“Kick the taxpayer” may not be the official motto of Baltimore City, but that is its de facto operating reflex. One egregious example is the massive and growing public pension liability city leaders are foisting on we the people at a time of growing unemployment and decreased benefits for each of us in the private sector.
Combined losses of about $600 million at the city’s Fire and Police and Employees’ Retirement System funds through the first six months of fiscal 2009 mean more tax dollars diverted to shoring them up. Actuaries say that translates to $20 million more dedicated to pensions in next year’s budget — a 17 percent increase from last year.
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In a normal year, some people might consider $20 million a rounding error in a $3 billion total budget. But revenues are falling across the board — which can only mean cuts to current employees and services to citizens to pay for this increase, or higher taxes — or both — without reducing benefits or asking city employees to share more of their burden.
While the numbers may look bad for next year, they are even worse when you look at the growth in payments over time. In 2000, taxpayers contributed $25 million for pension benefits. Next year it will be about $140 million — a 460 percent increase in nine years. Does that mean taxpayers must pick up a $644 million tab in 2018? If the operating budget continues to hover around $2 billion that translates to 32 percent of the total budget — and we haven’t even calculated retiree health benefits, which would push the total liability to well over 50 percent of the operating budget.
Unless members of the City Council and Mayor Sheila Dixon think city government should exist solely to pay benefits, they must review public employee pension plans and realign them with reality. Union bosses will make a stink, but they have only themselves to blame for promising the rank and file more than was possible even in boom times. Applying hoped for federal bailout dollars to the pension problem will only delay the inevitable.
Asking city employees to contribute more for their retirement — at the very least — must be on the table for our elected officials. The alternative — raising taxes or cutting services — not only will hurt residents but deter businesses and their employees from moving here, and force taxpayers around the state to pick up more of the tab.
City leaders and union bosses lied to dedicated employees about future benefits, recklessly invested their money and our tax dollars, and now think they can automatically stick citizens with the bill.
That cannot happen. It would accelerate the exodus from the city of jobs and people, eventually leaving retirees with nothing.
ON THE WEB
* Government Accounting Standards Board
* U.S. Census Bureau State and Local Government Employee-Retirement Systems
* Census state and local retirement system data 1993-2007
* Baltimore City Fraternal Order of Police
* Baltimore Police Department
* Baltimore Fire Department
* The Baltimore City Firefighter Local 734
* Pension Tsunami
* Taxpayer backlash
* Global Action on Aging
* The Intergenerational Transfer of Public Pension Promises
* Calvert Institute 2006 warning
