Council OK for pension reform near Tomorrow's vote will end county's five-month battle; Costs will be trimmed; Gary is fulfilling campaign promise; earlier plan died


The Anne Arundel County Council will approve pension reform tomorrow night -- perhaps unanimously.

After five months of rancorous debate, two thick bills and more than 75 amendments, a once-fractured council has united behind County Executive John G. Gary's plan to overhaul Anne Arundel's $750 million retirement system -- a campaign promise on which the Republican administration has spent a bundle of political capital and much of the year trying to fulfill.

For the first time in 31 years of charter government, the council will approve legislation that reduces pension costs instead of increasing them, excluding past bills voided by the courts.

The measure probably will serve as a model for other financially stressed Maryland counties considering pension reform.

"This is a terribly important piece of legislation," said Lisa Ritter, Gary's spokeswoman. "From the county executive's point of view, it's been a crucial issue and a lingering issue. This will put to rest a major undertaking for the administration."

The impending victory will hand Gary a key component of his effort to shave Anne Arundel's payroll costs, accounting for 75 percent of the budget. It is being viewed less as a triumph of salesmanship than as Gary's survival of a political war of attrition.

It took a Republican administration almost half a year to persuade the council's Republican majority to back the bill.

But Gary, as he said he would be all along, is the last man standing.

"At this point, I think there are at least four council members who have had their fill of this," said Councilman Thomas W. Redmond Sr., a Pasadena Democrat. "I'm one of them."

Positive vote expected

Councilwoman Diane R. Evans, the Arnold Republican who chairs the seven-member panel, said, "I can't guarantee a unanimous vote, but I fully expect a positive one.

"The support for this measure will be far stronger than if we had voted on it three months ago," said Evans, who almost single-handedly derailed Gary's first pension bill in September by refusing to call for a vote. "The council has worked hard, the fourth floor [the executive staff at the Arundel Center] has worked hard. It's been three months well spent."

In June, Gary said he didn't need to sell his pension plan to county employees because they weren't the ones voting on it. In July, bumper stickers started appearing on cars and at bus stops: "Want to meet a disgruntled employee? Call 911."

Gary ended up making a few personal appearances to pitch the proposal.

Getting answers

"It was a struggle to get answers that we wanted," said Councilman James E. DeGrange, a Glen Burnie Democrat and a critic of the legislation. "That shouldn't ever have happened."

Five months later, the administration had turned cooperative.

In October, top Gary administration officials took council members to several dinners at Loews Annapolis Hotel. And by publicly toning down anti-employee rhetoric and thinly disguising impatience with county labor leaders and Democratic council members, the Gary administration averted a budget crisis.

Without a vote tomorrow night, Gary's second pension bill would expire. Almost at once, Gary would have to set aside political embarrassment and begin thinking about how to keep his budget balanced, which Anne Arundel County law requires.

Gary's proposed budget this year counted on at least $2.2 million in future savings resulting from pension reform in order to balance.

Without a change in the system, Anne Arundel would need to contribute $19 million to the pension plan, which covers 3,500 county employees. Instead, the Gary administration set aside $16.8 million -- and the council, expressing token concern, accepted the move as an act of faith by approving the budget in May.

The final version of the bill will save Anne Arundel $3 million a year, the equivalent of 2.5 cents per $100 of assessed value on the property tax rate, and provide an $800,000 budget cushion instead of a potentially disastrous shortfall requiring midyear cuts to correct.

Reduced savings

The amount to be saved is less than the $4.3 million the administration expected to save with its first shot at pension reform, a 41-page bill that arrived in June and expired three months later without a vote.

But it is enough for the Gary administration to claim victory and showcase pension reform, during an expected re-election campaign two years from now, as a symbol of the county executive's commitment to fiscal austerity.

"While savings are not as large as originally hoped for, they are still significant," Ritter said.

There will be only minor changes in the retirement plans of Anne Arundel's current employees, thanks in large part to labor leaders and council members from both parties, and no change at all for the county's 1,100 retired workers.

The council watchdogs included Evans, who surprised many county Republicans and exasperated the administration with her painstaking review of the bill.

Outside help

Evans authorized Teresa Sutherland, the county auditor, to hire an actuary and a lawyer with expertise in pension matters to help the council examine the bill, at a cost of $52,300.

The administration spent thousands of dollars on an outside lawyer of its own.

"It was worth every penny," Sutherland said. "The advantage was that it provided the council with independent advice."

Partly as a result, the council smoothed out the bill's most controversial element, an administration proposal to eliminate the guarantee of future cost-of-living raises.

Fewer guarantees

The reform legislation, as amended, will continue to guarantee cost-of-living pension raises based on time worked before the bill's passage. But only 60 percent of cost-of-living adjustments based on future years will be guaranteed.

The remaining 40 percent will be linked to the performance of the pension investment portfolio, which has yielded double-digit returns in recent years.

The bill also establishes a board of trustees to oversee the pension system.

A trade-off

"There was a trade-off between saving money and caution," said Deputy County Attorney David A. Plymyer. "There will be suits and claims. That happens any time we have major legislation of this nature. But I'm quite comfortable that we have a bill that will pass all challenge."

Future county employees will enter a pension plan that pays about half the benefits the existing one does.

Fostering resentment

Labor leaders argue that the two-tier system -- current employees at one level, new employees at a lower one -- will hamper recruiting and foster resentment within the ranks.

While agreeing, the administration's council antagonists believe the legislation is as good as it's going to get. "I think pension reform has been beaten around, but I don't think there's support for any more changes," DeGrange said.

Pub Date: 12/01/96

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