Pension makeover heads to full city council

“I want to give the mayor and the council high marks for tackling this, but I am not sure if the numbers are adding up,” said political pundit and Fulton County Taxpayer Foundation board member Phil Kent. “There is still a $1.5 billion liability and they are still not clear if the plan can cover that.”

Making things dicey is the possibility of another amendment to last week’s legislation, which in essence would require that workers take a 5 percent pay cut in exchange for keeping their existing benefits through retirement. The pay cut comes in the form of a higher retirement contribution -- 13 percent for workers with beneficiaries or 12 percent for those without.

Actuaries for Segal Company estimate that the plan would save the city as much as $215 million over the next 10 years.

“It was better at 8 percent, but it keeps our pension intact and it helps the city. So it is a win-win,” said Kevin Kowalzyck, a lieutenant with Atlanta Fire & Rescue and a member of their pension board. “It shows that employees are willing to step up and help the city. I think it is a wash.”

Last week the city council voted unanimously to amend the previous legislation to the version scheduled to be voted on today. But over the weekend at least five council members revolted, claiming that the most recent revisions – the fifth serious version of a plan – borrowed too much from a union supported plan authored by councilmember Felicia Moore.

Councilman Howard Shook was working on an amendment Tuesday that may involve giving the city a "spending cap" that would protect Atlanta in the event of another financial meltdown, but he has been mum on details. In fact, the entire council is under a so-called "gag-order" from council veteran C.T. Martin, who after last Thursday's meeting told the council to cease "conversations with the media."

Today’s vote could put Atlanta at the center of pension reform, which several other cities and states are attempting amid budget issues.

Atlanta’s hands were forced by a $1.5 billion unfunded pension liability that was taking up roughly 20 percent of the annual budget and threatening to reach $4.5 billion in ten years.

The issue has gotten the attention of Atlanta’s business community.

“We need to begin the work now to eliminate the unfunded liability to ensure that today’s city workers can actually receive the benefits promised in the future,” said Turner Broadcasting CEO Philip I. Kent, who chairs Reed’s business advisory board, the Atlanta Committee for Progress. “Also, approximately 20 percent of the city’s general fund revenues are going to retirement benefits.  We need to lower this proportion so we can invest more city funds in hiring policemen and fixing infrastructure.”

On Thursday, the council is expected to approve a $545 million budget. The budget does not factor in today’s vote or the potential savings. But if they were both approved, more money would be freed up for services.

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 problems. That means other cities -- in the metro area and across the country -- are watching as Atlanta moves toward a more affordable retirement structure.

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 pension obligations continue to eat a large share of the budget.

What it does

If the plan passes, worker contributions rise and Atlanta saves about $215 million over the next 10 years -- more than in any other proposal that has been offered.

What happens next

The council is scheduled to vote today on a new pension plan. It needs 10 votes to pass.