City Council Eyes Talks On Pension Changes

OCEAN CITY – The Mayor and City Council had a hiatus this week in advance of next week’s work session that will likely determine whether compromise among this divided group is possible.

As of result of Mayor Rick Meehan vetoing seven out of 11 ordinances proposed to cut down on newly hired town employee pay and benefits in order to decrease town expenses, the City Council is to return to discussing the motions on Tuesday in order to meet on common ground.

Last week Council President Jim Hall was confident the council could have a meeting of the minds on the proposed law changes, some of which do impact current employees as well.

“I didn’t hear anything last night that I don’t think we can easily overcome,” he said last week. “He [Mayor Rick Meehan] agreed with most of the changes not just all of the changes. I listened to Rick’s objections and I think we can come to an agreement.”

This week This Dispatch polled the other council members to see if they agreed.

“I don’t see where any of the ordinances are difficult to get into a direction to focus on what it is in order to make a decision,” Councilwoman Margaret Pillas said. “I don’t think any of them should be a challenge for us to talk about. I think everything needs to be tweaked.”

Councilman Lloyd Martin said that the council is on the right track in its continued effort to reduce operation costs.

“The city grew so fast…we weren’t expanding everything,” he said.

Martin said that due to the hiring freeze that has been placed over the last couple years the city has saved $8 million in payroll alone.

“That’s money we’ve saved because we’ve looked at it, we’ve talked about it, and we’ve compromised on it,” Martin said.

In attempts to save city costs, Martin feels town employees shouldn’t have to be the scapegoat.

“I don’t want to go out there and use a big stick and beat the employee, that’s not my intentions,” he said. “My intention is to do, where the town feels safe…without burning the people too much. I think we have done a good job in the last couple years and I want to continue that flow.”

With what the town has already saved through the hiring freeze, retirees and future retirees, he feels the list of 11 ordinances to decrease town employee pay and benefits is too much.

“You got all those ordinances passed and it affects the employees directly,” Martin said. “Without looking at it and saying we’ve right sized, what more can we do in order to keep these people working and keep their benefits.”

Martin said that his main priority is to keep the town safe.

“You got to tell people this is what it costs to be safe, but at the same time you got to show them you’re not wasting money,” he said.

Councilman Joe Hall feels that the history of the Ocean City Council speaks for itself.

“The history of the Ocean City Council has always been to obtain the information and adjust in the best interest of the town,” he said. “So if something were to come forward that would alter our perception of where we were going…history shows that we have always adjusted to make sure we move forward in the right direction and in the best interest of the town.”

Councilman Brent Ashley believes the most challenging ordinance the council will discuss deals with town employee retirement plans. He hopes the council can come to agree on an ordinance that stated the retirement plan for new hires will be a defined contribution plan, versus the defined benefit pension plan that is in place currently, or as Ashley puts it “long-term debt versus current debt.”

“When you have a defined benefit pension plan, that’s a long- term debt to the taxpayers,” Ashley explained. “We want to get the defined benefit plan that the employees already have, but we want to get them 100 percent funded.”

Ashley said that current employees are not 100 percent funded at this time, causing the taxpayer to have to pay a long-term debt.

“When you get the defined contribution plan, or a 401K plan, those expenses are known each year,” Ashley said. “There’s a set expense that the city would contribute to each employee, that’s known each year, that’s a current expense, and it does not go into the future.”

Ashley said he understands that the change in the retirement plan is a new concept and it will meet resistance until all details are explained.

“I think once people understand and begin to accept things they will see that it is a pretty good plan,” Ashley said. “And we are going to make sure as we are with the current employees, the future employees are well compensated as well.”

Councilman Doug Cymek said once an actuary study is presented on Feb. 1, the council will be able to make a responsible decision on changing town employees’ pension plans.

“If logic prevails…to close down a pension plan, you’re going to have to accelerate the amortization of the program, which is going to mean a lot of money which you’re going to have to pay it now or pay it later,” Cymek said. “I think in the end the give and take may be that we possibly create a hybrid program that may not be one or the other. With the help of the experts, we may come out of it with something better. I am not sure it is going to be a defined contribution program.”

Councilwoman Mary Knight said that in her four years on the council she has always been amenable to compromise.

“I base decisions on the facts, on the effects of the facts, and along with being called the minority I just felt personally that I needed more information to make some of these important decisions,” she said.

Knight said that once the actuary study is presented next Tuesday, it will give the council an idea of what the town can or can’t afford in decreasing town employee pay and benefits.

“I have never said that I am against a defined contribution plan,” Knight said. “I just need to know the facts and how it all plays out in the long run.”

Pillas, too, is looking forward to the talks next week.

“The whole idea is to right size government,” Pillas said. “When we get right sized, that will be the stopping point.”

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