Council Approves Borrowing Nearly $260M For Pension System
County officials say borrowing the money will save county taxpayers $260 million in pension costs over the next 30 years.
Baltimore County will borrow up to $260 million for its pension system under a plan approved unanimously Monday by the Baltimore County Council.
The proposal was part of a two-bill package approved by a 7-0 vote.
The borrowed money is needed because the board of the Baltimore County Employees Retirement System voted to reduce its expected rate of return on investments. That change, made in July, would result in an additional $15 million payment from the county next year.
"That amount would grow to a much larger level over the next 30 years," said Keith Dorsey, the county's budget and finance director.
Without the change, county officials estimate that it would have to contribute $4.8 billion to the retirement system.
With the change approved by the council, the county estimates it will now have to contribute $4.1 billion over the same time period. The county expects to save more than $260 million after factoring the more than $499 million in principal and interest payments on the bonds, Dorsey said.
Of course, all of that is predicated on the county earning more on its investments than the nearly 4.25 percent interest. If those assumptions are wrong, the county could lose money and taxpayers could end up footing the bill.
A second bill added increased pension contributions recently negotiated by the union representing corrections officers. The bill also granted a death benefit to adult children of retirees with at least 15 years service to the county. Previously, only minor children of those employees were eligible for the benefit.
Tony Solesky
8:15 am on Tuesday, October 16, 2012
The county is wasteful in their spending. I am positive they over spend twice the 15 million they say they need. Take home cars, 36,000.00 a month on GPS monitoring on and on and on. Tony Solesky 2014
FranT
9:14 am on Tuesday, October 16, 2012
"The bill also granted a death benefit to adult children of retirees with at least 15 years service to the county."
Would someone please share the specifics of this?
Chuck Burton
9:44 am on Tuesday, October 16, 2012
Won't future taxpayers have to repay those loans? Haven't we seen enough of this spend now, pay later crap at the national level?
Tim
9:45 am on Tuesday, October 16, 2012
Exactly.
Tim
9:44 am on Tuesday, October 16, 2012
All this pension stuff is ridiculous to begin with. One of many things that has bankrupted this country.
Al Day
1:12 pm on Tuesday, October 16, 2012
And I know this won't be popular but has anyone thought about reducing benefits? Everyone else has had to bite the bullet. Budgets are being reduced in homes all across the country in order to survive. Why does the gov continue to think they are immuned? The very people who already have to do without in their own lives will now have to repay these increases in gov spending/borrowing. Not right!! Ask the former Beth Steel employees if they got any increase this year.
Matt
10:18 am on Thursday, October 18, 2012
The county's pension fund is actually in pretty good shape compared to many jurisdictions. However, I feel that borrowing from the fund ($25m for the recycling plant) is only the beginning of the decline....
JDStuts
9:51 am on Tuesday, October 16, 2012
Good luck hitting even 4% with the future of the bond market. Europe yields are below crisis/bailout levels and they are the ones getting their affairs in order.
What's the county to do? Go deep into leverages and derivatives and get their hands chopped off at the elbows? They screwed up MainSail II and then went mute about who was responsible. These are local pols, not licensed brokers, playing with other people's money with the knowledge if anything goes south, they'll be retired and the taxpayers will foot the under.
The only winners here are the deal brokers and bond salesmen.
Paul Amirault
10:26 am on Tuesday, October 16, 2012
It appears the County is attempting to use the arbitrage of selling tax-free bonds and then take advantage of the tax free status of the bonds and then earn more income than what they are paying by investing in other instruments.
If this solution is good for the pension system, why don't we just float bonds and eliminate income and property taxes on all of the residents of Baltimore County!
Now let's go another step, have the state of Maryland and every other county and state in the country do the same thing!!
Something really smells fishy here. Using arbitrage for this purpose has to catch the IRS's eye one would think.
Be nice if someone who specializes in government issued bonds would comment on whether or not these bonds qualify as tax-free upon review by the IRS.
mikmike
11:30 am on Tuesday, October 16, 2012
Well said....Very insightful!
Joe
10:54 am on Tuesday, October 16, 2012
VOTE NO on all bond issues. No more borrowing money to strap others with the bill.
Freedom Watcher
12:24 pm on Tuesday, October 16, 2012
Did anyone read the Bill? Kamenetz and Homan are in charge of the Bonds and not the Council. Fox in charge of the Hen house! Baltimore County Taxpapers are backing the Bonds with higher Property Taxes. The Council gave up all rights concerning the Bonds. Guess Kamentez and friends will have short term Bonds issued to family and friends and make "A Boat Load of Money" at the taxpayer expense. If Kamentz makes the wrong investment the taxpayer will now owe the total of 499 million and the pension system will go bankrupt. What a deal?
Al Day
1:09 pm on Tuesday, October 16, 2012
And I know this won't be popular but has anyone thought about reducing benefits? Everyone else has had to bite the bullet. Budgets are being reduced in homes all across the country in order to survive. Why does the gov continue to think they are immuned? The very people who already have to do without in their own lives will now have to repay these increases in gov spending/borrowing. Not right!! Ask the former Beth Steel employees if they got any increase this year.
BlutAusNord
2:42 pm on Tuesday, October 16, 2012
This is unbelievable.Kamenetz & Homan are the biggest thieves in the county.Morale among county workers is at it's lowest,no cost of living raises for the forseeable future,rising health car costs.Now they have GPS in the vehicles that cost almost $500,000 a year.They have been hiring part time employees in areas where they would be otherwise full time.Kamenetz looks to destroy the pension sysyetm that he should keep his filthy little paws off of.People who have already retired from the county have already said they are waiting for the day when their benefits will decrease because of the mess that The county doofus & his loyal boyfriend are dragging the pension into.
BlutAusNord
2:50 pm on Tuesday, October 16, 2012
Kamenetz is a lap dog to O'Malley who is a lap dog to Obama.These thieves have never met a dollar of someone else's money that they wouldn't take.The money belongs to the people who put it there,not you leeches.
Bill Howard
11:41 pm on Tuesday, October 16, 2012
The Council looked at these pension costs about 20 years ago. Councilman Mason and I predicted that the County would have to borrow or tax to meet the obligations. Borrowing 260 million will effect our taxes as well.
Now the really bad news. The problem is not solved. They will be back.
AGDSG
3:52 am on Friday, March 8, 2013
http://www.coachoutletonlineusa2013.com/ Coach Outlet Coach Outlet Online USA
http://www.monstervbeats.net/ Moster Beats Outlet Beats By Dre Custom
http://www.guccishoesuk.net/ Gucci Shoes Outlet Gucci Outlet
http://www.new-michaelkors.com/ Michael Kors Outlet Online Michael Kors Outlet
http://www.mk-michaellkorsoutlet.net/ Michael Kors Outlet
http://www.northfacejacketsoutletonline.net/ North Face Jacket Outlet North Face Outlet