Proposed pension restructuring creates concern among Washington cities

A provision in the Washington state Senate’s approved budget would shift some $70 million in pension contributions from the state to local municipalities if signed into law.

A provision in the Washington state Senate’s approved budget would shift some $70 million in pension contributions from the state to local municipalities if signed into law.

The contributions in question are part of an agreement signed in 1977 dealing with pension funding for firefighters and law enforcement officers serving in much of the state.

In the agreement, known as LEOFF 2, the individual employees contribute 50 percent of the total added to their pension fund, the cities and counties who employ them contribute 30 percent and the state makes up the rest, said Mark Lawson, president of the Washington State Council of Fire Fighters.

Lawson said his organization, which represents firefighters across the state, opposes the proposal in the Senate’s budget.

If the House of Representatives approves that provision in its budget and it is signed by Gov. Jay Inslee, the state’s 20 percent portion would be transferred to cities and counties.

Malisa Files, the city of Redmond’s finance director, said this would cost the city around $724,000 annually, or nearly $1.45 million each biennium.

“We are just looking at it because that is quite a large increase to our budget,” Files said.

Roughly approximated, that figure equals around six full-time firefighter or police positions, she said.

Funding for emergency services, as well as many other core functions of the city, come out of the general fund. If the city were forced to absorb the cost of additional contributions, it would put Redmond in a difficult place following the current biennial budget, Files said.

In the short term, the city could rearrange finances to meet the requirement, but following that, a permanent solution would be required. The general fund fills its coffers through property, sales and utility taxes.

This could prove difficult for the city, Files said, when coupled with a state requirement that property taxes can be raised no more than 1 percent each year.

Lawson also expressed concerns that cities may have to cut first-responder positions to fund the pension mandate.

“Many of our cities right now are still coming out of the Great Recession, and they’re trying to get their staffing levels back up,” he said.

Redmond currently employs 104 firefighters and has 75 commissioned police officers, which serve the city of roughly 54,000.

The LEOFF 2 plan was implemented in 1977 after the previous plan came under fire for having a perception of it being too generous. The pension plan was created in response to the dangerous and physically demanding nature of the jobs it covers, which leads many firefighters and law enforcement officers to retire sooner than in other professions.

In 2001, the plan was altered through voter approval to be overseen by a panel with representatives from cities and first responders. This board makes recommendations to the legislature, but the state legislature has control of the rates of contributions made by the various entities that participate in the program.

It’s a system that Lawson said has worked well.

“We have a system that is not broke,” he said. “… When you put all this together, we have a very, very good pension plan.”

If it is approved, Lawson said the effects on municipalities could prove to be harmful.

“The effects are either going to be loss of positions in the fire service, or the cities, if they were forced to do this, would cut other programs,” he said.

The state operates on a biennial budget which is being discussed in the House. Legislators hope to have a budget approved by July 1, the start of the new biennium.

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