After a two-week recess, the Atlanta City Council returned to work on Monday and was greeted with two unresolved issues, pension reform and 2012 budget passage, both of which hold major implications for the city.
Pension reform could give Atlanta financial relief for decades, but at the risk of alienating thousands of city workers who are resistant to changes to their benefits. On the budget side, a potential shortfall could result in massive layoffs.
“It is like an old movie serial, where the end of the film dissolves into a cliff-hanger,” Councilman Michael Bond said. “That is where we are now.”
The city budget has to be approved by July 1, and Atlanta Mayor Kasim Reed also wants pension reform done by that date.
“We are poised to be proactive,” council president Ceasar C. Mitchell said. “Hopefully, we will structure productive pension-reform conversations over the next couple of weeks.”
H. Lamar Willis got things started Monday by introducing one of three pieces of pension legislation.
“Only in tight fiscal times do people take a good look at [themselves],” Willis said. “If we waited for the economy to recover, we wouldn’t do anything. With this paper, we can start to have a real fruitful discussion.”
Yolanda Adrean, who chairs the council’s finance committee, said there is still much work to be done.
“We are not done hearing from unions and consulting with experts,” Adrean said. “It will be helpful for the city’s finances to get this done by July. But we have to find the right answers first.”
Reed has presented the council with two options to consider for the pension, which accounts for 20 percent of the annual budget.
The first option would be to shift all employees to the city’s current plan, which has employees and the city each contributing money comparable to 6 percent of salary toward a retirement savings plan.
The second option would be to shift all workers earning $39,856 or less into a retirement plan. If an employee voluntarily signed up for Social Security, the city would match up to 8 percent of employee contributions to a second retirement plan. If the worker opted out of Social Security, the city would match up to 12 percent of employee contributions to retirement savings.
“We should not link pension reforms to the budget,” Mitchell said. “The budget needs to stand on its own. We certainly don’t want to make a decision because of budget pressure.”
The budget shortfall remains unclear, because the council has not been presented with figures yet, but its members are cautious.
“I understand that we are 1 percent under budget right now, so I am concerned about what is driving the projections,” Mitchell said.
In June of 2009, the council voted 8-7 to increase the property tax rate for general operations from 7.12 mills to 10.12 mills in order to help close a $56 million budget gap.
Council members said a shortfall brings the possibility of laying off workers.
“If they knew in January that there would be a shortfall, we could have addressed it then,” Bond said. “We could have taken cost saving measures. We could have had hiring freezes. We could have had furloughs. We could potentially lay off 300 people. That could have been avoided.”
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