Montgomery County officials aren’t done slashing employee benefits. After passing an array of benefits cuts to plug a $300 million budget gap, the County Council is expected to approve more reductions in retirement benefits for new employees.
Starting July 1, when the new fiscal year begins, new hires would need 10 years of service rather than five to qualify for retiree health benefits and 25 years on the job — up from 16 — to receive the maximum health premium under a proposal expected to pass June 14.
The county covers between 50 and 70 percent of retirees’ health premiums, depending on years of service.
In the fire department, for example, employees qualify for retiree health coverage after 20 years on the job regardless of their age.
The average Montgomery County employee costs taxpayers about $100,000 annually between salary and benefits — an increase of more than 50 percent over the last decade.
“It’s been hard; but it has to be done,” said Councilwoman Nancy Navarro, D-eastern county, of the changes for new employees. “It’s not popular, but I don’t think we have any choice.”
The reductions in retirement packages mirror changes imposed by the Maryland General Assembly on state employees earlier this year, a shift expected to fund 80 percent of the state’s pension program by 2023 — up from 64 percent.
Unions have criticized the Montgomery plan, saying council members ignored their proposals to find savings through employee compensation. Labor leaders also argue that county officials are destroying incentives for choosing a public-sector job. However, the council blueprint is not as extensive as the benefits cuts recommended by County Executive Ike Leggett.
“This is a long-term problem,” said Councilman Marc Elrich, D-at large. “Nobody put away enough money for retirement benefits. The only way to do that without squeezing out more and more services is to bend the curve.”
The council already approved a total of $273 million in benefits cuts over the next six years. Roughly 9,000 Montgomery government employees will pay 5 percent more for certain health care plans, while investing 2 percent more into defined-benefit plans or a one-time, 2 percent jump into 401(k)-style arrangements.
