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Find a stick, Mr. Mayor

January 17, 1997

Hagerstown Mayor Steve Sager says he's looking for a "ray of hope" to solve the city's $9.96 million pension problem. What he ought to be looking for is the political equivalent of a big stick, to get the state to acknowledge that it bears some responsibility for this fiasco, and for finding another solution to it.

The proposed solution now would have the city pay back the money over the next 40 years, at an interest rate of 7.5 percent. It would mean a 2-cent increase in the tax rate, and hikes in city utility rates.

Neither of those are likely to force citizens out of their homes, but the issue of unfunded pension liability was addressed in legislation passed in the mid-1980s, which resulted in another multi-year payback plan, a plan the city has adhered to.

According to Peter Vaughn, executive director of the state's retirement agency, "Hagerstown paid what we billed them and they are good customers. But because Hagerstown's demographics are not the same as the total pool, there was an inconsistency in funding in Hagerstown."

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Hidden inside that rhetoric is an implied admission that the state didn't keep proper track of the numbers, didn't bill Hagerstown enough to cover the future obligations the pension fund will have to city retirees. The state is now saying "Oops!" and handing the bill for its mistake to city residents.

The city's last crisis was averted with legislation sponsored by former Del. Paul Muldowney, whose leadership on pension reform cost him his seat in the legislature. Sager should not be too proud to ask for help now from the former delegate, who, we predict, will have more than a passing interest in how the state goofed up a plan that took years to create.

Finally, the city needs to consider moving its employees, at least the new hires, into a separate, private pension system. Even if this current crisis is solved, staying with the state system is no guarantee that in another five years there won't be another stupid state bureaucrat presenting City Hall with a bill for mistakes the city government didn't make.

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