GUEST POST by Tammie Casteel (Boise, Idaho) —
October 4, 2013
Dear Mayor Bieter:
I attended the Bond Proposal Open House on August 22nd and performed some online research pertaining to the portion of the Bond that will result in additional funding for a fire training facility. I also attended the council meeting on September 11th in which you and the City Council voted unanimously to place the Bond on the ballet in November. The portion of the bond that relates to the fire training facility was $16,900,000 Million dollars.
My online research found that there was a major decision made by yourself and the City Council on November 27, 2012. This meeting was open to the public and was conducted at 12:00 noon on that particular date. You and the City Council agreed to implement Resolution R-401-12.
I researched this Resolution online and found that it pertained to a Memorandum of Understanding between the City and the Boise Fire Fighters in which their Union contract was amended for changes made to implement the biweekly payroll system and changes to participation in the social security system.
Apparently, from reading this memorandum from Kevin Borger dated November 27, 2012, it mentions that the firefighters for the City took place in some kind of vote that resulted in the "opting out" of social security.
Article 3 of this contract also states that fire fighters will receive a 2.5% pay increase for the upcoming year.
Article 4 discusses that a referendum was held by the fire fighters in which the fire fighters opting out of social security. The contract specifies that this was a "loss" of social security coverage. In essence, the fire fighters voted to accept this "loss" of social security benefits. I will like to point out that the loss of this benefit actually resulted in a pay raise to the fire fighters of 6.2% (the amount that is no longer required to be paid by fire fighters into social security).
This is also a savings to the City as well. Because fire fighters no longer pay into social security, the City will not be required to pay a matching amount into social security.
This is a huge saving to the City and my tax dollars. Back in December of 2011, the Idaho Reporter reported on statistics relating to fire fighters salaries for the City of Boise. It stated and I quote "Records show 31 firemen earned more then $100,000 in 2011, totaling $3.3 million in salary. Another 42 earned more then $90,000 in a collective 3.97 million. Again, a larger number of firefighters – 66 – earned more than $80,000 annually. In all, the fire department is slated to pay out $22 million in wages this year, with the average worker earning slightly less than $80,000."
If we take the figures provided by the Idaho Reporter we have a cost savings to the city of $1,364,000 per year in Social Security Tax. ($22 million times 6.2%). That is a considerable amount of savings. The Idaho Reporter also stated that the average fire fighter in the State is paid $34,000 a year. Therefore, the City of Boise is substantially higher in salaries.
However, the City apparently decided to give this savings back to the firefighters. The City, per article 4, states that in lieu of paying social security tax the City will pay up to 6.2% of the fire fighters wages into PERSI choice 401(k). I will like to point out that this resulted in a wage increase of an additional 6.2% as well.
Additionally, the contract discusses the fact that the referendum also resulted in a few fire fighters being exempt from Medicare tax as well. The savings to the City would be 1.45% of those particular employees salary. Again, the City decided to give this savings back to those particular fire fighters. For those fire fighters that are no longer subject to Medicare tax the City has agreed to pay 1.45% of their salary into the Cities health insurance plan.
Finally, the contract states that the City agreed to seek for refunds of social security and Medicare taxes for both the City and the employees. The City agreed to pay over all refunds to the employees. I would hope that this would only apply to the employee's share of Social Security and Medicare and not to the Cities share.
I have discussed this matter with a tax professional and was told that there is nothing under the Internal Revenue Code that would require the employer to ever have to pay over their share of Social Security taxes to the employees if they filed for a refund. If the City paid their share of Social Security refunds to the employee it would have been done so voluntarily. Since nothing is mentioned in the contract that the employer was required to pay these refunds to the employees, I will assume that you and the city council voluntarily agreed to pay the Cities share to the employees.
As a business owner and residence of the City of Boise I respectfully submit to you the following questions:
Respectfully,
Tammie Casteel
October 4, 2013
Dear Mayor Bieter:
I attended the Bond Proposal Open House on August 22nd and performed some online research pertaining to the portion of the Bond that will result in additional funding for a fire training facility. I also attended the council meeting on September 11th in which you and the City Council voted unanimously to place the Bond on the ballet in November. The portion of the bond that relates to the fire training facility was $16,900,000 Million dollars.
My online research found that there was a major decision made by yourself and the City Council on November 27, 2012. This meeting was open to the public and was conducted at 12:00 noon on that particular date. You and the City Council agreed to implement Resolution R-401-12.
I researched this Resolution online and found that it pertained to a Memorandum of Understanding between the City and the Boise Fire Fighters in which their Union contract was amended for changes made to implement the biweekly payroll system and changes to participation in the social security system.
Apparently, from reading this memorandum from Kevin Borger dated November 27, 2012, it mentions that the firefighters for the City took place in some kind of vote that resulted in the "opting out" of social security.
Article 3 of this contract also states that fire fighters will receive a 2.5% pay increase for the upcoming year.
Article 4 discusses that a referendum was held by the fire fighters in which the fire fighters opting out of social security. The contract specifies that this was a "loss" of social security coverage. In essence, the fire fighters voted to accept this "loss" of social security benefits. I will like to point out that the loss of this benefit actually resulted in a pay raise to the fire fighters of 6.2% (the amount that is no longer required to be paid by fire fighters into social security).
This is also a savings to the City as well. Because fire fighters no longer pay into social security, the City will not be required to pay a matching amount into social security.
This is a huge saving to the City and my tax dollars. Back in December of 2011, the Idaho Reporter reported on statistics relating to fire fighters salaries for the City of Boise. It stated and I quote "Records show 31 firemen earned more then $100,000 in 2011, totaling $3.3 million in salary. Another 42 earned more then $90,000 in a collective 3.97 million. Again, a larger number of firefighters – 66 – earned more than $80,000 annually. In all, the fire department is slated to pay out $22 million in wages this year, with the average worker earning slightly less than $80,000."
If we take the figures provided by the Idaho Reporter we have a cost savings to the city of $1,364,000 per year in Social Security Tax. ($22 million times 6.2%). That is a considerable amount of savings. The Idaho Reporter also stated that the average fire fighter in the State is paid $34,000 a year. Therefore, the City of Boise is substantially higher in salaries.
However, the City apparently decided to give this savings back to the firefighters. The City, per article 4, states that in lieu of paying social security tax the City will pay up to 6.2% of the fire fighters wages into PERSI choice 401(k). I will like to point out that this resulted in a wage increase of an additional 6.2% as well.
Additionally, the contract discusses the fact that the referendum also resulted in a few fire fighters being exempt from Medicare tax as well. The savings to the City would be 1.45% of those particular employees salary. Again, the City decided to give this savings back to those particular fire fighters. For those fire fighters that are no longer subject to Medicare tax the City has agreed to pay 1.45% of their salary into the Cities health insurance plan.
Finally, the contract states that the City agreed to seek for refunds of social security and Medicare taxes for both the City and the employees. The City agreed to pay over all refunds to the employees. I would hope that this would only apply to the employee's share of Social Security and Medicare and not to the Cities share.
I have discussed this matter with a tax professional and was told that there is nothing under the Internal Revenue Code that would require the employer to ever have to pay over their share of Social Security taxes to the employees if they filed for a refund. If the City paid their share of Social Security refunds to the employee it would have been done so voluntarily. Since nothing is mentioned in the contract that the employer was required to pay these refunds to the employees, I will assume that you and the city council voluntarily agreed to pay the Cities share to the employees.
As a business owner and residence of the City of Boise I respectfully submit to you the following questions:
- When was the decision made to give the employer share of the refund, plus interest, to the eligible firefighter voter?
- Who was involved in making this decision?
- What years did the City receive refunds of Social Security taxes on eligible firefighters?
- How much was the actual refund amount that the City received for their share of Social Security and Medicare taxes from these refunds?
- Were the Boise City taxpayers given information about the vote and the City's decision to voluntarily give its share of the refund, plus interest, to the eligible fire fighter voter?
- How long is the City required to voluntarily contribute 6.2% into the PERSI choice 401(k) plan for eligible fire fighter voter?
- Did the 2.5% pay increase as stated in the Union contract actually go through?
Respectfully,
Tammie Casteel
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