Atlanta fire fighters turned up the heat on pension reform by bringing in a team of financial advisors and consultants who said Wednesday the proposed changes are “illegal, unjust and bad policy.”
Atlanta mayor Kasim Reed has proposed ending defined pensions for city workers. Atlanta pays about 20 percent of its annual budget -- or $125 million -- to cover pension benefits. The city has $1.5 billion in promised benefits it has yet to cover, and Reed says a reform plan would keep that from figure from growing. Firefighters say the city is reneging on a promise, and they asked the city Wednesday to levy new taxes on commuters to keep the existing pension system.
“We are here in good faith, asking the city council to follow through on their word,” said Jim Daws, president of the Atlanta chapter of the International Association of Fire Fighters.
Daws and dozens of firefighters jammed a city hall conference room Wednesday for a four-hour special meeting with the finance committee. They were joined by hired consultants: Hank Kim, executive director of the National Conference on Public Employee Retirement Systems; William Fornia, president of Pension Trustee Advisors; and Mary Carole Cooney, a former deputy attorney of the city of Atlanta, who is now representing the firefighters.
Daws, as well as city workers from across the spectrum, have blasted the proposal Reed said would save the city from financial ruin. Daws proposed what would amount to a commuter tax – “a small non-residence parking tax.”
“We have 400,000 taxpayers trying to provide services for 1.5 million people who come into Atlanta everyday,” Daws said. “For them to keep taking services from Atlanta that we are paying for is unsustainable. The whole scheme is killing the goose.”
But the administration has been adamant about not raising any kind of taxes to cover pension costs.
“We were surprised that the only alternative to the current unsustainable pension we have was raising taxes or putting in place a commuter tax,” said city COO Peter Aman. “This administration has been on the record, we don’t believe tax increases are the way.”
Currently, only 53 percent of the current plan's liabilities are funded and since 2001, annual pension costs skyrocketed from $55 million to $125 million. Reed estimates that if nothing changes, the current $1.5 billion unfunded liability could grow by another $4 billion over 10 years.
To fix that he has proposed two options.
One is to shift all employees into a plan where employees and the city each contribute money comparable to 6 percent of salary toward a retirement savings plan. The other would shift all workers earning $39,856 or less into a retirement plan. If an employee voluntarily signs up for Social Security, the city would match up to 8 percent of employee contributions to a second retirement plan. If the worker opts out of Social Security, the city would match up to 12 percent of employee contributions to retirement savings.
Although neither of the plans can touch any benefits a worker has already earned, Daws and his consultants argued that any changes in the current pension plan breaks a contract that firefighters and police officers were hired under.
“The current proposals would force many police officers and firefighters to work beyond the age they can effectively perform their duties," said Daws a 22-year veteran of the department. That's an unacceptable risk for the citizens and a raw deal for the hardworking men and women who keep Atlanta safe."
Daws continued to argue that the city’s pension liability is not as bad as the mayor claims and that he should allow the economy to recover.
But Aman said there is no time to further deliberate the matter, which has been lingering for years.
“It is important that this conversation has progressed, but I would just remind the council that we don’t want to be here,” Aman said. “The administration did not choose to tackle this issue. We have respect to the risks that fire fighters take, but we don’t believe that the promise that they think they have today is a real one. People think they are walking around with something real and they are not.”
Before pension is voted on, there will be several more meetings between the council the administration and city workers to hatch out a deal.
Next Thursday, the police officers will get their turn before the finance committee.
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