Mayor Mitch Landrieu is proposing to give the city’s firefighters just a third of the money they are owed in back wages from a contentious, long-standing lawsuit.
On top of that, firefighters would have to wait more than a decade to get that money and accept changes to their pension system under the plan, which is likely to meet with intense resistance from the firefighters union.
Landrieu’s proposal, which will need an OK from the City Council, comes in response to a threat from the judge overseeing the lawsuit, known as the “longevity” case. Civil District Court Judge Kern Reese has said he would hold city officials in contempt of court if they didn’t give him a plan for settling up with the firefighters by Friday.
But it’s not clear whether Reese will accept what the mayor is putting on the table. The city owes $142 million in judgments and interest in the longevity suit, which deals with a series of pay raises legally mandated by the state but never paid out by successive City Hall administrations.
Landrieu’s plan calls for paying out just $45 million.
The mayor’s proposal also spells out how the city would settle a separate lawsuit over the firefighters pension system, which has suffered from a combination of poor investments and the mayor’s decision to slash payments to the fund when he took office in 2010. In that case, the city owes $26 million and is demanding that firefighters accept less generous benefits in exchange for a city pledge to continue funding the system.
The firefighters, meanwhile, have won every court battle with City Hall.
Neither the Landrieu administration nor representatives of the firefighters union responded to requests to discuss the latest proposal on Tuesday.
The city’s plan is broadly similar to a proposal the Business Council of New Orleans and the River Region made to council members last week; it in turn was modeled on one of the proposals put forward during a series of meetings moderated by the business group earlier this year.
Under the proposal, the firefighters would get $2.75 million in back pay up front, but that would come out of the city’s contribution to the pension system.
Another $7 million this year and $8 million at the beginning of 2017 would be contingent on voters passing a new property tax.
The rest would be paid out in $2.5 million yearly installments over the next 11 years.
The city also would promise to pay enough into the pension system to have it funded at the end of 30 years; the city’s contribution to the plan would go from about $24 million this year to $35 million next year.
The plan calls for various changes to the pension system aimed at making it less generous. Among other steps, it would raise the retirement age to 55 and peg it to any increase in the retirement age for Social Security.
During mediation on the issue, firefighters had proposed the city pay about $20 million toward the judgment up-front, with the money likely coming from the city’s $45 million settlement with BP for sales tax revenue lost after the Deepwater Horizon oil spill. They have then called for the rest of the money to be paid off — likely through the new millage — over the course of about five years.
Paul Flowers, who heads the Business Council, acknowledged that the mayor’s proposal comes nowhere near to what the courts have said the firefighters are owed. But he said past mismanagement of the pension system and other costs facing the city — including court-ordered reform plans, known as consent decrees, for the local police force and jail — have made some kind of reduction inevitable.
“All this is going into consent decrees and pension funds, and what about the rest of the city?” Flowers asked. “How do we keep this economic expansion in this city going and accelerate it to the point where it could keep going for all of us?”
The firefighters are not the only ones the city has to satisfy with the deal. Reese told Landrieu administration officials they had only until Friday to propose a plan to pay off the judgment. If they didn’t, he implied, they might find themselves in contempt of court, a move that could open the door to having city assets seized or officials, including the council and the mayor, fined or even jailed until they cough up the cash.
Because he doesn’t have to take the other issues between the firefighters and the city into consideration as he presides over the case, it is unclear whether Reese will consider the substantially reduced offer put forward by the city as satisfying the terms of the agreement.
Follow Jeff Adelson on Twitter, @jadelson.