This is a statement released jointly today by Mayor Slay, President Reed, and Comptroller Green:
For years, the City has had a covenant with its employees: work hard, provide good public service, and you will receive a pension so you can retire with dignity.
Unfortunately, over the years, the cost of those pension obligations has grown beyond the City's ability to pay them without disrupting City services, or severely curtailing employee pay and other benefits.
We must fix our pension systems so we can fulfill the promises made to our police officers, firefighters and city employees. We also must fix them before the rising cost cripples our ability to provide quality police and fire protection, and other services. And, we must do so in a way that is fiscally responsible and fair to taxpayers.
Tomorrow, a bill will be introduced in the Board of Aldermen to authorize a bond issue that will serve as the first step toward addressing the pension funding issue. This financing will infuse $125 million dollars into the three systems and will be sufficient to cover all the City's outstanding obligations through the current fiscal year ending June 30, 2007.
As anyone who owns a house understands, simply borrowing money does not solve a problem. We will have to pay back the money borrowed and we will also have to set aside money for FY08 and FY09 to cover new obligations as employees continue to accrue benefits going forward.
The City will have enough money to cover the debt service on the bonds. But, by our calculations, the City will face an estimated funding gap in excess of $20 million of what is needed to cover pension obligations for the three systems going forward.
That means we will need to identify new revenues and ways to reduce the cost of the pension plans that will bridge this funding gap.
We are in the process of creating a plan to close that gap. The plan must be fair to both taxpayers and our police officers, firefighters and other employees.
While this will not be easy, filling our pension shortfall is going to be far less difficult than in many other cities, counties and states -- if we do it sooner rather than later.
We are all working together with our financial advisors, the Board of Aldermen, the budget division and other city officials and moving towards addressing this problem. It is our goal to have a finance and benefit adjustment plan ready to show our employees, the aldermen, state legislature and taxpayers by this fall.