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City to ask lawmakers for pension debt help

January 21, 1997

By JULIE E. GREENE

Staff Writer

When Hagerstown officials meet with state legislators in Annapolis on Thursday, they will discuss the possibility of capping the city's $9.96-million pension debt at $5 million, city officials said Tuesday.

The proposal to limit the debt might be more attractive to state officials than eliminating the 7.5 percent interest rate, said Eric Marburger, the city's personnel manager.

Legislation proposed by the city's pension attorney to cap the debt would affect only seven local government bodies that participate in the Maryland State Retirement Agency's pension plan, Marburger said.

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Waiving the interest would affect those governmental bodies that are owed money from the state retirement agency as well as those in debt to the state agency, he said.

City officials will ask that the 7.5 percent interest rate be waived, whether the debt is reduced to $5 million or not, Marburger said.

During a Tuesday work session the mayor and City Council members discussed ways of tackling the debt as well as why city officials didn't know about it several years ago.

State retirement agency Executive Director Peter Vaughn offered the 7.5 percent interest rate to city officials last week. At that rate, the city would pay $49.2 million on the $9.96 million debt over 40 years.

The debt resulted from the state agency under-billing the city for its contribution to the state pension plan over several years.

City Finance Director Al Martin told Council members Tuesday that he was concerned several years ago when he saw that the city's pension premium dropped from $972,953 in 1989 to $686,575 in 1990.

Martin said he asked state pension officials about the drop in the rate, but was told the numbers were correct.

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