For more than a decade, the city of Atlanta has been on a collision course toward fiscal insolvency because of its growing pension obligation.
Since 2001, annual pension costs have increased from $55 million to about $110 million. Even worse, only 53 percent of the city’s pension obligations are funded. Comparable governments typically fund their pensions at 80 percent.
Without fast action, Atlanta’s pension liability could grow to more than $4.5 billion — a catastrophic situation that would absorb resources and could not be addressed by a property tax increase.
That’s why it’s vital to our long-term fiscal outlook to enact pension reform now.
I recently introduced a plan to the Atlanta City Council that would reduce the annual and long-term costs of the city’s pension liability. It is also compassionate to city employees, many of whom have worked for years to keep our residents safe and secure.
My proposal, which has two options, protects the benefits already earned by current employees. It moves them from a defined-benefit to a defined-contribution plan and gives them the choice to enroll in Social Security. Those changes mean more diversified retirement choices for employees instead of only one source of post-employment income.
I was presented with proposals that would have drastically reduced employee benefits. I also could have asked the Georgia General Assembly to pass harsher and broader reform measures. Instead, I chose to focus on options that address two main priorities: stabilizing the city financially and treating employees fairly by making a pension promise the city can actually keep.
Pension reform is important for Atlanta residents and business owners as well. It allows for more responsible allocation of taxpayer dollars. Depending on which option the City Council chooses, my proposal could eventually save as much as $30 million.
In partnership with the council, we could make further investments in public safety and infrastructure improvements. We could fix more potholes faster and repair aging sidewalks. We could enhance programs for young people such as the Centers of Hope. Employees who consistently perform well could receive better pay and incentives such as bonuses.
We cannot let pension fund decisions in 2001, 2005 and 2009 cripple the city for generations to come.
We must be committed to making hard choices that result in a city with a strong financial base and a work force of talented, fairly paid employees who provide unparalleled service to taxpayers.
Pension reform is the right path forward, right now.
Kasim Reed is mayor of Atlanta.
