Pensions, historically, have been the lifeblood of many government retirees, but these days they are threatening to become the death knell for many cities.
Spiraling costs associated with checks sent from underfinanced pension funds to retirees are dragging down cities and taxpayers alike, while those in government workplaces today worry that nothing will be left by the time they reach retirement age.
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What some Palm Beach County cities are doing:
- West Palm Beach: Required contributions to police and firefighter pension plans jumped 55 percent in past two years — to $14.5 million this year. Unions allowed city to use revenue from the excise tax on property and casualty insurance, about $2.5 million this year, to help cover the obligations. That concession expires in September 2014.
- Palm Beach Gardens: Last year the city raised the minimum retirement age for police officers from 52 to 59 and reduced the maximum benefit from 99 percent to 75 percent of salary, to save the city $5.7 million over three years. Officers with 10 years of service when the contract was approved last year could still retire after 20 years of service. The maximum benefit for city firefighters was capped at 75 percent to save about $5.8 million over three years. Firefighters with 25 years of continuious service at the time of the new contract remained eligible to receive up to 99 percent of their salaries.
- Lake Worth: The city is negotiating with three unions. Annual firefighter pension costs have risen 64 percent the past five years, to $2.3 million this year. Police pension costs took a similar jump. Commissioners imposed a $60-per-dwelling annual fire assessment to cover firefighter pension costs two years ago. But the controversial tax was repealed following the November 2011 city election. Instead of a new fire levy, commissioners cut $1.6 million from the general fund to cover pension obligations.
- Jupiter: The town reduced its police pension costs through negotiations with the Police Benevolent Association. Police pension costs have dropped 22 percent since 2011, to $2.5 million this year.
- Greenacres: Contributions to pension plans are expected to drop slightly next year after more than doubling following the 2008 financial crisis. Most of the costs are for police and firefighter pensions. The city’s general employees moved to a defined-contribution retirement plan in the mid-1990s.