The Baltimore City Council gave unanimous, fast-track approval last night to a compromise early retirement plan that could eliminate several hundred city jobs by the end of the year.
But some key council members and Mayor Kurt L. Schmoke continue to differ on whether the plan would also erase the need to raise any taxes.
Council members said that the plan giving about 1,500 eligible employees incentives to retire by Dec. 31 should generate enough savings to close a $4.9 million gap in the budget for the fiscal year that begins July 1. Police, firefighters and teachers are not eligible.
Sign-up for the plan begins today.
"I think this clearly lessens the likelihood that there's a need for raising taxes," said Council President Lawrence A. Bell III.
Councilman Martin O'Malley, who chairs the council's Taxation and Finance Committee and is a key architect of the proposal, went a step further.
Although he conceded that there were a number of unknown elements in the plan, ranging from how many people would sign up for the program to how many, if any, would have to be replaced with new hires, the 3rd District Democrat estimated that the bill would generate $10 million in savings over two years.
"If we can't find ongoing savings," said O'Malley, "then we should all be looking for other jobs."
But Schmoke, who said he would sign the plan worked out last week between council and administration officials, said most of the potential savings would not begin to show up until a year from July because of payouts for accrued vacation and sick leave.
For that reason, the mayor said, there was still a need for the council to pass one of his three alternatives to raise taxes -- a 10 percent increase in the city's income tax; an increase in parking taxes and an end to an energy tax exemption for nonprofit organizations; or a smaller income tax increase combined with a smaller rise in parking tax and an end to the energy tax exemption.
"It doesn't replace the revenue-enhancement proposals," he said the early retirement bill.
Schmoke said that although he and some council members disagree over the bill's financial impact, "We do agree it's speculation on both our parts on the total number of people who will take advantage of the incentives."
A provision in the plan calls for a 5 percent bonus paid to employees who retire before July 1 -- an inducement to retire before the end of the current fiscal year.
If the council fails to pass his initial proposal for a 10 percent income tax increase, which generated a public outcry, or either of the two alternatives he later suggested, then "we've got to cut another $4.9 million from this budget," Schmoke said.
The council suspended its rules last night to give both preliminary and final approval to the early retirement bill -- a reflection of the importance members place on getting the program off the ground. Usually, the council would have given preliminary approval to the bill last night and waited a week to give final approval.
The bill represents a middle ground between an initial administration proposal that would have created an extended five-year window to allow employees to retire and a Bell-O'Malley proposal that would have covered more employees over two years.
The key difference in the compromise bill, which treats employees' unused leave time as additional service toward retirement, is that it ends the plan Dec. 31.
It also increases the service credits for unused leave and provides additional incentives to those who retire by July 31. The latter provision is designed to induce people to retire as early in the fiscal year as possible, decreasing the possibility of layoffs.
Money to pay for the program would come from an unallocated surplus in the employees pension retirement system. O'Malley said narrowing the window to six months would reduce the cost from $30 million to $17 million.
The exceptions to the plan are police officers and firefighters, who have their own pension system, and teachers, who are part of the state system.
One union leader predicted "a lot" of eligible employees would sign up for the program.
"I think it's going to be 700 to 1,000," said Glenard S. Middleton Sr., executive director of the local office of the American Federation of State, County and Municipal Employees, which represents some 5,000 mostly blue-collar city workers.
Bill highlights
Here are key highlights of the early retirement bill for Baltimore municipal workers passed last night by the City Council:
Who is eligible? About 1,500 employees in most city jobs, except for police, firefighters and teachers, out of a total city work force of about 26,000.
How many are expected to sign up? Estimates range from several hundred to 1,000.
How long do employees have to sign up? The window closes Dec. 31.
How does it work? Employees do not receive cash payments. But they receive additional credits toward the years of service needed for full retirement by being granted another year of service; being credited with additional years equal to one-sixth of the years they have served; or being credited with a portion of unused leave time.
How much will it cost, and where will the money come from? It will cost about $17 million, which will come from an unallocated surplus in the employees' pension system.
How much will it save the city? That depends on how many people sign up. Some council members say enough should be saved so that no new taxes will be needed to cover a $4.9 million budget shortfall for the fiscal year that begins July 1. But Mayor Kurt L. Schmoke says savings won't be realized until the next year, meaning that some sort of tax increase or budget cuts will be needed.
Pub Date: 5/21/96
