In a matter of minutes, the Louisiana House on Wednesday endorsed a plan that is expected to put an end to four decades of bickering between the city of New Orleans and its firefighters.
A package of four bills that address firefighters’ pension problems advanced without objection.
Sponsor Walt Leger III, the New Orleans Democrat who as speaker pro tempore is the second-highest ranking official in the House, had little to say when he introduced the measures, and legislators had few questions before voting.
The key bill would make firefighters hired after Aug. 15 work more years and earn less in retirement benefits.
But the apparent calm during the House debate belied the intense negotiations that have been going on throughout the session — even on Wednesday afternoon before the House convened.
Throughout the process, both sides described negotiations as good-faith efforts to implement the deal as they sought to ensure the language in the bills put in place exactly what had been agreed to.
“Each side believes that they are correct in most of their assertions,” Leger said.
Leger had to postpone hearing the bills in committee, the first step in the legislative process. They finally were considered in the House Retirement Committee last week but only on the condition that a union leader sit at the table with city officials and speak in support of the package.
Firefighters and various city administrations have been at odds for almost 40 years, a conflict that reached its highest intensity as the firefighters union fought in both New Orleans and Baton Rouge against Mayor Mitch Landrieu over the way their pension system should be run and over a decades-old $75 million lawsuit against the city over pay.
The main points of dispute were the back pay owed to firefighters from a case dating back decades and the dismal state of the firefighters’ pension system, which had fallen to near insolvency due to poor investment decisions and what the Landrieu administration said were policies overly generous to retirees.
Landrieu had long argued those two issues should be tied together, and he spent most of the past year arguing for a global settlement to both disputes. But most of the plans supported by the administration would have required the firefighters to give up some of the money they were owed, and the long-simmering conflict burst into full flame in the fall.
First, firefighters successfully sought a court order holding the city in contempt for failing to pay the back pay judgment, a legal maneuver that saw Landrieu ordered not to leave his house on weekends, though the state Supreme Court stopped that ruling from going into effect.
Weeks later, as Landrieu unveiled his budget, he told firefighters they had just hours to reach an agreement or he would give up on the process.
Despite or because of those flare-ups, a deal was struck that day: Firefighters would get their money in exchange for agreeing to support a package of bills overhauling the pension system and to appear next to administration officials in favor of them.
The Landrieu administration pledged to pay up in exchange for retirement concessions from firefighters that it estimates could save the city hundreds of millions of dollars in the coming decades.
The four bills now move to the state Senate. Both chambers will have to agree on the exact language of the bills before the Legislature adjourns on June 6, and the governor will have to sign the measures into law.
“This is one complex package; there were trade-offs every step of the way,” said Andy Kopplin, the city’s chief administrative officer. “Passing these bills is vital to implementing the agreement that was struck.”
Overall, changes the firefighters agreed to in the pension plan are estimated to save the city about $300 million in payments to the retirement system over the next 30 years, Kopplin said. The vast majority of those savings, however, come from alterations to how the system operates that don’t require legislation, such as an agreement not to provide cost-of-living increases until the pension is better funded.
The largest impact from the legislation is expected to be the changes for new hires, which will save the city about $10 million over the coming decades.
At the same time, the deal obligates the city to properly fund the pension system — something that the Landrieu administration has not done as it wrangled with the union. That means paying in $36 million next year, $4 million more than this year.
The key measure, House Bill 56, would raise the retirement age from 52 to 57 and lower the rate by which retirement benefits are calculated. The accrual rate is now 2.75 percent; under the legislation, that multiplier becomes 2.5 percent. That means the benefit would be, under HB56, 2.5 percent times years of service times final compensation.
House Bill 57 would base the contributions to the retirement system on compensation instead of salary. Compensation includes factors such as overtime, lump sum pay and the like.
Firefighters work 24 hours on and have the next 48 hours off. That works out to about 2,900 hours a year, of which about 156 hours is scheduled overtime. The average 20-year employee makes about $35,000 a year. By the time a firefighter retires, the average compensation is about $50,000 per year.
House Bill 58 changes how the Deferred Retirement Option Plan is used. House Bill 59 codifies the way sick and annual leave are treated in calculating benefits.
The House’s passage of the bills marks a major milestone for both those issues, though one that leaves a chill in the relationship. Nick Felton, head of the firefighters union, said that despite some lingering suspicion, there are no indications the bills will not make it through the process.
“Naturally, there’s distrust on both sides, but Nick Felton’s going to live up to his word and his deal and his commitment, and as long as they do the same, we’re going to have a smooth ride in the Senate,” Felton said.
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