A Fulton County Superior Court judge has upheld Atlanta Mayor Kasim Reed’s 2011 pension reform, siding with the city in a class-action lawsuit brought by employees.
“Today is a special day for me because I consider pension reform to be one of the most important things that my administration has done to stabilize the finances of the city of Atlanta,” Reed said during a press conference on Wednesday.
City Attorney Cathy Hampton said the judge’s ruling was “unambiguously clear” in affirming Atlanta’s right to modify its pension plan.
“What this means is (employees) can rest assured that the promised income will be there when they retire,” she said.
A handful of employees representing Atlanta fire, police and general workers sued the city last November, saying Reed's decision to force employees to pay 5 percent more toward their retirement benefits was in violation of their contract and, therefore, unconstitutional. Such an increase, the plaintiffs argued, must also increase their pension benefits.
John Bell, who represented the workers in the case before Judge John Goger, explained his clients’ argument in simple terms: “You’re paying more for the same amount.”
Reed and city officials successfully countered that the pension contribution increase is allowed under Georgia law. The mayor has long said overhauling the employee retirement benefits program was critical to the city’s financial stability, and will help Atlanta pay off a $1.5 billion unfunded pension liability.
Reed argued that, without increasing contributions, the city can’t afford to pay the full benefits eventually owed to workers. And that could have led the city into default.
Bell said his clients are likely to appeal the court’s decision: “We knew we wouldn’t win or lose this until the Georgia Supreme Court decides.”
But Stephen Borders, president of the Atlanta Professional Firefighters union and a plaintiff in the case, was less sure.
“I don’t want to appeal just because we’re allowed to,” he said. “We know what it’s going to do to our already strained relationship with our mayor, and it will drag this out for another two years.”
The lawsuit threatened to dismantle the hallmark achievement of Reed’s first term, a move that he said helped improve Atlanta’s finances and bolster police, fire and other city services.
Moody’s Investors Service recently upgraded Atlanta’s financial outlook from stable to positive, citing the pension reform as among the reasons for the upgrade.
Had Goger sided with the employees, the move would have effectively reversed Reed’s pension change, leaving Atlanta on the hook for more than $40 million in restitution. That would have blown a gaping hole in the mayor’s plans to fund an infrastructure bond worth up to $250 million next year, pending voter approval, to address a billion-dollar backlog in street, sidewalk and bridge repairs.
The mayor and Atlanta City Council reached rare agreement in unanimously passing the reform three years ago. And it highlighted a brief moment of political alignment between Reed and District 9 Councilwoman Felicia Moore, with whom the mayor has a well-publicized rocky relationship, as Moore played a key role in gaining union support.
Still, employee representatives have said they sued because their concerns about the reform’s legality went unanswered by the city.
The legal challenge fractured an already tense relationship between the mayor and public safety unions, in particular, who in the past two years have asked Reed’s administration to address what they say are salary inequity issues.
Public safety employees were granted incremental raises during Reed’s first term, but the mayor withheld increases in the latest budget cycle because of the litigation. He famously accused the unions of trying to “rob the train and shoot the conductor in the head” by asking for salary increases while employees sued the city.
Reed said Wednesday that his administration has spent more on police and fire services than any previous mayor and “what I got for it was a lawsuit.”
Asked about that tension, Reed said: “You aren’t going to see any first step from me, not one. But I remain open. I remain open to having a conversation and good dialogue.”
Borders said he’d be happy to extend an olive branch. “I just don’t want to get beat over the head with it.”
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