… Finance officials eyeing at pensions, retiree benefits to cut costs …
By Julie Scharper, The Baltimore Sun
8:43 PM EDT, November 1, 2011
Baltimore officials have identified a $52 million budget shortfall next year, and Mayor Stephanie Rawlings-Blake’s administration is eyeing pension costs and other benefits after years of significant cutbacks to city programs and worker salaries to close previous budget gaps.
But city workers could find some good news in the coming budget year. When drafting spending projections, officials included a 2 percent raise for all city employees as well as the elimination of unpaid furlough days, a savings measure that has been in effect for three consecutive years as the city struggled to balance its budget.
“The mayor has given a clear directive that we need to be on a sustainable path, and pay freezes and furloughs are not part of a sustainable path,” said mayoral spokesman Ryan O’Doherty.
Officials outlined the budgetary situation Tuesday as they prepare to brief the City Council and to release the results of a survey asking residents what city services they think are the most important — police, firefighters and ambulances, and sanitation headed the list. The mayor plans to host budget workshops for residents beginning next week.
The new shortfall estimate also comes as the city explores ways to right its finances for years to come. While it was too early to say whether employees would receive raises or avoid furloughs — or to identify what services could get cut — O’Doherty stressed the city needs to adopt long-term solutions that could target retirement and health care programs.
Scores of workers have received pink slips over the past few years as the city has grappled with declining tax revenue and the national economic slump. Also a result of budget cuts: Some trees weren’t maintained at city parks, dead animals were collected less frequently and pools were open for fewer days last summer.
Employees have faced furloughs for the past three years, and most employees have seen their pay frozen for some or all of that period.
O’Doherty said the budget, which will be unveiled in March, will incorporate preliminary recommendations from a task force appointed by the mayor to draft a 10-year financial plan for the city.
The task force, which is expected to release a full report in late June, is analyzing ways to reduce fixed costs, such as pension and benefit costs for retirees, which have ballooned in recent years.
“Our fixed costs are really crowding out spending for actual services,” said O’Doherty. “People look at the budget and say ‘Where does the money go? Why can’t you afford my trash pickups?’ ”
Those fixed costs, which also include the city’s required contribution to the school system and debt service, are expected to balloon to $700 million in the coming budget year. The city paid $500 million for those costs in 2004, according to city budget director Andrew W. Kleine.
Kleine, who sits on the task force, said the group also is examining ways to save on health benefits for current and retired employees as it drafts the 10-year plan.
The city will save $21 million in health care costs in the current budget year through changes to prescription plans and other programs implemented over the past two years, Kleine said. However, rising costs will likely obliterate those savings in the future.
The task force also is looking at ways the city could increase revenue and streamline expenses for the largest agencies, such as the police, in its 10-year plan.
Both O’Doherty and Kleine declined to detail the specific cuts that the administration was contemplating, but they noted that pension costs were among those rising most quickly.
The city is still fighting a federal lawsuit over Rawlings-Blake’s overhaul to the fire and police pension system two years ago. Public safety union leaders contend that the changes, which delayed retirement for some members, violated their contracts.
Administration officials said the pension system overhaul would save the city hundreds of millions of dollars over the next few years and prevent a financial disaster.
Kleine said finance officials are studying benefits for new hires to the police and fire department.
Last month, finance officials asked agency heads to draw up a spending plan for the next fiscal year that would cut 5 percent from their department’s budget.
Fire Chief James S. Clack warned firefighters on an online forum that a 5 percent cut would equal the cost of running five of the city’s 56 fire companies, in addition to the three that are currently closed on a daily rotation to cut costs.
Clack later clarified that he hoped to avoid all closures, and only mentioned the potential impact to fire companies to give firefighters a sense of the magnitude of the cut.
News of the shortfall for the fiscal year that begins in July comes as the residents have yet to fully feel the impact of the current budget. Two dozen recreation centers could be turned over to private parties or closed at the end of December, as part of an overhaul backed by Rawlings-Blake.
The mayor aims to devote limited recreation funds to improving programs, facilities and staffing at 30 of the remaining centers.
O’Doherty said a survey of residents to be released Wednesday indicates that few consider rec centers among the city’s “most important” services. The survey was conducted by the University of Baltimore at the city’s request.
O’Doherty noted that only 3 percent named “recreation/ culture/ parks” among their two top picks. Police, fire and ambulance services topped the list.
“It’s instructive that the citizens view core services as most important to them,” he said. “If you look back that the mayor’s previous budgets, those are the things she has struggled to protect.”
Copyright © 2011, The Baltimore Sun