HAVERHILL — Mayor James Fiorentini has blocked a measure passed by City Council that would eventually increase city retirees' pensions by a total of $1 million a year.
Fiorentini said the city cannot afford such spending, and stressed that retirees will still get other cost-of-living raises.
At its Dec. 20 meeting, council voted 7-0 to accept a new state law changing the formula for calculating annual cost-of-living pay raises for retirees. Currently, cost-of-living increases are based on the first $12,000 of a retiree's benefits. The new law increases the base amount used to calculate annual pay raises by $1,000 a year for three years, topping out at $15,000.
In his veto message to councilors, Fiorentini said adopting the law would cost the city $171,533 next year, $356,000 the following year and $556,000 in the third year.
"We already face an estimated $3 (million) to $3.6 million deficit in the upcoming budget," the mayor's veto message to councilors said. "This would add to the deficit."
A financial study shows that in 18 years, the cost of the adjustment rises to $1 million per year, the mayor said.
The measure would cost the city more than $14 million over the next 20 years, he said.
"This change in the cost-of-living adjustment is not sustainable either this coming year or in the long term," Fiorentini said in his message to councilors.
In an interview, the mayor said councilors were "somewhat misled" about the measure's impact to the city by Lewis Poore, who is a Haverhill Retirement Board member and former deputy fire chief. Poore pitched the proposal to councilors at the meeting on behalf of the Retirement Board.
"This is a much more significant impact to our budget than many of the items that we have spent months together debating and deserves a much more detailed analysis than was presented to the council at the meeting," Fiorentini said in his veto message to councilors.
Council President Michael Hart said he believes Poore gave an "accurate and honest assessment" of the state law to councilors, but he said Poore did not highlight the measure's financial impact to the city. Hart said Poore only told councilors the program would cost the city $171,533 next year.
Poore did not return a message left at his home to comment on this story.
Hart said he would not have voted for the measure if had been aware of its full financial impact.
"I'm not sure it would have passed if we had this information the night we voted," Hart said, referring to the long-range cost estimates in the mayor's veto message.
Hart said the rationale behind the local-option law is that other new pension reforms passed by state lawmakers will eventually save money for cities and towns.
"The mayor's position, and I tend to agree with it, is that we should wait to see if these savings materialize, and then we can revisit this in six months or a year," Hart said. "Everyone wants to give retirees a little boost if we can, but it has to be something we can afford."
In his veto message, Fiorentini stressed the measure passed by councilors is technically not a cost-of-living raise for retirees, but rather a law that raises the base amount that is used to calculate those raises.
"Retirees will continue to receive cost-of-living increases voted by the retirement board," the mayor said. "Retirees have received an average of 3 percent cost-of-living raises per year over the past several years, and they just received a new 3 percent cost of living increase effective July 1 of this past year. Vetoing this legislation does not affect that."
The council is expected to consider the mayor's veto at its Jan. 10 meeting. To override a mayoral veto, six of the council's nine members must approve.
Another twist is that the term of the council that passed the measure Dec. 20 ended yesterday when new councilors were sworn in. Hart said City Solicitor William Cox is reviewing how the council will deal with the mayor's veto.
• • •
Join the discussion. To comment on stories and see what others are saying, log on to eagletribune.com.