After years of struggle, including a week that saw some of Atlanta's most intense internal political battles in years, the city is close to approving a plan to finally address its $1.5 billion pension shortfall.
As early as Monday -- if 10 crucial votes can be secured -- the council could vote on pension reform.
If it does, Atlanta would become one of a growing number of large American cities to come to terms with a financial crisis that also threatens the budgets of municipalities across the region.
The plan, forged between Mayor Kasim Reed and a sometimes reluctant City Council, is expected to ease the city’s spending, avoid layoffs and maintain its pension for city workers, a demand that consumes about a fifth of the city's annual budget.
"And this plan is financially sound, fair and affordable to the city, while providing employees with flexible choices," said the legislation's principal author Councilwoman Yolanda Adrean. "Our pension situation is acute and our revenue situation is not improving. We don't have as many options as other municipalities."
While Atlanta’s pension crisis has gained the most public attention, it is not the only large metro-area government struggling to keeps its promise of healthy retirement benefits to its employees. The pension plans of five major metro governments are hundreds of millions of dollars in the red.
Metro Atlanta, according to an Atlanta Journal-Constitution study, has a $2.8 billion pension deficit when you add Atlanta's shortfall to that of the five core counties -- Gwinnett, Clayton, DeKalb, Fulton and Cobb.
The 2008 stock market crash had a deep impact on all metro governments. But some of the damage -- like what is happening in Atlanta -- was self-inflicted.
Backed by at least three votes over the past decade to shift how the retirement benefits of city workers were distributed, Atlanta now faces an uphill climb of drastically reforming the pension while staring down angry employees who are resisting change.
Many of the city's 7,000-plus workers had been in favor of an alternate pension plan from Councilwoman Felicia Moore that would have allowed them to pay more into their retirement in exchange for keeping their benefits.
But when the council voted Wednesday to send Adrean's plan -- which would close the old pension plan to new employees and convert it into a lower-cost hybrid plan for current employees -- it pretty much killed Moore's.
Reed said if the council approves the plan, it would save the city $15 million this year and $20 million annually in subsequent years. It also would, he said, negate the need for as many as 200 layoffs sought in the current budget proposal to close an $18 million spending gap in the $545 million 2012 budget.
The pension proposal needs votes from 10 council members to pass and City Council President Ceasar Mitchell said he estimates that there are at "least eight or nine votes," already in the bank.
"My hope as council president is that we will find that common ground and coalesce the council around that common ground," Mitchell said.
Likening the problem to the century-old sewer troubles that faced Shirley Franklin when she became mayor, Reed has made the issue a priority since coming into office.
"Atlanta's greatness is confined by this pension liability," said Reed, who has said that the $1.5 billion liability will swell to $4.5 billion in 10 years if left unchecked. "No matter how much we improve as a city, we can't improve as fast as the pension is growing. We can't outrun the pension increases. But we can fix this now. Not in 10 years."
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Atlanta’s pension problem
The issue: Atlanta has a $1.5 billion pension liability that is eating up 20 percent of its annual budget. Left unchecked, that liability could grow to $4.5 billion in a decade.
Why it's important: Atlanta is one of several major U.S. cities tackling pension reform. That means other cities – in the metro area and across the country – are watching Atlanta as it moves toward a more affordable retirement account.
What it means to city residents: Atlanta's ability to provide services -- from hiring police officers to opening recreation centers -- may be at risk if its pension obligations continue to eat a large share of the city's budget.
What's next: A vote could take place as early as Monday. That decision could be delayed. Mayor Kasim Reed has asked the Counil to vote by June 30..
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