Wednesday, May 15, 2013

OPEB funding

OPEB is bureaucrat-ese for "Other Post-Employment Benefits."

We'll be hearing about it more and more in Amherst Town Meeting, because "we" (past Town Meetings / Select Boards) have promised more than 90 million dollars in benefits that "we" didn't put aside money to pay.

Oops. That is more than the Town's total yearly budget.

Promised-to-pay benefits are a huge problem at the local, state, national, and international level. I don't know enough about politics to figure out what is likely to happen, and I suspect we'll see different towns/states/countries try different things-- some will bend or break their past promises, some will plug the hole by taking wealth from people they think can afford it (or who aren't politically powerful enough to complain much), and maybe some will figure out a way to grow their way out of the problem (millions of young immigrant workers paying taxes could push the problem another 40 years into the future).

What should Amherst do?

It is awfully tempting to do nothing. After all, every city and town in Massachusetts is facing a similar problem. It seems very likely that, at some point, either the State or Federal government will step in and fund some sort of bailout, wiping away Town debts by some combination of "breaking promises" and "redirecting wealth." They'll use lots of nicer sounding words, of course; it won't be a local/state government bailout, it will be "Medicare for All" or "Universal Health Security Accounts" or something.

If the Town of Amherst is responsible and tries to pay off those promises itself (which we've started doing, in a very small-so-far way) then we might just end up benefiting less from that future bailout.

Maybe the most responsible thing to do is to be irresponsible.


Larry Kelley said...

Yeah, the Golf Course has gotten by for 25 years now because of out-of-sight-out-of-mind hidden costs (employee benefits, capital improvements, insurance) that don't even include those "Other Post-Employment Benefits."

Town Meeting is pretty good at being "irresponsible."

Bill Berggren said...

If they are promises to pay, they can make identical promises not to pay. Thus, they would cancel out. With bitcoin, there are no promises to pay.