use $1.252M of the projected $1.4M end of FY 2015 surplus to be used as a funding source for the 2016 budget. So, the council clearly violated their own policy.

Furthermore, the staff proposed using the surplus funding (whose exact amount will not be known until after the close of the current fiscal year) to fund road maintenance projects. Since road maintenance is clearly a baseline budget item, it should NOT depend on surplus, prior year funds. This appears to be a ruse to obfuscate other spending.

Stay tuned!

Preliminary City Budget Document

The preliminary city budget document can be downloaded at the following link'

http://agendas.georgetown.org/Bluesheet.aspx?ItemID=10964&MeetingID=1196

The information in this document will be discussed at tonight's special city council meeting starting at 6 pm.

City Employees Pay

The city staff presented their methodology at the last city council workshop by which they propose to adjust city employee pay levels. The basic methods is to compare "like" jobs with similar cities in Texas. Those cities in close proximity are: Austin, Cedar Park, Leander, Pflugerville, Round Rock and Williamson County. Other similar sized cities considered are: San Marcos, New Braunfels, Sugar Land, Grapevine, Denton and Flower Mound.

The primary issue with this method is that essentially if all cities use this method, the pay scales keep ratcheting up as each city tries to keep up with the "average city" and keep nearby cities from poaching their employees. There is no relationship between pay and actual work performed or value added for the city.

Other flaws in the method are a result of the inability to accurately construct 1:1 comparisons for individual jobs. The responsibilities and work tasks for a library assistant in different cities are most likely different to some degree.  Also each city may have a different retirement system which can affect the pay that an employee is willing to accept for a given job. Similarly, each city may have a different health benefit system which could also affect pay rates.

Finally, each city likely has different costs of living. For example, it is likely more expensive for an Austin city employee to live in Austin than it is for a Georgetown city employee to live in Georgetown. No adjustment for cost of living variations has been included in the methodology.

There are a host of problems with using this kind of methodology to set city employee pay. In the longer term a method that relates pay to the actual job and employee performance needs to be developed.

Idle musing! What does the private sector use to set pay levels?

City Council Meeting and Workshop Today

The Council workshop is today at 3pm at council chambers. The subject is the budget for next fiscal year on the following subjects.

A	Budget – General Capital Projects (GCP) -- Wesley Wright, Systems Engineering Manager, Jim Briggs, General Manager of Utilities and Laurie Brewer, Assistant City Manager
B	Budget – Employee Compensation & Benefits -- Tadd Phillips, Director of Human Resources

The regular Council meeting is at 6pm today at council chambers. The following subjects are on the agenda to be updated. 

Project Update and Status regarding American with Disabilities Act (ADA), Downtown Facilities, Downtown Parking, Lease Agreements related to City-Owned Property; 2015/16 Annual Budget Update; EMS Transition Update; Project Updates for the Georgetown Economic Development Corporation (GEDCO), the Georgetown Transportation Enhancement Corporation (GTEC), and the Georgetown Transportation Advisory Board (GTAB), and Possible Direction to staff – David Morgan, City Manager

There are special budget workshops scheduled for 6pm on Thursday, July 16 and Friday, July 17 in council chambers.

Attend these meetings, or watch on video, and find out how your city is spending your money.

Solution to Public Pension Liability?

One solution to the public pension liability problem that has been advocated by public pension gurus is to switch from a defined benefit plan to a defined contribution plan. A defined contribution plan is similar to a 401K or 403B plan where the contributions are defined, but, the benefits depend solely on the growth of the plan assets over the life of the individual plan contributor. The person contributing to the plan gets to select where the funds are invested, within some limits, and agrees to the retirement payout based on life expectancy at retirement and fund amount at retirement. In other words, the entire risk for the retirement is shifted to the retiree from the employer, in this case the city.

Perhaps it is time for the Georgetown City Council to consider transitioning city employees to a defined contribution plan so that the taxpayer is not responsible for any unfunded liability. There are methods for effecting such a transition. The Federal government transitioned from the long-standing civil service plan to a new Federal Employees Retirement(FERS) Plan in the mid 1980s. The existing enroll-es at the time continued in the civil service plan, while all new hires were enrolled in the FERS plan. The city could use a similar strategy.

The city should not wait to change plans until a crisis exists such as the one in Chicago, IL (http://city-journal.org/2015/eon0712ar.html). The proposed solution there is to issue long-term bonds to pay off short-term obligations. That is not a real solution to the growing pension liability problem, it is just kicking-the-can down the road.

Another solution advocated by progressives is to have the state take over local pension obligations. Again, not a real solution, just shifting the problem to another government entity.

Georgetown needs to begin to address the issue while it is still manageable. Ignoring the problem only allows it to grow into a crisis!

The Real Pension Liability Story

Georgetown uses the Texas Municipal Retirement System(TMRS) as the vehicle for funding the retirement of city employees.  This system is known as a defined benefit system as the benefits are payed to retirees based on their length of employment and highest annual base salary. The contributions to TMRS are invested in stocks, bonds and other financial instruments so that the funds grow enough to be able to pay the promised retirement. The growth and size of the fund is not a consideration when the retirement payments are payed out to the retirees. That is why it is called a defined benefit retirement plan.

If the retirement funds managed by TMRS do not grow sufficiently, the plan is said to have an unfunded pension liability. In the event the funds are exhausted, then the city will have to raise taxes or divert spending from other functions to make up the shortfall.

Every year TMRS calculates the unfunded liability based on expected growth of the funds, payout rates, number of expected retirees and other factors.

The TMRS Actuarial Valuation as of December 31, 2014 provides the following information.

Actuarial Accrued Liability      $104,163,491
Actuarial Value of assets               86,743,754
Unfunded Liability                     $17,419,737


Funded Ratio                                 83.3%

Within the public sector retirement plan community, a funded ratio of 80% or better is considered "golden". Georgetown reports that its funding ratio of 83.3% is 4th best among of a community of peers.

An over-riding factor in determining the unfunded liability is the growth of the funds deposited by the city. TMRS assumes an investment return, system-wide, of 7%, net of all investment and administrative expenses.

A net investment return of 7%, especially after taxes would be truly fantastic! It is highly unlikely that TMRS will achieve such a return in the future without investing in high-risk and speculative financial instruments.

Using a more realistic growth rate of 5%, which can be achieved by investing in selected Texas school bonds, the unfunded liability is approximately:

Unfunded Liability                      $46,000,000

Funded Ratio                                  65.4%

Using the most conservative risk-free rate accorded by the US Treasury of approximately 3% for a 15 year bond, the unfunded liability for Georgetown becomes:

Unfunded Liability                     $171,000,000

Funded Ratio                                  50.1%

Thus it can be seen that the unfunded liability and funded ratio can be significantly manipulated to show favorable results. At the risk-free rate of return of 3%, the unfunded liability is 10 times higher than the TMRS assumed rate of 7%.

The city staff, councilpersons, and the citizens need to be aware of the real potential pension liabilities facing them in the future as the city and city staff grows.

Do not be complacent about this hidden liability that threatens the future of all our local communities!

Federal Government Attack on Local Government

HUD has released the final rule entitled, Affirmatively Furthering Fair Housing. This will impact Georgetown through the city's participation in "Urban County Entitlement for the Community Development Block Grant Program". The city renewed their participation in this program, which is administered by Williamson county, at the June 23, 2015 council meeting fora the 2016-2018 time period.

It should be recognized that this new HUD rule is consistent with and supportive of Agenda 21, the United Nations endorsed program to pack people tightly into cities and get them out of their cars.

In the first step, HUD will force municipalities to collect detailed information on the racial, ethnic and class makeup of households within the city. This data, ostensibly will be used to facilitate planning. The data is intended to assist with the AFH(Assessment of Fair Housing) and addressing fair housing issues. It will address issues including patterns of integration and segregation, racially and ethnically concentrated areas of poverty, discrimination, persons with disabilities, and access to employment, transportation, education, and other factors that may assist with fair housing choice.

NOTICE the inclusion of employment, transportation, education and other factors to provide information to coerce cities into meeting Federal government requirements.

We need to have our city councilpersons get Georgetown out of HUD Community Development Block Grants at the moment we see a requirement for data collection as described above.

There are other Federal initiatives, like the Sustainable Communities Initiative that is also geared to usurp local control over housing, transportation, education, etc. More about that later.

Additional information about the Affirmatively Furthering Fair Housing Rule can be found here: http://www.nationalreview.com/corner/420896/massive-government-overreach-obamas-affh-rule-out-stanley-kurtz

HATERS in Central Texas

As a result of the letter on Obamacare published in the Wilco Sun, see July 2nd guest post on Obamacare in this blog, the following letter was received via the US Mail.  It expresses hate against the letter writer and against Iowans!  This is the kind of irrational behavior that conservative, God-fearing, constitution loving citizens of Texas are facing from big government progressives.

Pension Liability is Hidden

The pension liability of the City of Georgetown is hidden from public view.  The City retirement system is part of the Texas Municipal Retirement System (TMRS). Georgetown's employee's retirement is reportably funded at approximately 83.3%.  Funding levels above 80% are considered prudent by pension standards.

There is just one major problem with the reported funding level.  It assumes the investments backing up the pension systems are growing at a 7% annual rate.  As anyone who has a savings account knows, a 7% annual return in a "safe" investment is not possible.  Either TMRS is investing in high-risk instruments, or, they are fudging the books by using a 7% growth rate.

Ellen Norcross of the Mercatus Center at George Mason University has calculated the pension liability for the State of Texas.

Pension liability is calculated from each state’s pension actuarial reports. The unfunded pension liability is based on the expected return on the pension fund’s investment. The market value of the unfunded liability recalculates the value of pension obligations using the risk-adjusted discount rate, or the return on 15-year Treasury bonds, to reflect the legal guarantee associated with benefits. Changing the discount rate reveals the full liability for the plan and also reduces the funded ratio of the plan.

	Unfunded pension liability	Funded ratio	Market value of unfunded liability (risk-adjusted discount rate)	Market value of funded liability ratio
Texas	$39.87 billion	81%	$227.03 billion	43%
National average	$19.85 billion	70%	$78.79 billion	40%

The unfunded liability for the state of Texas assumed rate of return is $39.87 billion for a funded ratio of 81%. However, when the risk adjusted discount rate, or the 15 year treasury bond rate, is used, the unfunded liability balloons to $227.03 billion and a 43% funding ratio. The unfunded liabilities increased by a factor of 6X and the funding ratio decreased by 50%.

It is likely that Georgetown's share of TMRS is also significantly underfunded when using the 15 year treasury bond rate to discount the growth of the investments.

Georgetown needs to determine the unfunded pension liabilities when using a current real-world interest rate.

Ask your city councilperson to have the staff provide this information for all citizens to see!

Georgetown's Non-Transparent Budget Process

The City has scheduled 2 special council meetings for July 16 and 17 to review the FY 2015/16 city budget and tax rate. Following is the agenda for both meetings.

City of Georgetown, Texas City Council Agenda July 17, 2015

SUBJECT:

Call to Order - A Special Meeting of the City Council Workshop overview, discussion and possible action regarding the FY 2015/16 City of Georgetown Budget and Tax Rate –- David S. Morgan, City Manager and Micki Rundell, Chief Financial Officer

ITEM SUMMARY:

The City Council Workshops on July 16th and 17th is an opportunity to review current estimates and strategies under consideration prior to the submission of the City Manager’s Proposed Budget. City staff will provide a review of anticipated revenues and expenditures for all the major funds of the budget and seek City Council’s feedback and direction as City staff prepares the final elements of the proposed budget. Discussion on the 2015 property tax rate will also occur, providing direction to staff to prepare the proposed FY 2015/2016 Annual Budget. Council workbooks will be delivered on Tuesday, July14, 2015. Presentation will be provided on the dais.

FINANCIAL IMPACT:

A financial overview will be included as part of the discussion.

SUBMITTED BY:

David S. Morgan - City Manager Notice there is no advance information provided for the public. The first opportunity for the public to view the budget information will be at the July 16 meeting. The budget will again be discussed at the July 17 meeting. Again no advance budget information is provided. Contact your City Councilperson and demand they restructure this budget process to provide the presentations in advance of the public meetings so that citizens can provide informed inputs to the budget process.

Guest Post on Obamacare

Has Obamacare become SCOTUScare?

Last week was a devastating week for our Constitution. For the second time, the Supreme Court saved Obamacare by rewriting Obamacare--not by ruling on written law.

The first time the Supreme Court saved Obamacare was its 2012 ruling that Congress COULD NOT constitutionally mandate a penalty on people for not buying health insurance as required by Obamacare. However, the Court noted Congress COULD constitutionally impose a tax.  It then determined the mandated penalty was a tax and not a penalty as the Obama Administration had claimed for years.  President Obama had even insisted it was not a tax when interviewed by George Stephanopoulos on national TV.  This rewriting was judicial legislation by the Court.

Last week, the Supreme Court ruled Obamacare subsidies would be available to uninsured people in all states via a state or Federal government exchange.  The Court ignored Obamacare specified seven times that subsidies would be available only to people buying insurance from “an exchange established by the state.”  The Court claims it ruled on the intent of the law because Obamacare was a poorly written law. Oral descriptions of the intent were ignored.  Specifically, Dr. Jonathan Gruber (MIT Economics Professor and a principal architect on Romneycare and Obamacare) gave numerous taped speeches saying Congress limited the subsidies to “exchanges established by the state” specifically to encourage states to establish exchanges. These speeches are still viewable on YouTube.  This second ruling was also judicial legislation.  In his dissenting opinion, Justice Scalia suggested Obamacare’s name should be changed to SCOTUScare.

On Saturday, an immigrant from Australia wore a black band on his arm to mourn the death of our Republic.  With both the Executive Branch and the Supreme Court now legislating, America’s Constitution indeed may be on its deathbed.  All Americans should be very concerned.