Grand Rapids' Mayoral Candidates Spar Over City's Financial Health

On August 4 Grand Rapids city voters will elect a new mayor. But they'll first have to make sense of widely divergent claims about the city’s fiscal health made by two of the four candidates, one a current and one a former city commissioner.

Commissioner Rosalynn Bliss says the city's total debt burden has fallen to just $533 for each resident under her stewardship. But Robert Dean, another mayor candidate who formerly served as a city commissioner, school board member and state representative, says the city's total obligations are more like $5,318 per resident.

Candidate Bliss says she got her data from a management dashboard on the city’s website.

“That particular dashboard is independently maintained by BS&A software, a leading provider of municipal financials tools,” Bliss said, adding that the firm uses the generally accepted accounting practices used by most municipalities.

Former Grand Rapids Comptroller Donijo DeJonge supports Robert Dean for mayor, and points out that BS&A has a disclaimer at the bottom of its product, the “Multiple Performance Dashboard,” that says it is not responsible for the content or accuracy of the data.

“I don’t know who enters the data for this site or what it represents,” said DeJonge. She says the city's comprehensive annual financial report is a better source, and one with several key tables showing the city's total debt burden exceeds $1 billion. That comes to more than $5,700 per resident, far higher than the $533 per capita figure Bliss put in her campaign literature.

DeJonge believes the $533 figure is an extrapolation from a table in the 2014 CAFR, “Ratios of Outstanding Debt by Type — Last Ten Fiscal Years.” It shows that one type of debt, general obligation limited tax bonds, has fallen from $82.4 million in 2005 to $49.7 million in 2014.

“The downward trend there is good but it doesn’t include everything, and the per capita number still does not reflect the $533 figure,” said DeJonge.

DeJonge says for taxpayers to get a true picture of the city’s fiscal health they need to look at all of its obligations, including bond debt and unfunded liabilities for employee pensions and post-retirement health benefits. The official CAFR includes all those figures.

She says that report shows that city employee retirement benefits are just 77 percent funded, leaving an unfunded liability of $102.6 million. Police and fire retirement systems appear in better shape, with just an 8 percent funding gap, which city Comptroller Sarah VanderWerff says will be closed this year.

So Grand Rapids taxpayers are liable for more than $133.7 million in unfunded pension benefits, or around $700 per resident. Under the state constitution these are an obligation the city may not renege on. (The city no longer offers defined benefit pensions to new employees, meaning it is on a multi-decade path to getting out from under this burden.)

But that's just part of the unfunded retirement liability. Retiree health benefits are an equal worry, because they are almost entirely unfunded. According to the report, the city faces a $135.5 million tab to cover those obligations over time, which is about $700 per current resident. Unlike pensions, these promises are not backed by the state constitution, and could be trimmed in the future.

DeJonge says to get a full picture Grand Rapids' fiscal status these unfunded retirement liabilities must be added to the bond debt shown in the CAFR's “Long Term Obligations” section. It lists $522.4 million in principal owed by the city and $288.4 million in interest.

Therefore, the city is on the hook for more than $1.08 billion, or $5,318 per resident. Moreover, the per capita amounts are likely to increase because the number of Grand Rapids residents is declining. According to City-Data.com, it fell 2.8 percent from 2000 to 2013.

Bliss was elected to the city commission in 2006 and will be ineligible to run for a third term under city term limits. She is eligible to run and have two terms as mayor.

Current Mayor George Heartwell has held office as commissioner and mayor for as long as the term limits ordinance allows. He supports Bliss to be his replacement.

DeJonge, VanderWerff and former Comptroller Stan Milanowski support Dean, although their endorsements came independently, not together.

“When it comes to fiscal responsibility, he’s been out (of city government) for awhile and recognizes the problem,” said DeJonge.

Bliss does not think the other officials' endorsements of Dean will have an impact on her campaign.

“The bottom line is the only endorsements that ultimately count is that of the voting public on election day and I have faith our citizens will look at my record of results as a hard working problem solver who can bring people together to find solutions and will support me,” said Bliss.

Also running for mayor are John George and Willard Lee, both described by WOOD-TV "local politics newcomers."