Council Budget Panel Approves $10.8 Million Payment to KRS

by Phillip M. Bailey on March 28, 2012

The Louisville Metro Council’s Budget Committee reluctantly approved a $10.8 million payment to the Kentucky Retirement Systems.

The figure is a compromise between Mayor Greg Fischer and KRS officials for interest the state did not receive from the city due to back pay owed to firefighters since 1985. Because the firefighters were underpaid the city miscalculated payments to the County Employee Retirement System, which is under the state pension system.

But several city lawmakers objected to the payment and delayed a vote last week, arguing the city properly contributed to the state pension system once the lawsuit was settled. Council members continued to voice their displeasure with the agreement during the meeting, but said it was necessary to save the taxpayers in the long-run.

Budget Committee Vice Chairman Kelly Downard, R-16, met with state pension officials, the city’s chief financial officer and the Jefferson County Attorney earlier this week. He says he believes the city should not have to pay the interest, but Metro Government will likely lose a fight over the matter in court.

“In fairness, we should not in my opinion be penalized. In equity, in my opinion, we should not be penalized. However, I’ve been convinced by legal counsel and my own reading of the statuettes involved that we would probably not prevail in the court on this issue,” he says.

The KRS board has given the council until April 6—a day before their next full meeting—to approve the payment.

The committee introduced an amendment to pay $3.8 million before the deadline and the remaining $7 million without interest at the beginning of the next fiscal year. But state pension officials could reject that offer and force the city to pay the full $10.8 million instead.

Each committee member criticized the retirement system’s collection as unfair,  but those who voted in favor of the ordinance argued the city could lose millions more through litigation.

“Most of us will probably be holding our noses, but voting in favor of it,” says Councilman Rick Blackwell, D-12, who voted for the payment.

But Councilman Jerry Miller, R-19, who voted against making the measure in protest, says the state has failed to properly fund and pay out its own pension system and is passing the cost to local government.

“For the Kentucky Employee System to demand that we pay a penalty, which was originally calculated on the basis of interest lost and then to turn around and refuse to pay interest to the firefighters on their delayed pension payments is just stunning to me,” he says.

During the committee meeting, attorney Ann Oldfather, who represents a group of 100 firefighters, attempted to address the budget panel but was denied. She told WFPL the city is liable to her clients, who were not part of the initial lawsuit and state pension officials will likely ask for another hefty contribution in the future.

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