City is considering issuing bonds to pay off cost of PERS

By Terry Murry on Wednesday, February 16th, 2022 in Columbia Basin News More Top Stories

HERMISTON – The Hermiston City Council had a work session on issuing bonds to help pay off the city’s unfunded Public Employee Retirement Service debt Tuesday evening. The council instructed staff to create a bond proposal for future action.

Assistant City Manager Mark Morgan said the city’s financial consultants put on an in-depth report about the issue that anyone who is not a numbers person could appreciate.

“I don’t know if you have any sleep issues, but if you do, I would recommend that you go to our YouTube channel and listen to the work session,” he said. “It was a lot of numbers and very dense.”

Morgan said that Piper Sandler cautiously advised the city that it would save money by issuing bonds at 3.5 percent interest and use that money to defray the assumed interest of PERS debt at about 7 percent.

“In a nutshell, we’re basically using one credit card to pay off another one because the one has a much lower interest rate,” he said. The financial consultant estimated the city would save anywhere from $2 million to $12 million by issuing the bonds. The city’s unfunded financial obligation to PERS is at around $15 million at present.