Atlanta Pension Panel holds 1st Meeting

By Charles Edwards

Atlanta, GA – Nearly 6,000 people have retired from the city of Atlanta and are receiving pension payments. More than 4,600 people work for Atlanta and the city is obligated to pay towards their retirement. However, funding retirees and paying for employees' pension has become a major problem for Atlanta.

The budget for Atlanta's 2009 fiscal year was 523 million dollars. 20 percent of the budget went to pension obligations. That year, the city's police department was the only budget item more expensive than pensions. But without changes to the pension system, Mayor Reed fears it will easily trump police in the future.

"What you see is a liability that is increasing at a rate that will soon overtake the amount of money that Atlanta is spending on police officers," said Reed.

On Monday, a 14 person panel assembled by Reed started looking at possible pension solutions. The panel is chaired by former Atlanta-Journal Constitution publisher John Mellott. He says there are two types of solutions.

"You can change your benefits plans and you can attack that unfunded actuarial liability," said Mellott.

As for the benefit plans, Mellott says you could start fresh and put old and new employees in a brand new system. But pension panel member and police union chief Scott Kreher says that idea is not fair.

"I've got police officers who have been with this department 15 20 years that are within grasp of full retirement and to change that plan at the end of their career is just unconscionable," said Kreher.

Another idea would have current employees keeping their pensions the same with new employees falling under a new, cheaper plan. However, some fear the new plan would put Atlanta at a disadvantage when competing with other cities for top police recruits.

The city is struggling to pay retirees' pension. 70 percent of Atlanta's yearly pension cost is for retirees. One possible remedy is a special local option sales tax or SPLOST. Pension panel member and firefighter union head Jim Daws favors a SPLOST because it taxes people who live, work and play in Atlanta.

"Those commuters use city services to a great extent and it's only fair they help shoulder the burden of those services," said Daws.

However, that plan requires approval from the state legislature. Some observers doubt the General Assembly would pass such a resolution.

The panel could always keep the current system and find a way to fund it. That could result in furloughs, layoffs or raising property taxes. During the campaign, Mayor Reed said he would not raise property taxes. Today, he reiterated his campaign promise.

"A tax increase will not be an option during my administration. I made that commitment for this 4 years and I'm going to honor my commitment," said Reed.

However, city council President Caesar Mitchell says raising property taxes should be on the table as a last option.

"I don't have any appetite for a tax increase but I also have an appetite for making sure that we make strong fiscal decisions for the city of Atlanta and our citizens and we deliver service in an adequate fashion," said Mitchell.

The panel will meet again before finalizing options for the Mayor. The Mayor and city council plan to phase in pension reforms on a yearly basis starting with the new budget in July. The city's ability to reform its pension system also depends on tax revenues which are a major funding source.