Tucked away in the pie charts and spreadsheets in Baltimore City?s proposed $2.6 billion budget this week is a ticking time bomb that will cost the city millions.
That explosion is called the pension fund payments.
Those payments to police and firefighters will total about $118 million in 2008, an increase of about $17 million from this year and nearly $50 million more than 2006.
“Depending on the markets, contributions to pension funds could continue [to] devour a greater share of the city budget,” said George Liebmann, director of the Baltimore-based Calvert Institute for Policy Research, a think tank that studies public employee pension funds.
City officials also expressed concern about the growth in funding for pensions.
“It?s a challenge for the city,” city budget director Raymond Wacks said. “People are living longer, and investment performance has been down, so we have to contribute more.”
Wacks said economic experts have advised him that future growth will not be as robust, putting possible further strain on city finances if pension investments perform below expectations.
Mayor Sheila Dixon spokesman Anthony McCarthy said, “We have introduced a bill to try to stabilize costs.” The bill would give retirees a set cost-of-living increase, rather than more money when investment returns increase ? a move that officials hope will save money.
McCarthy said that despite the rising pension fund. the proposed spending plan is a realistic blueprint for improving the “quality of life” in the city.
“We are saving city residents money with a property tax cut, investing in our young people through additional funding for our schools and increasing the staffing at our recreation centers,” he said.
“Mayor Dixon has said over and over again that her priorities as mayor include investing in the human capital of our city,” he said.
City Budget Highlights
Spending by department
» Fire Department: 9.4 percent increase
» Health Department: 8.2 percent increase
» Police Department: 4.0 percent increase
» Enoch Pratt Free Library: 8.2 percent increase
» Recreation and Parks: 9.4 percent increase
? Source: Mayor Sheila Dixon?s proposed 2008 budget
