Personal finance: Am I the only one that sees a problem here?

It’s been on at least the last two meeting agendas and sure enough it made it back onto the agenda for tonight’s recessed Bay St Louis Council meeting:

08-09-17 Agenda - recessedWhy on God’s green earth would Councilman Zimmerman’s salary be a topic for discussion? I asked and the answer I got was disturbing on several different levels. It appears Zimmerman took early social security to help make ends meet and now doesn’t want to make too much money and jeopardize his new government check. My instant reaction was to wonder why he did not think about the ramifications of running for office when he qualified for the Ward 5 Council earlier this year.

Normally a politician not wanting to take a paycheck would be refreshing and it could have been for Zimmerman had he thought things through but it is clear he didn’t do that before running to the taxpayers for a solution to his personal financial problem with Social Security. It also carries implications about his financial acumen which, for a councilman in a “strong Mayor” town whose main job responsibilities are financial in nature, (Budget and annual audit) is a must in order to be effective.

I am asked about taking social security early frequently in the day job, in fact the interplay between taking early social security and planning for a steady retirement income stream is the number 1 question I am asked by my individual income tax clients. Since Mr. Zimmerman put his personal finances on display I’ll use the numbers he disclosed to illustrate a point that trying to game social security is a losers game.

First up is the income:

Council Salary – $16,800
PERS Retirement – $31,752
Social Security – $20,000 (Estimated)

What we do not know is Mrs. Zimmerman’s income but we can figure the net on Mr. Zimmerman’s income assuming they have one dependent grandchild living with them. Next up is social security and its rules on retiring early:

If you’re younger than full retirement age during all of 2017, we must deduct $1 from your benefits for each $2 you earn above $16,920.

Social Security uses a very specific term here in “earn” for it has an important legal meaning. For instance you may work a lifetime to “earn” a retirement benefit such as PERS but it is not considered “earned income” for either tax or social security purposes:

If you work for someone else, only your wages count toward Social Security’s earnings limits. If you’re self-employed, we count only your net earnings from self-employment. For the earnings limits, we don’t count income such as other government benefits, investment earnings, interest, pensions, annuities, and capital gains.

And it is here you get a hmmm moment because Mr. Zimmerman does not have another job besides the City Council salary that I am aware. His council salary is $120 less than the exempt amount for purposes of the earnings test so something is not computing here. Perhaps he has self employment income that nets him $40,120 which coupled with his council salary would eliminate the social security benefit but assuming that is true his hypothetical $20,000 social security benefit in this illustration would already be reduced by over $11,000 without the Council salary which means keeping the salary plus self employment income and foregoing social security would net him more money than he would get by not taking the council salary and keeping the social security check.

Another possibility is that perhaps Mr. Zimmerman is getting his financial advice from an imbecile or perhaps he simply made this a topic for council business because he didn’t do any real research beforehand (the social security fact sheet I linked earlier in this post was found in less than a minute using google). It could be something else altogether but whatever the reason when the Councilman perceived a problem with his personal finances, his solution was to run to his employer which is a big no no in the business world. All of this raises questions about the soundness of his financial acumen which is not a good thing.

If there is a sad thing here it is this: If Councilman Zimmerman truly wants to serve without a salary he could have handled that without bringing his personal financial problem to the Council via the concept of rescission. That would have only involved two people besides the Councilman in Mayor Favre and his payroll clerk. As an added bonus he could sold the fact he was serving for free, which the public invariably sees as a noble gesture by politician instead of being seen as a functional financial illiterate trying to get one over on the man to save a few bucks on his early retirement. The bottom line is whoever is giving him political advice is not doing him any favors.

Note: Before this post was published the recessed meeting agenda for tonight’s meeting has been amended and Councilman Zimmerman’s salary is now gone from this meeting agenda. Perhaps the light bulb belatedly turned on which would be a good sign. An important heuristic that everyone should remember here is generally speaking, you never get ahead in life turning down the chance to make money.

4 thoughts on “Personal finance: Am I the only one that sees a problem here?”

  1. Doug,
    Let me say this is an interesting and educational post, but this meeting in its entirety was bizarre. In my opinion, this isn’t the only thing that should not be on the agenda of a city meeting.
    It started with a group of citizens who were upset with their neighbor’s door he wanted to install. They had signed up to speak at Public Forum, but the Council President, breaking his own previously announced protocol, allowed them to speak at the same time the main complainer spoke to lend her their moral support of this horrific thing that was occurring in her life. Public Forum is limited to 3 minutes per speaker and is a separate segment of the agenda. They each took between 10 and 12 minutes and were allowed to speak outside of Public Forum. As one citizen in the audience said to me, “I think the Chairman has lost control.” But I am thinking to myself that while this is going on there are people in the world who have no roof over their head, much less a door to walk through, no matter what shape it is.” These things should be taken to small claims court to show the damages the shape of the neighbor’s door is doing to this woman’s life, not to a Council meeting where the city officials are haggling over finances which need their undivided attention.
    Then we moved on to the Library Director and her Board who are trying desperately to convince the Council not to accept the new inter local agreement presented to them by the Board of Supervisors.
    The Chairman allowed this group to engage in name calling, such as “the Supervisors are a bunch of bullies, think the library belongs only to them”,” trying to usurp authority of library services”,” gave the library board no input into agreement”, etc…… in reality, part of the agreement was an offer by the Supervisors to pay off an $80,000 bond for the library board resulting in a decrease in their overall expenses. Oh, how I wish I had met just one bully like that in my life!!!!
    But let’s think this through– if Council is convinced to reject the Supervisors ‘proposal because the Library Board wants the Bay to have two people on the board rather than one, what if…….
    Supers say, “no, we aren’t interested in your response, so we are out of here on September 30. We’ll run the Pearlington, Kiln, and the cities of Bay St. Louis and Waveland can run theirs. No hard feelings. Knock yourself out. You know what’s best for your community.
    But WHAT if Waveland decides to accept the proposal? They’re only getting one person on the board anyway. Then the County will fund the aforementioned branches, and have the inter local with Waveland. Diamondhead told the county they weren’t interested in the inter local agreement a long time ago; said their residents were taxed by the county to run Hancock East, gave a $20,000 donation, and said “hit the road.”
    What is Plan B for the Bay? For the Library Board? The Bay Council had better start crunching some numbers to afford a library in their budget already $809,000 in the red.
    Social Security benefits of a Councilman becoming the problem of the citizens? door shapes that don’t meet the criteria of the neighbors? a board claiming they are being “bullied” by another board who has offered to lower their debt?

    YOU CAN’T MAKE THIS UP!!!!!!

    1. I watched a good bit of the Council meeting and Courtney Thomas’ name calling, fear mongering and misinformation campaign was a low point.

      As for Mr. Adams and the bane of his existence Ellis Anderson, has she cleaned that ugly, weed infested derelict boat out of her front yard?

      Remembering the problems Anderson gave her neighbor over a very nice fence last year, I have come to the conclusion that part of third street is a freak show that features douchebag control freaks performing acts of epic assholery.

      1. The boat is still there and does need some serious attention, weeding, etc. The curb appeal is, well, not so appealing, shall we say. In contrast, the lady down the street who had to fight for her fence in order to keep her large dog from escaping into her neighbors yards, has done some really nice landscaping.

  2. The boat is hideous. She is blaming her property values on everything except her poor landscaping tastes. She has threatened to leave for Kentucky. She has been offered help…..but she is still here making life miserable for others. Compretta supported her is Larry doing the same? Her fourth ward cleaver rag ain’t worth her trouble making. I say hit the curb lady and leave productive city improving businesses alone. Katrina is gone you need to be too!

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