Proposed Pension Reforms Provide Windfall for Louisville
Friday June 20, 2008
Mayor Suggests Saving $2 Million, Spending $3 Million on Top Needs
The proposed changes in the state’s pension system would provide a one-time windfall of about $5 million for Louisville Metro Government in the coming fiscal year.
Mayor Jerry Abramson sent a letter today to Metro Council President Jim King and council members, which recommends a combination of savings and additional spending in the coming fiscal year if the changes are enacted by state lawmakers next week.
The Kentucky General Assembly is meeting next week in a special session called by Gov. Steve Beshear to enact a consensus package of reforms to the retirement systems for state and local government employees.
Among the changes is a one-year decrease in the contribution rates that local governments pay for both hazardous and non-hazardous employees in the 2008-09 fiscal year.
“A one-time rate decrease is welcome relief for local governments that have endured years of double-digit increases,” Abramson said. “Louisville’s pension contributions have doubled – from $31 million to $63 million – in the past five years despite the reductions we’ve made in our workforce.”
In the letter, Abramson urged council members to consider saving a portion of the windfall “given the uncertainty of the overall economy and future-year pension contributions” and to focus additional spending primarily on one-time expenses, such as capital needs.
Abramson recommended $3 million in additional spending to address pressing needs in the upcoming fiscal year:
- External agency grants, particularly in the housing and family services area – $500,000
- Road and street improvements – $500,000
- Playground equipment and park improvements – $500,000
- Safety equipment for police, including body armor and in-car cameras and computers – $500,000
- Waterfront Park Phase III and Riverview Park redevelopment – $500,000
- Facility improvements such as roof repairs and HVAC upgrades –$300,000
- Fuel – $200,000
Abramson thanked council members for their help in convincing state officials to reform the pension system for state and local government employees to reduce annual cost increases to taxpayers and, over time, help state and local governments more fully fund the pension systems’ outstanding liability.
The council is scheduled to vote on the mayor’s budget proposal on Thursday, June 26.