City pushing pension debt bailout

February 25, 1997


Staff Writer

ANNAPOLIS - Hagerstown Mayor Steven T. Sager and other officials made their pitch to Maryland lawmakers Tuesday for legislation that would cut the city's $9.96 million pension debt in half.

"I believe it's as good as we can reasonably expect to get," Sager said after testifying before the House Appropriations Committee.

Sager and officials from Takoma Park and Dorchester County supported legislation that would call for the state to pay $7.7 million as a partial bailout to seven local governments in the state that owe a combined $19.6 million to the Maryland State Retirement Agency.


"We're here to try to seek some relief for those (governments) that were most impacted," said Del. John P. Donoghue, D-Washington, one of the bill's sponsors.

The pension debt stemmed from the state under-billing the municipalities for their contributions to the state pension plan over several years. As a result, they didn't contribute enough to cover expected pension payouts to their retired employees.

Sager denied that the city actually was under-billed. He said the city simply paid what it was required to pay under the previous pension law.

It wasn't until a new pension law was passed last year that the city was aware of any debt, and even then it believed the effect would be minimal.

Dorchester County Administrator Deborah Byrd said she blames the retirement agency's lack of communication for making the problem worse.

She said she was told that the pension bills would be "somewhat higher" after last year's legislation.

But what she thought would be a $29,000 annual bill paid over five years has turned out to be a deficit of more than $1 million, she said.

"We're disappointed that the state retirement system has failed to communicate with us," she told the committee.

No one at the hearing testified in opposition to the bill.

"This is a matter that I think we can resolve," said state Treasurer Richard N. Dixon.

Sager and local lawmakers said they believe the bill has an excellent chance of being approved. In addition to Dixon, the bailout is supported by the retirement agency, Comptroller of the Treasury Louis L. Goldstein and House Speaker Casper R. Taylor Jr.

Still to be resolved is how the city will pay the remaining $4.9 million it would owe if the bill is passed.

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