Public workers deserve safe and reasonable pensions, but the city of Tampa cannot afford, especially in this recession, to keep paying its employees more and more on both ends of the pay scale — first in larger salaries and later in the associated costs of bumped-up pension payments. Tampa firefighters and police, in particular, are represented by politically powerful unions and have had quite a ride. But it is time the politicians who court them start recognizing the larger economic picture.
Pension payments to retirees have doubled since Pam Iorio was elected mayor in 2003 and are $114-million this year. She gave increases to both general employees and public safety personnel. Iorio bumped the multiplier used to calculate a pension payment, cut the vesting period to qualify for pensions and increased cost of living adjustments. She and the City Council sweetened the pot even more for firefighters and police, raising their multipliers to 3.15 from 2.5. When multiplied by salary and years of service, the move allowed a police officer or firefighter who earned $50,000 to retire after 20 years with 63 percent of his or her salary instead of half. The multiplier for state law enforcement is 3.
The city's pension costs are growing even though it has shed jobs to balance the budget in this down economy. And the increase in pension benefits comes as more retirees are coming onto the rolls. The city's contributions to general employee and public safety pension funds jumped in 2004 and 2005, largely to make up for market losses in the first half of this decade. And while those contributions moderated in recent years, the payments for firefighters and police continue to grow. The contributions for 2010 could reach between $21-million and $27-million, or up to four times the payment in 2003.
One-year swings in the city's pension contributions are not the most meaningful measure, as the payments are based on a "smoothing" method that seeks to spread the impacts over years. Still, this is real money. The city will almost surely be forced to dip into its savings to cover the pension payments. And it will do so as the city's economic outlook projects that Tampa will collect less in property tax revenue in each succeeding year from 2009 to 2011.
The message for the mayor, the council and the unions is that the taxpayers deserve to see some correlation between the benefits package for public employees and what is happening in the private sector. Thousands of employers have pared back traditional defined-benefit pensions over the last 10 years as a means to improve their companies' cash flow and remain viable. The public sector is not immune from those costs. A study in July by the Government Accountability Office, an investigative arm of Congress, found that the portion of state and local government pension plans that were sufficiently funded had dropped since 2000 from 90 percent to 58 percent.
A report this year shows that the city of Tampa, to its credit, has adequately funded its pension obligations. But the days of 6 percent and 8 percent pay raises, or in the case of firefighters, up to 13 percent pay raises, should be long gone. The firefighters are already asking for another 8.5 percent pay increase for next year. Officials need to corral the raises and rework the formula for cost-of-living adjustments. They should reflect actual swings in consumer prices and not be back-door pay raises. Taxpayers are forced to confront economic reality, and so should city leaders and public employees.