(Tuesday - January 05, 2021) - While the City of Iron Mountain's current finances appear to be in excellent shape, debts incurred over decades continue to loom over the City.

The information was released in the annual audit report of the City's finances. That report was delivered to the Council via Zoom, by Scott Sternhagen, Senior Manager of the accounting firm Clifton Larsen Allen, which performed the City of Iron Mountain's audit this year.

The elephant in the room, as it has been for the past couple of decades, appears to be the pension and former employee benefits program.

These "unfunded liabilities," often referred to as "legacy debt," were built up over decades, as City Council after City Council made promises to employees, but failed to put any money aside to fund those promises.

In almost every labor negotiation for decades, the City's unions would agree to smaller pay raises (in some cases no pay raises), in exchange for enhancements to their retirement programs. While the unions and employees were forward looking, the City Councils were not, as they continued to make promise after promise, but funded none of it.

At one point, many decades ago, I asked the chairman of the City's finance committee, "who's going to pay for all this?" The question was met with a laugh, and the comment, "that will be somebody else's problem."

It appears that the current City Council is that "somebody else," as it continues to struggle with how to manage this debt. The total debt, give or take a million or two, is $40,000,000.00. That's "Million," with an "M."

While it is true that many municipal entities have some degree of "legacy debt," Iron Mountain's is higher than average. Jordan Stanchina, Iron Mountain's City Manager, said that Iron Mountain would stand out like a "shining star."

Two things need to be pointed out:

1. These debts are not such that they are due tomorrow, or any time in the immediate future. Compare them with a mortgage on your home. It may be a huge number, but nonetheless, manageable.

2. Massive changes have been made to the City's employee retirement and benefits packages, hopefully assuring that the City will not again find itself in a similar situation.

 
Article by: DCNews Online Editor, Dave Lee
editor@dickinsoncounty.news







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