This was going to be the column where I regretted not endorsing Kasim Reed last fall.
I would write about the visits that Atlanta’s new mayor has made to the AJC’s offices to talk about fixing the city’s finances, in particular the crushing unfunded pension obligations it faces. I would write that I was impressed with his new priorities and his resolve.
Reed would have gotten my vote, I would write, if he had talked this way during the campaign rather than putting first and foremost a plan to hire 750 more police officers. That was probably good electoral politics, for it no doubt matters to a great number of Atlantans.
I simply didn’t think then — and still don’t — that such a plan was feasible until the new mayor had gotten a grip on pension costs, which have come to consume about 20 percent of Atlanta’s general budget. I thought I heard Reed signaling that he now agreed.
Then came his first budget.
It includes 100 new police officers and a 3.5 percent raise for current officers, at a cost of $11 million. There’s also $4 million to open all of the city’s recreation centers in an effort to stem youth crime. Yet he projects flat revenues.
Yes, there are cuts, and no raises, for other departments. In that sense, Reed is choosing, as he says leaders must do.
But paying for this proposed budget hangs on spending some reserves, increasing a range of fees, and completing two deals: a sale of the city jail to Fulton County for savings of $16 million a year, and $13 million from selling City Hall East.
Neither deal’s final. The budget must be final June 30. That’s a lot of unhatched chickens.
The mayor speaks compellingly, and seems sincere, about finally getting Atlanta’s finances in order. Budgeting new revenue before it’s in hand is not going to reassure skeptical residents that things have changed.
But there is a more important element here.
Unfunded retirement benefits are a nearly $3 billion problem: almost $1.5 billion each for pensions and health care. Making legally required payments for pensions alone will cost the city an estimated $125 million this year.
Changing benefits for those who have already retired or left the city’s payroll is off the table, Reed says, and in any case is probably illegal.
Changing benefits for future workers and those who aren’t vested — the latter move sparks lawsuit threats from labor unions — would save $8 million to $12 million a year, Reed says.
That leaves a $100 million-a-year problem. I don’t think the city can solve it without getting workers to agree to benefit changes. They’ll surely want something in return.
Raises are one option — paying more today instead of promising to do so tomorrow. That choice at least forces elected officials to fund the decisions they make, and it doesn’t lead to problems that keep compounding over time. But why not tie raises, maybe even larger ones, to the needed pension changes?
Also problematic is that the raises are only for police, and it’s firefighters who have been most vocal so far about opposing any pension changes.
The history of compensation changes in the city, particularly the pension enhancements in 2001 and 2005, shows that what is given to one group of workers eventually is given to the others as well. That’s partly how Atlanta got in this mess.
I like much of what Kasim Reed says. I don’t want to see him get stuck before he gets started.