Atlanta Mayor Details Proposed Pension Changes

ATLANTA, Ga. - Atlanta Mayor Kasim Reed warned homeowners to pay attention to the government pension debate at City Hall on Tuesday. Mayor Reed says he’ll have to cut vital services if Atlanta’s wealthy pension program is not changed.

City workers and citizens turned out to hear the mayor explain the proposed changes on Tuesday evening. Workers see it as a takeaway. The mayor says he’s forced to make the changes, which will impact people across the city.

“I could duct tape this thing and avoid it, and get out of office—but it will explode,” Mayor Reed told FOX 5’s Morse Diggs.

The mayor was talking about an explosion of employee benefits costs, which he says put in jeopardy the long-term retirement plans of government workers. Also in jeopardy are the neighborhoods because 20 cents of every tax dollar is spent on Atlanta pension and not on services.

Reed says the only remedy the government has is to either fire employees-- which makes services worse-- or to raise taxes, because that is the primary funding source for the city. He says either way, homeowners get the short end of the stick.

After 30 years of service, a worker in the city can receive up to 80 percent of their top salary as a pension payout, according to a policy established by politicians who came before Reed. In the private sector, companies typically fund a pension or 401K-type plan, but it only makes up about 1/3 of the retirement pot. The rest is made up of social security and personal resources, accounting for 1/3 each. Those numbers are according to the Atlanta Pension Panel.

Neighborhood president Penelope Cheroff of Ansley Park says she backs the mayor’s attempts to change the pension program, and that her neighbors are already paying fat taxes.

The mayor says he wants to make adjustments, and offer a blend of programs to make it more financially viable long term. He has proposed two options. First, he suggests a plan similar to private 401Ks. A second option would give workers making less than $40,000 the choice of entering into the social security system.