Mayor Rawlings-Blake's Statement On The Passage Of City Employee Pension Reform Legislation
Monday May 5th, 2014
Better Schools. Safer Streets. Stronger Neighborhoods.
BALTIMORE, Md. (May 5, 2014)—Today, Mayor Stephanie Rawlings-Blake issued the following statement after the City Council passed pension reform legislation that will give future City employees a choice between a 401(k)-style retirement savings plan and a hybrid pension plan, which includes both a 401(k) style benefit and defined benefit component:
“This legislation shows that government and labor officials can sit down in good faith and work out a compromise that is fair to workers and protects the City’s bottom line. Rather than waiting on a fiscal disaster, Baltimore is, again, being proactive in getting our finances in order for the long-term by taking decisive action to significantly slow the growth of our unfunded pension liabilities. We continue to set ourselves apart from other major cities by refusing to kick the can down the road—instead, meeting our challenges head on. Working together, we have made tremendous progress in reducing unfunded liabilities across city government—including key reforms within my administration’s 10-Year Financial Plan that have reduced our structural deficit by $300 million dollars, while making key investments in public safety, property tax reduction, and blight elimination. I would like to thank both the City Council and AFSCME for their leadership and dedication in making this compromise possible.”
The pension system for municipal employees faces $686 million in unfunded liabilities. Under this proposal, new City employees will be required to contribute 5 percent of their salaries to their retirement accounts—the same contribution level being phased in for current employees. The new plan will mitigate the City’s risk of repeating the large unfunded liability and pension cost increases of the past decade.