An opportunity on pensions that Atlanta cannot miss

Atlanta taxpayers should cross their fingers that their City Council will seize on a great opportunity this week and vote to revamp the pension scheme for city workers.

Atlanta’s pensions have been a billion-dollar time bomb ticking for years, thanks in large part to a pair of ill-considered — and possibly illegal — plan changes made during the last decade. Those changes vastly increased the city’s liabilities at an unfortunate time of stock-market stagnation.

Mayor Kasim Reed deserves much credit for his determined pursuit of a solution to the pension problem, and things came to a head last week when the City Council’s Finance Committee approved a reform plan that could come before the entire body as early as today.

City workers are understandably upset about the plan, but Reed has rightly described the issue as a matter of preserving pensions or preserving jobs; he’s estimated that up to 200 workers will be laid off if the Council doesn’t approve a solid reform plan.

What’s more, with projections that today’s $1.5 billion in unfunded liabilities could triple to $4.5 billion within 10 years if left unchecked, it’s not a matter of whether to keep the city’s promises to workers. It’s a matter of changing the deal now, or breaking those promises even more egregiously later.

Taxpayers have a huge stake in this debate: Atlanta has been paying about one-fifth of its general budget — more than $100 million — toward pensions in recent years. It’s a drain on resources that have been even more scarce than usual during the recession and sluggish recovery.

“Atlanta’s greatness is confined by this pension liability,” Reed has said. Bringing the pensions under control is an opportunity Council members must seize.

– By Kyle Wingfield

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23 comments Add your comment

arnold

June 20th, 2011
6:00 am

What changed? What are the new changes? Is the pension a defined benefit plan? How about some facts other than the liability is large.

Lil' Barry Bailout

June 20th, 2011
6:31 am

arnold, try clicking on the links Kyle provided.

Mike Jones

June 20th, 2011
6:35 am

Don’t look for help outside of the perimeter Atlanta. You got yourself into this mess, you are going to have to get of this mess on your own.

Mongo

June 20th, 2011
7:17 am

Atlantan’s pay way more in state taxes than they get back in state services. Maybe if the people outside of the perimeter stopped stealing Atlanta’s tax money they could pay for “this mess” on their own.

WillieRae

June 20th, 2011
7:47 am

Maybe Atlatna can vote itself a $4.5 billion dollar tax increase.

It’s time for Atlanta to get serious about dealing with a serious problem. Reed has put forth a serious solution at some political risk. Now we will see who else is serious or who just wants to keep making political hay with whispers and silly non solutions.

the red herring

June 20th, 2011
7:52 am

governments should not be allowed to sign up employees and promise them pensions if they’ll work for less money than their private sector peers and then claw back those pensions years later. If the employees were paid the same or better than private sector people for the same jobs then their pensions could and probably should be reduced or a 401k implemented. i recall for many decades the state of georgia paid their employees 10 to 20% less than private workers but offered better vacation time and retirement benefits. It’s not possible for a person that’s worked 34 or more years for less money to go back and get that money back—neither should state governments be allowed to rake back their pensions. I don’t think that’s what is happening in atlanta but i don’t know the full details. I’ll try kyle’s links to see what those articles say.

Finn McCool

June 20th, 2011
8:17 am

It’s a drain on resources that have been even more scarce than usual during the recession and sluggish recovery.

I can only hope that when it’s your turn to retire, and you go to your employer and say “Hey, that part of my contract where you deferred part of my compensation for this point in time, i’ll be needing to collect on that for the next 30 years”, that employer looks you in the face and goes”Ummm, well, you see, umm, we have a problem…all these people who have yet to put in their time, well, they need to work. I’m sure you’ll get by. Have a nice day.”

Oh, by the way, I hear Alpo is actually pretty tasty!

Raise taxes and make good on your promises to these people. And people wonder why we can’t get good government workers?

tscali

June 20th, 2011
8:35 am

And people wonder why we can’t get good government workers?

the highest paid have turned out to be the biggest crooks. the rest ride the gravy train. i’m happy to punch their ticket, just not pay for it anymore.

ex-city worker

June 20th, 2011
8:38 am

The city has brought this mess upon themselves by borrowing from and underfunding the pension system for decades. Besides under paying employees for years (as was brought out by an earlier post) they cut deals to extend the payments due to the pensions. It went like this “work with us now without any raises and we’ll increase the pension benefit to what other cities are giving their employees”. Now they say ‘Sorry you worked for less all those years, we want to cut your pensions out from underneath you and balance the budget on your backs”. I’m tired of hearing about how the employees have ravaged the city with these pension cost. If the city invested the money like they were supposed to, instead of borrowing, borrowing, borrowing, and never paying back, they would not be as much red ink on the bottom line. History repeats itself and the COA has a long history of screwing the city worker: the beatings will continue until the moral improves. Hey Kyle, you’ll fit right in with their mentality of not missing out on yet another opportunity to screw the city worker!

Divide and Conquer

June 20th, 2011
8:45 am

So sorry, government employees. It is time for you to experience the same pain as private sector employees. I sure would like to get the pension that my company offered me to start working for them 20 years ago, but it got frozen. Max vacation – reduced by 40%, Pay – stuck at 2004 levels. Insurance cost – tripled.

Cut the headcount ofgovernment employees (at all levels)by %10, and cut all government pay by 15%.

Finn McCool

June 20th, 2011
8:46 am

We wants clean roads that er paved. But them people doing the work want to get paid fer doing it? They should be happy to have a job; they should feel privileged we let em work for us.

GW

June 20th, 2011
8:47 am

Bush’s tax cuts expired two years after he left office. His wars were never properly and transparently accounted for in his budgets. His increased welfare benefits were not funded. He borrowed money and handed it out freely as though it was his to give. Oh yes. Atlanta has a problem too. I read somewhere that Clayton County is better off than even Cobb County though. Do you have any numbers for other cities and counties. Not to worry though because I hear that the state officials make sure that their pension fund stays in top shape. They’ll cut just about anything else to protect it. What a Deal.

Finn McCool

June 20th, 2011
8:49 am

So sorry, government employees. It is time for you to experience the same pain as private sector employees.

Yeah, you government employees, I went to work for the WRONG employer – bunch of idiots who couldn’t run a business. But of course it’s no fault of mine that I went there – they made me join their company.

I made a poor choice and got screwed so I hope ya’ll get screwed too. Serves ya’ll right!

Finn McCool

June 20th, 2011
8:53 am

Where does this mentality come from that we should get everything and not have to pay for it? If you want a city that works, a city that runs smoothly, you have to pay for it – you have to collect taxes to pay for it..

And the middle and upper classes who are always bitchin about the poor being freeloaders? Really? You all need to look in the mirror.

independent thinker

June 20th, 2011
9:09 am

This city has been run on the patronage system with overpriced goodies for the allegedly disenfranchised minority workers starting with Maynard in the seventies Now it is the disenfranchised private sector employees and the property owners who are taking the heat for the excesses of the patronage system set up by Maynard and continued without a hiccup by Shirley,The pensions given to guaranty her reelection were illegal and must be rescinded. No actuary ever approved them. Just like out mortgage crisis- buy more tha you can afford and then cry victim when it comes time to pay or get out.
I for one am moving out of the city after thirty years because I have had enough of the nepotism, airport corruption, school corruption, high crime rate, and bankruptcy of the city treasury by the incompetents who allegedly govern this city and owe their existence to the patronage system..This is just a band aid solution to future contributions and does nothing to solve the current shortfall to workers who deserve nothing more than a separation notice and a cold cup of coffee.How many workers retire at age 55 with 80% of their pay? and then they double dip at another public sector job- government largesse run amuck.

Lil' Barry Bailout

June 20th, 2011
10:05 am

Atlanta rarely misses an opportunity to do the wrong thing.

Lil' Barry Bailout

June 20th, 2011
10:07 am

Finn McCool
June 20th, 2011
8:53 am
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Atlanta is run by Democrats–why don’t they just raise taxes? Isn’t that the answer?

Thomas Shadwell

June 20th, 2011
11:16 am

“I think we have more machinery of government than is necessary, too many parasites living on the labor of the industrious.”

Carlosgvv

June 20th, 2011
12:38 pm

These workers were hired with the promise of a pension. And now the City will pull the rug from underneath them. And, the Federal Govt. is trying to do away with SS. Looks like our Government people just can’t be trusted.

ATF

June 20th, 2011
12:53 pm

Well, good. We cannot afford to have defined benefit pension plans for government workers. Primarily because we can’t trust politicians to fund them appropriately or to stand up to police, fire, teachers, or any other union when the unions ask for something that is not affordable. The fault is not with the unions – it is with the cowardly politicians. But, this time, the politicians are acting as they need to. Further, most businesses have long since abandoned defined benefit plans because they are not predictable.

I do hope that those near retirement – say age 55 or older – are grandfathered into the system they have come to rely on. Except, maybe, any elected officials for whom I don’t feel a whole lot of sympathy.

Lil' Barry Bailout

June 20th, 2011
2:02 pm

Why aren’t you punks complaining about “the rich” being taxed too lightly not demanding that Atlanta raise taxes?

Lil' Barry Bailout

June 20th, 2011
5:53 pm

$1 Billion in Homeowner Aid Offered

Homeowners facing foreclosure can now tap into a $1 billion program of emergency loans to help tide them over a temporary financial crisis, the Department of Housing and Urban Development (HUD) has announced.

Beginning today, homeowners in 27 states can file preliminary applications for the Emergency Homeowner’s Loan Program (EHLP). Eligible homeowners can obtain interest-free loans of up to $50,000 to help cover mortgage expenses for up to two years.

http://community.nasdaq.com/News/2011-06/1-billion-in-homeowner-aid-offered.aspx?storyid=81588#ixzz1Pr6niY1r

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Lil’ Barry Bailout buys a few more votes from the parasite class.

4-Reel

June 22nd, 2011
6:41 pm

According to former AJC publisher John Mellot’s own investigation, the changes in 2001 and 2005 account for only about 15% of the underfunding. The rest is due to Wall Street’s fraud and corruption that crashed the stock market. Stop trying to blame the working class for the wrongdoing of the rich and privileged. Kyle Wingfield is a misinformed putz.