WAFF Investigates: City pension rates - WAFF-TV: News, Weather and Sports for Huntsville, AL

WAFF Investigates: City pension rates

The city has $13 million in pension contributions earmarked for 2014. The city has $13 million in pension contributions earmarked for 2014.
HUNTSVILLE, AL (WAFF) -

A Huntsville City Council member plans to introduce an alternative to a sales tax hike meant to supply funds for seven much-needed road improvements.

Councilman Bill Kling said a sales tax is not the way to go. He plans to introduce a cigarette and gas tax at Thursday night's council meeting.

In looking at the city's budget to see any areas to ‘trim the fat,' we found only one area that really stood out: the amount of money going into pensions.

Every Huntsville city employee is contributing roughly 5-6% of their salary towards the pension, and the city pays the rest – to the tune of more than $13 million budgeted for 2014. That comes out to about 14 cents for every dollar paid out in salary.

There are slight differences, depending on when a city employee started working for the city, but essentially if an employee stays with the city for 25 years or more, he or she receives 50% of their highest average annual income as their pension.

Some cities have had to cut back or make changes because the benefits were too much of a financial burden. Tuesday, the House and Senate agreed to a federal budget deal that will reduce contributions to pensions.

Huntsville city leaders said similar changes are not on the table right now, but admit they have had to contribute more to the program in recent years.

"Because of the recession, investment rates have dropped and that means the city has to make up some of that difference. Right now we're paying about 14 percent. Whether that rate rises over time is not clear," said Randy Taylor.

To be clear: we are not suggesting that police or firefighters lose their taxpayer-funded pension.

The question is if a secretary and other employees of the city should get their retirement paid for by taxpayers – particularly when taxpayers are being asked to pay more in taxes.

The city council will continue to discuss the one-percent tax increase Thursday night.

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