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Council authorizes plan to privatize some city pensions

Laws and LegislationPensionsRetirement PlanningInterior PolicyPension and Welfare

Some future city workers will receive a 401(k)-style retirement plan rather than traditional pensions under a sweeping plan approved Monday by the City Council.

The legislation — the result of a deal struck by Baltimore unions and Mayor Stephanie Rawlings-Blake — was stalled in a council committee for nearly a year until the mayor and union leader Glenard S. Middleton reached what both sides called a compromise.

Rawlings-Blake initially called for all new municipal workers to be placed in a 401(k)-style plan. The deal approved by the council will give new workers the option of selecting a 401(k)-style plan or a "hybrid" plan that combines such an account with a traditional pension. The "hybrid" plan will be two-thirds traditional pension and one-third 401(k)-style plan, officials said.

Under the measure, new city employees will be required to contribute 5 percent of their salaries to their retirement accounts.

"This legislation shows that government and labor officials can sit down in good faith and work out a compromise that is fair to workers and protects the city's bottom line," Rawlings-Blake said in a statement. "Rather than wait on a fiscal disaster, Baltimore is again being proactive in getting our finances in order for the long term by taking decisive action to significantly slow down the growth of our unfunded pension liabilities."

Middleton has called the deal "fair and equitable."

Councilwoman Sharon Green Middleton, who is married to Glenard Middleton, abstained from the vote.

The pension system for municipal employees faces $686 million in unfunded liabilities, according to city documents. Fully funded in 2003, the system has weakened each year and is now only 68 percent funded. The city did not have figures for estimated future savings.

The bill does not affect police or fire department employees or elected officials, who have their own pension systems.

Councilwoman Helen Holton, chairwoman of the Budget and Appropriations Committee, said the pension plan moves the city "in the right direction. It's not done, but it's a great head start."

"It shows compromise and compassion for a more balanced approach at addressing a reality of unfunded liability," Holton said.

In other action, the council also authorized two multimillion-dollar payouts resulting from botched programs.

The legislators gave final approval to pay back $3.7 million from a homeless services grant after the federal government said the city and its subcontractors could not sufficiently account for how the money was spent.

Several council members have objected to the repayment, arguing that the U.S. Department of Housing and Urban Development provided poor accounting guidelines during a rushed rollout of stimulus funds several years ago. Councilwoman Mary Pat Clarke has argued that the city is effectively being "robbed." Clarke and Councilman Warren Branch voted against the repayment.

Council members also approved a $3 million payout to an estimated 300 owners of historic properties whose tax bills in coming years will be higher than what government officials told them to expect. The checks are intended to compensate property owners who were awarded excessive 10-year credits for renovation or restoration of historic buildings. The city intends to cover the mistakes by writing checks now.

"No citizen should have to carry more than their fair share of the tax burden," Rawlings-Blake said in a statement. "This program will help many hard-working Baltimore families."

Council members also gave preliminary approval to a bill that would give Baltimore animal control officers more leeway to seize dogs, cats or other pets deemed to be a nuisance.

The legislation, sponsored by Councilman Robert W. Curran, would allow animal control officers to evaluate complaints, such as dogs barking or running loose, and decide whether to take the animal to the pound without having to observe the violation.

The animal's owner could get the pet back following a hearing process in the city Health Department, Curran said.

Curran said the legislation is the latest in a series of changes intended to update the city's animal control code, which in recent years removed the need for some households with multiple pets to obtain kennel licenses.

lbroadwater@baltsun.com

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Copyright © 2014, The Baltimore Sun
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Laws and LegislationPensionsRetirement PlanningInterior PolicyPension and Welfare
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