Here’s the situation for a retired Fort Worth police sergeant we’ll call Joe Brown.
In his last year wearing the uniform he earned about $65,000. Now he relies on his city retirement of around $30,000 a year, plus the annual cost-of-living adjustment, or COLA, the city promised employees they’d receive after their service.
We agree with city employees who say keeping the “promise” of a COLA for retirees is important as Fort Worth council members prepare to vote on a plan to close a $1.6 billion shortfall in the city pension fund.
For former Sgt. Brown, the 2 percent annual cost-of-living benefit adds another $600 a year to his income. Over 10 years his $30,000 will become $36,000. It’s not a lot of money to live on these days, but the extra helps address inflation.
Many retired employees draw much less than Sgt. Brown, and say the several hundred dollars in COLA money every year is a lifeline, since former city employees don’t receive social security. We think all efforts should be made to retain that assistance.
Pension fund shortfall
We recognize the city is in a bind and delaying a fix isn’t an option. With current spending, the fund will run out of money in 2048.
And if the city doesn’t produce a solid bailout plan soon, credit rating agencies have threatened to downgrade the city for a third time which will increase the cost of borrowing money.
What’s required here is major, life-saving surgery.
City manager recommendation
1.) Through an increase in what the city contributes for each employee;
2.) By increasing the payroll contributions of current employees;
3.) By applying a portion of an increase in property tax revenue to pensions;
4.) And by cutting the COLA for all retirees with less than 25 years service, and reducing the COLA for those who still qualify to a maximum $403 a year.
The solution will be part of a dizzying and elastic mathematical equation. When you reduce the amount of one contribution you have to increase others to find the savings needed to stabilize the fund.
Limit property tax increases
We all know home values are rising, which means property taxes are going up again. Cooke proposes reducing the city’s tax rate by 2 cents. That would minimize the increase in home taxes, though they’d still be higher for some whose property values have increased.
We don’t think the pension problem should be solved on the backs of struggling property owners. Fort Worth already has one of the highest property tax rates among cities in North Texas.
So, reducing the tax rate by 2 cents should be the minimum Fort Worth does for homeowners. Can it do more?
We also don’t want retired employees, no longer able to work, standing in food lines.
Completely cutting the cost-of-living benefit for the many retirees who’ve served the city less than 25 years, and reducing it for the others is cruel.
We urge council members to support a plan that will allow current retirees to receive what they were promised. Changing the benefits for future and current workers will bring some heartburn, but will probably be necessary. We think, however, the city can build some consideration for inflation into its retirement plan. Social Security does that much.
City spending cuts?
Here’s a fifth factor the City of Fort Worth needs to look at — what it’s spending.
We know our community is growing, and we need to provide quality services to attract good-paying jobs and sought-after businesses. But there may be projects that are discretionary or operated inefficiently. Look for those savings in your budget and apply them to the pension fix.
Cooke says the city’s general fund will grow by about $26.9 million this year. He’s suggested using $10.2 million of that to increase the city’s share of the pension payment. Should council members consider dedicating even more?
This Editorial Board has met with the mayor and city manager. We’ve talked with representatives of employee and retiree groups. We believe there’s a sincere effort to find a solution that is fair.
One goal should be to protect those most vulnerable. We think that’s seniors trying to make ends meet, and property owners worried they’ll be taxed out of their homes.