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Friday, February 19, 2010

Atlanta's pension predicament? Worse than you thought

click to enlarge Reed: Pensions could make city insolvent
  • Reed: Pensions could make city insolvent

If Atlanta wakes up one morning to discover that Kasim Reed has skipped town without leaving a forwarding address, at least we'll know why.

At yesterday's City Council training session, the new mayor told his fellow elected officials what he's learned in recent weeks: The city's pension crisis is worse than anyone had previously imagined.

How bleak is the situation? As usual, Reed didn't mince words.

"The do-nothing option would be like a plane hitting a mountain," he said. "After we'd fired everyone we could fire and still call ourselves a government, this would be a city that provides some police service, some fire service, some trash pick-up — and pays pensions."

On the campaign trail last fall, Reed rarely missed an opportunity to remind voters that 20 percent of city spending — one out of every five dollars — went to meeting its crushing pension obligations. Apparently, that millstone-around-the-neck description was the rosy version.

Still, Reed made clear that he doesn't plan to rush into any decisions. This coming Monday, the new Pension Review Panel will hold its first of many meetings to consider pension reforms. It sounds as if all options are on the table, including scrapping the pension system altogether and putting future employees into Social Security. So you understand why the mayor doesn't want to make any snap decisions.

"Meeting this challenge is a process that will take years," he told Council members. "We're not trying to do this to meet the 2011 budget."

Apart from selling pension reform to the Council, Reed will have to convince the city's various employee unions — police, fire, etc. — that current pension levels are unsustainable. That won't be a fun task.

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