At last, New Orleans firefighters will get their back pay: Editorial
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The long-running back pay dispute between the city of New Orleans and its firefighters seemed hopelessly deadlocked in early September. Civil District Court Judge Kern Reese found Mayor Mitch Landrieu in contempt of court Sept. 4 and threatened him with house arrest if he didn't come up with an acceptable payment plan.
Not only did the mayor get out of having to spend weekends confined to his house, his administration worked out a settlement with union leaders this month. That is a significant achievement.
The Business Council of New Orleans and the River Region, which paid for much of the mediation and took part in negotiations, deserves a great deal of credit. "I think this is a fair deal for the firefighters. It addresses the long-term health of their pension fund and allows the city to meet its obligations," Business Council chairman Paul Flower said.
This fight had gone on for decades, first over leave pay in the 1980s and then the city's refusal to pay state-mandated 2 percent "longevity" raises to veteran firefighters. Courts ultimately found that the city owed back pay from 1990 to 2006, when the Nagin administration implemented the raises going forward.
Mayor Landrieu inherited the debt when he took office in 2010. Last year the city agreed to pay more than 1,100 firefighters or their heirs $75 million. Not much of that had been paid when Judge Reese issued his contempt ruling.
Then Oct. 15, the day of the mayor's budget presentation to the City Council, a deal was struck.
Firefighters will now get the $75 million the administration promised. The city will give them $15 million from the general fund next year and pay off the rest in $5 million annual installments. The city also will put money into the firefighters' troubled pension plan to ensure that it doesn't go under.
In return, Mayor Landrieu got some pension reforms that he badly wanted.
Future firefighters will accrue retirement credits at a slower rate, which means they won't be able to retire at full salary until they have put in 40 years. Under current rules, they only need 36 years to reach that level. That will save the city a sizable amount of money over time.
In addition, a new rule will prevent the pension board from approving cost of living increases unless the pension system is essentially fully funded. The previous board gave out those increases even though the system was in poor financial shape.
The pension changes will save taxpayers an estimated $275 million over the next 30 years, Mayor Landrieu said.
Neither side got exactly what they wanted. The mayor wanted to reduce the pension calculation formula for current firefighters, but that didn't happen. On their side, firefighters didn't want to change the accrual rate at all.
The union had argued that the pension had nothing to do with the back pay issue. That was true, but it was smart of Mayor Landrieu to push for those changes.
The city has been spending more of its general fund to meet firefighter pension obligations every year than it does on Fire Department operations. That couldn't continue.
The Legislature approved reforms in 2013 that should help make the pension system more stable in the future, but those changes didn't go far enough. These additional reforms should strengthen the pension for the long-term, which is important for firefighters and taxpayers.
And, after too many years of waiting, firefighters and their families will finally get the money they are owed.
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