The Atlanta finance committee approved a proposal Wednesday that could save the city about $20 million a year, while combining a traditional pension plan for the city's 7,000 workers with a 401(k)-style retirement plan.
As early as Monday, the full City Council could make a historic vote to reform Atlanta's retirement plan and begin putting a dent in the $1.5 billion pension liability.
The council previously agreed to listen to another plan offered by Councilwoman Felicia Mooreon Thursday. Moore's plan, which has widespread support from the unions and city workers, would have allowed workers to contribute five percent more to their retirement benefits in exchange for keeping most of their benefits.
While the council still intends to hear Moore's plan, Wednesday's vote essentially guts it.
The 4-2 vote marked the tensest and most acrimonious day in the city's ongoing struggle to reform pension. Councilwoman Yolanda Adrean, whose plan was approved, said Moore's numbers didn't make sense to her, which infuriated several members of council.
When Councilman Michael Julian Bond failed to get Councilman Alex Wan to rescind his motion to vote on the approved plan, C.T. Martin asked Wan what he was promised for his vote. Martin called Wan and Adrean arrogant and disrespectful of seniority on the council.
"The votes are going to point out who you are more than anything else," Martin said. "You just got here and whoever asked you to carry that water doesn't have respect for us either. We agreed to discuss this, but if you all are going to play this game, let's vote and get it over with so we can see who you are."
Earlier in the day, a couple dozen people, most of them city workers, rallied in front of City Hall in favor of Moore's proposal. That rally was followed by the lengthy committee meeting where 21 people signed up to speak out against Adrean’s plan and in favor of Moore’s.
Throughout the session, Adrean, who chairs the committee, had to repeatedly warn members of the audience, several of whom said they had been threatened by their bosses about attending meetings and rallies, about making unauthorized comments. But that didn’t stop the shouting and personal attacks from some of the speakers, who accused Mayor Kasim Reed and the council of turning their backs on city workers. At least one speaker was ejected after using a racial slur to describe Councilman Lamar Willis.
Willis supports Adrean's plan, as does Reed, who said he would veto Moore's plan if it came across his desk.
While the council debated alternate dates as a back-up in case they decide to hold the proposal, there is nothing preventing it from voting it into law on Monday. There is a likelihood that elements of Moore's plan could be introduced as amendments.
Reform would take 10 votes to pass and unofficial polling suggests that at least nine council members would support Adrean’s plan, which calls for a defined benefit plan for existing employees with a 1 percent multiplier and reduced cost of living adjustment for defined pension benefits. Employee contributions will remain at 8 percent.
It also puts new employees into a defined contribution
The 1 percent multiplier is less than it had been in past years, but the city will also pay at least 2 percent of the employee's compensation into the defined contribution plan annually. Future employees will enter into a Social Security retirement program as well, but that is off the table for current workers.
“What is happening to municipal workers is a travesty,” said Jim Daws, president of the International Association of Fire Fighters. “To have this mayor trying to grab our pensions and destroy our benefits is shameful and ought not be happening in Atlanta, Georgia.”
Funded at 63 percent, Atlanta’s pension liability is currently $1.5 billion and Reed said it will grow by $3 billion in 10 years if it is not regulated during his administration. That is something that Atlanta taxpayers, the region and even the nation are closely following.
With that huge liability and a 20 percent budget hit annually, Atlanta is one of the growing number of major cities and municipalities addressing their pensions reform. Many local governments saw their pension woes increase with the economic downturn that began in 2008.
Last week, New York Gov. Andrew Cuomo said the state and New York City can no longer afford to offer new employees the generous benefits their predecessors had been receiving. He has proposed increasing the retirement age and requiring state employees to contribute 6 percent of their salaries into the pension system, up from 3 percent currently.
“Many, many cities and municipalities are going through the same thing. Last year, over 20 states made changes in their retirement plans,” said Cathie Eitelberg, senior vice president for The Segal Co., a benefits, compensation and human resources consulting firm. “The council is being thoughtful in the process because Atlanta’s fiscal issues are aligned with other cities who are making hard decisions. State and local governments live and die by revenue streams and when they are damaged, it takes a while to recover.”
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