Less than two months after the City Council approved Mayor Lenny Curry’s pension reform legislation and shifted its attention past the long-standing issue, a councilman wants his colleagues to consider a new plan he says could save an additional $500 million over the next 13 years.
Councilman Danny Becton’s plan wouldn’t undo Curry’s reforms. Instead, it would see the city more aggressively pay off its $2.86 billion pension debt using a portion of future growth in tax revenues.
Curry’s plan is a cocktail of reforms that ended pensions for new government employees and will use a special, voter-approved sales tax that begins in 2031 to pay off the city’s pension debt.
To begin reaping financial benefits before the tax begins, the city will put off a large chunk of its pension debt payments into the future in order to free up money as soon as next year. That approach could free up an estimated $1.4 billion between 2018 and 2030 — but cost the city an additional $4.5 billion more in the long-run.
It’s unclear how eager other council members will be to adopt Becton’s idea.
A major selling point for Curry’s plan was that it would allow the city, for the first time in years, to reinvest growing tax revenues on initiatives like public safety or infrastructure instead of paying off its ever increasing pension debt.
Becton began his push to pass his legislation Monday with a presentation to 10 other council members, likening the idea to shortening a 30-year home mortgage to 15 years.
He called Curry’s reforms a historic decision that provided greatly needed financial relief. But he said deferring pension debt payments is a costly and risky endeavor, citing the estimated $5.9 billion price tag of Curry’s plan and the concerns expressed by Moody’s Investors Service, a bond-rating agency, about the “pay less now, pay more later” approach.
“We don’t have to do this. We can ignore it, we can go the next 13 years and make minimum payments on our charge cards. But somebody at some point is going to have to pay for it. And it’s our kids,” Becton said.
His colleagues commended Becton for his efforts, but some expressed concerns that acted as a barometer on the council’s attitude toward pension reform.
Councilwoman Katrina Brown said she’d like to at least delay his plan for a year so that money wouldn’t be diverted from improvement projects in her district.
Councilman Jim Love said he was concerned not enough money would be spent on city services if tax growth was stagnant in the future.
Councilman Reginald Brown said he wanted to see an actuarial study that showed just how much the city would save before he approved the plan. (Becton said the city won’t pay to have a study completed for his legislation.)
Curry also weighed in on Becton’s legislation. He wouldn’t say whether he supported it, but he disputed Becton’s assertions that his reforms put the city’s credit rating at risk. He said if Becton had those concerns, he shouldn’t have voted for his plan.
“It was comprehensive. It solves the problem. It had to get through the legislature, the governor, the council a couple of times, the voters, and unions. I think the results speak for themselves,” Curry said. “It seems he needs to convince the majority of the council to see if they agree with him.”
Under Becton’s plan, the city would set aside 15 percent of any new tax growth to pay toward the city’s pension debt until the pension sales tax begins in 2031.
The payment amount would carry over each year and grow if tax revenues increased. It would remain the same during years where there wasn’t growth or decrease if the city’s budget shrank.
Becton said the idea could generate as much as $500 million if taxes grew at a rate of 3.3 percent each year.
The legislation will be reviewed by a council committee later this week. If it clears the committee, it could be voted on as early as next week.