Arguments Over Pension Could Mean Lexington Layoffs

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Posted: 6:15 PM Dec 1, 2008
Last Updated: 6:59 PM Dec 1, 2008
Reporter: Dave Spencer
Email Address: dave.spencer@wkyt.com

13 comments

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Police and Firefighters say it's owed $246 million for the pension plan, the city argues but says now is not the time to take a big chunk all at once. And the issue is being heard by the Kentucky Supreme Court.

Over half of Lexington's general fund goes to police and fire, but the pension plan for firefighters and police is underfunded by nearly 250 million dollars. A problem Mayor Jim Newberry says has been plaguing the city for 30 years.

Mayor Newberry says there has only been one time when the pension was funded at the proper rate. Now with police and fire unions loosing thousands in a struggling financial market, it's looking for the city to start paying what it's owed.

Currently Lexington pays 18% of the total payroll to the pension plan, now the unions are asking for an additional 20 million dollars annually for the next 23 years, that's how long it would take to recoup the money.

The Mayor offered a different solution, $70 million to be sold in bonds then paid off by the city over the next 20 years. The Mayor says they wanted to take that money in addition to the $20 million annually. That's something the city can't afford, said Newberry.

The Pension Board has the power to name the price they want the city to pay, and according to a former board member they have no plans on changing the 20 million dollar figure.

Newberry says if that is the case, he'll be forced to cut positions in fire, police and other departments. The Mayor says with flat revenues and growing expenses and a budget that must be met, he'll have no choice but to make cuts.

Mike Sweeney of the Fraternal Order of Police says it's not fair to punish fire and police officers for the city's mistakes.

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Comments are posted from viewers like you and do not always reflect the views of this station.

Posted by: Anon Location: Ky on Dec 3, 2008 at 08:30 PM
The Fireman and Police do what they can even with the non-appreciation of their jobs!! Their pension is as important to them as yours is!! If you don't like what they have, apply for the jobs they have!! Don't hate them because you are jealous of the lifes they have and a lieing Mayor that has no backbone and cries when he doesn't get his way!!!

Posted by: Dave Location: Garden Springs on Dec 2, 2008 at 07:42 PM
What if we tax our illegal population? Every peso counts right?

Posted by: JR on Dec 2, 2008 at 07:22 PM
There is not an single person that has not been affected by the downturn in the economy. The states and cities continue to suffer as the tax base falls and less money comes in. Now is not the time for the union to be playing hardball with the local goverment. To continue to do so will result in a loss of jobs in the areas to which the community can least afford them.

Posted by: KY Location: KY on Dec 2, 2008 at 03:30 PM
Don't re-elect the people responsible if you don't like it. I suggest the city go ahead and lay'em off.

Posted by: sara Location: frankfort on Dec 2, 2008 at 08:34 AM
They need to impose a tougher penalty for those caught driving without insurance and expired tags. That would generate alot of money.

Posted by: Freda Location: Lexington on Dec 2, 2008 at 06:39 AM
The Police and Firemen have earned their pension we should make sure it is there for them. Good Job!

Posted by: regular joe Location: lexington on Dec 1, 2008 at 11:26 PM
same old pre tax shake down, Scare the public with reduced law enforcement and if that does'nt stick, then go to plan b and announce cuts in education or meals for the disadvantaged kids. The sad part is , It works like a charm everytime.

Posted by: Fireman's Friend Location: Lexington, KY on Dec 1, 2008 at 10:48 PM
Ask Newberry to tell the whole story, yes he came up with a plan to put $70 million (BOND)into the pension fund while REDUCING what the city was already paying so he could balance the current budget. July 1, 2008 Newberry reduced what the city was paying from 27% to the KRS mandated minimum 18%. The cities contribution rate had been increased over the years to get the fund going back in the right direction. Ask yourselves were you will be if he cuts already severely understaffed departments??? TI were are you??!!

Posted by: Liberation Demonology Location: Richmond on Dec 1, 2008 at 09:30 PM
"Mayor Newberry says there has only been one time when the pension was funded at the proper rate." Okay, so when was the one time it was properly funded (if that's true)??? The pension board is missing a bit of perspective on this issue. If the account had been fully funded, it would have just meant that much more they would have lost in the stock market downturn.

Posted by: Anonymous on Dec 1, 2008 at 08:20 PM
tisk tisk just breaks my heart,this is what happens when you live on a projection instead of a buget.

Posted by: Goebel Location: Lexington on Dec 1, 2008 at 07:25 PM
If the city needs more money collect on all the unpaid parking tickest and give tickets to those who don't use their turn signals. This should generate thousands and thousands of dollars.

Posted by: Firemedic Location: Lexington on Dec 1, 2008 at 06:47 PM
I am disapointed to see that both the Mayor and Mike Sweeney left out a provision in the Mayor's solution. Back in the summer when the Mayor floated the idea of the 70 million dollar bond he unilaterally dropped the city's contribution rate 9%. The city had been contributing 27% of payroll to the pension fund, but the Mayor cut the cities contribution rate to 18% when he came up with the idea of selling the 70 million dollars worth of bonds. The mayor cut the contributions many months before he proposed to sell the bonds, in fact he was not planning to sell the bonds till 2009 but cut the city's contribution rates in the summer of 2008. The increase the Pension Board asked for would not seem as drastic if the city was still contributing at the 27% rate. The pension board is bound by law to set the rate as advised by the actuary. The actuary determined the rate and the pension board followed their reccomendation.

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