Mayor Jim Newberry said earlier this week that layoffs of police and firemen may be inevitable if the city has to pony up an additional $20 million next year to fund police and fire pensions.
Newberry made the comments after theLexington Policemen's and Firefighters' Pension Board voted Tuesday to raise the city's contribution level to 46.6 percent of the total payroll for police and firefighters for the fiscal year that begins July 1, 2009.
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The city did not provide the actual numbers, but based on this year's payroll, 46 percent is about $28.9 million. The city currently contributes about 18 percent of the payroll, or about $11.2 million, to the pension fund.
Newberry, according to multiple people at the meeting, wanted the board to delay setting the city's financial contribution until after January, when he planned to put an additional $70 million from a bond into the pension fund, which has an unfunded liability of about $250 million.
Newberry said at the Tuesday meeting that the city couldn't afford the 46.6 percent rate and might have to lay off 100 police officers and close five fire stations.
Maj. Mike Tracy, a firefighter and pension board member, said his initial reaction Tuesday was "disbelief."
"All I'm doing is following state law, and the other five members on the board that voted with me acted in a legal fashion," Tracy said, who was at Tuesday's meeting. "It didn't strike me as a very professional action."
When asked about his comments Thursday, Newberry said in a written statement that the city "absolutely cannot afford that contribution rate, and that the board's action would mean a substantial cut in city service."
Susan Straub, a spokeswoman for Newberry, stressed that the mayor has not made any decisions on whether there will be layoffs.
Because public safety makes up 54 percent of the city's budget, it would be difficult to make cuts without cutting public safety, the release from Newberry's office said.
Police officers and firefighters pay a percentage of their salary into the fund, but the city also pays into the fund. The city's contribution to the pension has long lagged behind the contribution level set by the police and fire pension board. That contribution rate is determined by an actuary.
The city's contribution to the pension fund has been the subject of at least two lawsuits. Recently, the state Court of Appeals upheld a lower court's ruling that said the city should pay the rate set by the pension board. The city has asked the state Supreme Court to review the ruling.
Newberry said Thursday that he won't ask for the $70 million bond now that the pension board has set the 46 percent rate.
"I can't recommend to the Council or to the taxpayers that they pay debt service on $70 million worth of bonds in addition to a contribution set at this rate," Newberry said in a statement.
Sgt. Robert Cottone, a Lexington police officer and member of the pension board, said the law says that the board has to set the city's contribution rate within six months of an actuary report, signed in July, that determines the city's contribution. That means the board couldn't wait until after March, which is what Newberry requested, or the board would violate the statute.
To control spiraling costs, Newberry has also proposed starting a new retirement system within the same fund for new police and firefighters. Proposals for the new system would reduce benefits.
But Cottone and others say the city has a responsibility to fund the current pension.
"He came into a bad situation," Cottone said of Newberry and the current pension crisis. "But it's not going to go away. He and his predecessors caused this problem by not adequately funding this pension."
Police officers and firefighters went without pay raises for many years with the understanding that they would get enhanced benefits when they retired, Cottone said. The pension rules were tweaked so people could retire earlier and receive more money. The system's rules to get disability benefits were also relaxed, which created an uptick in the number of police and firefighters who received disability pensions, a 2005 Herald-Leader report found.
Tommy Puckett, a Lexington police officer and former pension board member who sued the city to increase its contribution to the fund, said Newberry shouldn't punish police officers and firefighters by laying them off when the city has not met its obligation to the pension for decades.
"He knew about this problem coming into office," Puckett said.