FRANKFORT — Mayor Jim Gray said Wednesday that he will fight to have the city regain control of its police and fire pension fund if officials cannot reach an agreement with police and fire unions to reduce the pension's unfunded liability and make it sustainable in the future.
Gray made the comment Wednesday in Frankfort while testifying before the interim joint committee on local government.
The mayor was flanked by Lt. Chris Bartley, president of the International Association of Fire Fighters Local 526; Det. Robert Sarrantonio, vice president of the Fraternal Order of Police Bluegrass Lodge No. 4; and Vijay Kapoor with the consulting firm PFM, which was hired by the city to help with pension reform.
Lexington is the only city in Kentucky where police and firefighters are not covered by the state pension system. The city is required to fund its own pension plan, but the plan is controlled by the state legislature. Gray said this arcane arrangement was a condition of the charter that established local merged government in 1974.
The city would have to introduce a bill in the legislature to take control of the fund.
Police and fire would fight such a move, Bartley said. "Past city officials — not the current administration — did not make public safety a priority," he said.
Bartley said police officers and firefighters had poor pension benefits and made minimum wage until the legislature took control, improved the pension and put in place collective bargaining for police, fire and correction officers.
City officials and the police and firefighter unions have been at odds over the pension fund for years.
The pension fund has an unfunded liability of $258 million, about the size of the local government's annual budget.
The city's required annual contribution, plus pension bond payments, is approximately $40 million, and Gray said he expects that amount to go up. The city's contribution has tripled since 2004 and quadrupled since 2000, he said.
The escalating costs have had "tragic consequences" for the city, the mayor said.
Hundreds of millions of dollars of capital improvement projects have been ignored. Parking garages are falling down, creating safety risks, and the social services budget has been cut in half over the past six years. Non-bargaining employees have had pay freezes and layoffs. This year, pay freezes were implemented for collective bargaining employees.
Kapoor said he expects to have pension fund recommendations by mid-December and a bill to take to the legislature by early January.
As he left the committee hearing, Bartley was asked how close the two sides were to reaching an agreement. "We are making considerable progress. We wouldn't be sitting at the table here if we didn't think we were making progress," he said.
"But it's just like in negotiations," Bartley said. "No side will get everything it wants. We're all going to have to give up something."
Gray said the city was working with police and firefighters to gain consensus on a bill to take to the legislature. But if the two sides cannot get together, he was going to vigorously pursue local control, "because it is the only way to solve the problem."
Sen. Damon Thayer, the committee chairman, said he thought Lexington ought to have local control over its pension. After the meeting, Thayer said he didn't think there had ever been a strong push by Lexington to take control of the pension. "But now the pension problem has gotten worse, I think there's a desire to return local control to the city of Lexington."
Lexington has two problems with its pension, Thayer said. First, the city has to come up with a solution that all parties in Lexington buy into. Second, it has to get the legislature to buy into it.
"I don't think that's fair. No other city in the state has to do that," he said.
Thayer said the legislature ought to help Lexington fix its pension problem, "But more importantly, I think we should return home rule to Lexington when it comes to police and fire pensions." He said if the city wants to take that on, "I think they would find a lot of support for it because the concept of home rule is something that enjoys broad support in both chambers of the legislature."
The legislature is grappling with trying to solve the state's pension problem. "It would be better for us if we didn't also have to try to solve Lexington's pension issues. It would be better if Lexington could solve its pension issue."