Legislators to Consider Change to Mayors’ Pensions Law

Northwest Arkansas legislators plan to address a state law that requires some cities to continue to pay their mayors 50 percent of their salaries at the time of retirement, if they have at least 10 years of service.

The law is applicable to cities of the first class, or cities with a population greater than 2,500.

A resolution passed by the Fayetteville City Council in December asks legislators to consider bringing forward an act amending the state law at the legislative session.

The resolution states that the city council should be able to let the taxpayers decide if they want to pay the annual benefit, by way of a special election.

Sen. Sue Madison said she plans to address the issue.

“It seems to me that at the very least the city council should be able to decide, because in some cases, it’s quite a chunk of money,” she said.

Fayetteville City Attorney Kit Williams said there has not been a Fayetteville Mayor who has qualified for the retirement benefit since the law was enacted in 1987.

Former Mayor Dan Coody came close with eight years as mayor and a year and a half as a board member.

If Coody had been re-elected in November and served another term as mayor, the city would have owed him about $53,000 a year, half of his $109,039 annual salary.

Rep. Jim House said he is studying the section of the state code regarding mayors’ retirement benefits and talking with the Arkansas Municipal League about how other cities would be affected.

“This money comes out of the city’s general revenue and it does seem like a bit much for the state to tell cities they have to do that,” he said. “I think that makes it subject to a vote of at least the council if not the general public.”

Williams said the amount of money that would come out of the city’s budget probably warrants city council approval.

“I think that it’s certainly reasonable to have something like that decided by the city council,” Williams said. “I think a special election may be going beyond the necessity.

“Usually we only have special elections for a new tax as opposed to whether or not one person gets a pension.”

The public did not vote on the police and fire pension, he said, which is a much bigger drain on public resources

Williams said the problem of underfunded pensions for the city’s retired police officers and firefighters is going to be a bigger issue.

The old pension plan, which effects 52 retired police officers and 63 retired firefighters, is at risk of being underfunded, due largely to the downturn in the financial markets.

“It could be a terrific drain on resources to pay these pension debts,” he said.

The plan, which was closed in 1983, used to pay benefits of 50 percent of a retiree’s salary after 20 years of service. It’s increased to more than 100 percent of the retiree’s ending pay when an annual cost of living increase is factored in. The city is obligated to pay the benefits until the pensioner and the pensioner’s spouse have both deceased.

“It looks like pensions are fading fast around the county,” Williams said. “The only ones that are really left are government, police, fire and military.

“I wonder if we’ve gotten into a situation where those have become so generous, we can’t afford them.”