HAVERHILL — Mayor James Fiorentini and members of the Haverhill Retirement Board debated to a standstill at last night’s City Council meeting over the board’s proposal to increase pension payments to city retirees.
The board, on a split 3-2 vote, recently passed a measure that would increase for retirees the maximum base amount on which annual 3 percent cost-of-living pay increases would apply for pension payments. The board wants to increase the base amount, which is currently $12,000, by $1,000 per year for each of the next three years, capping at $15,000 in 2016.
City Council must approve the increase before it can go into effect.
Fiorentini said the proposal would cost the city $170,000 next year, almost $500,000 in the third year and $12 million by 2033. He said it would also increase the retirement system’s unfunded liability, which is already $163 million, by another $5 million.
The city pays its pension liability through the annual budget, and the mayor said increasing those payments could jeopardize the city’s bond rating, which determines how much interest it pays on loans.
“This proposal seems innocuous, but it isn’t,” said Fiorentini, who vetoed a similar measure two years ago after it was passed by the council. “We simply can’t afford it at this time. ...This raise might help our current retirees, but it could hurt our future retirees, also known as our city employees.”
Retirement Board member Lewis Poore, a retired Haverhill firefighter, said the mayor’s presentation was guesswork based on new actuarial figures the city obtained a few hours before last night’s meeting.
“The mayor’s numbers aren’t real,” Poore told councilors.
Due to the newness of the information presented and the dispute over its impact on the proposal, councilors agreed to send the proposal to a study committee before voting. Councilors said they will hold a meeting later this month to hear from both sides and the public.