The tea party-backed amendment that would semi-privatize Cincinnati’s ailing pension system gathered enough signatures earn a place on the November ballot.
Of 14,215 signatures scrutinized so far, 8,653 were valid, according to Sally Krisel, deputy director of the Hamilton County Board of Elections. That clears the requirement of 7,443 signatures, but the numbers will grow as the board continues counting petitions.
The success follows a well-funded effort from Cincinnati for Pension Reform, which paid California-based Arno Petition Consultants nearly $70,000 to collect enough signatures, according to petition documents obtained through the city.
The amendment would privatize pension plans so city employees hired after January 2014 contribute to and manage their own retirement accounts — a shift from the current set-up in which the city pools pension funds and manages the investments through an independent board.
But unlike private-sector employees, city workers might not qualify for Social Security benefits, which means they would lack the safety net and benefits that shield them from bad investments.
Alternatively, the city could be required to pay into Social Security. An Aug. 5 report from the city administration claims that would make the tea party-backed system more expensive than the current pension system, which would defeat the reform’s main intention.
Supporters of the tea party amendment say it’s necessary because Cincinnati is dragging its feet in addressing an $862 million pension liability, which earned the city a downgraded bond rating from Moody’s in a July 15 report. Although the city passed reforms in 2011 addressing future pension costs, the unfunded liability actually grew by $134 million between 2012 and 2013.
The Cincinnati Retirement System board is working on changes that would address the unfunded liability, but so far no agreement has been reached as board members argue over whether taxpayers or retirees should be hit hardest by more cost-cutting measures.
City officials acknowledge the issues with the current pension system, but they claim the tea party-backed amendment would exacerbate cost problems and reduce payments to future city retirees.
“Under the guise of ‘reform,’ a well-financed out-of-state group is pushing an amendment that spells economic disaster for the future city retirees and the city’s budget,” Vice Mayor Roxanne Qualls said in a statement. “Current and future retirees need an income they can live on. This amendment is a budget-buster for retirees and the city.”
City Council condemned the amendment in a resolution unanimously passed on Aug. 7.
CityBeat’s Aug. 14 news story will give an in-depth look at the amendment and the campaign behind it.
This story was updated at 5:07 p.m. with the most up-to-date numbers.
Issue 4, the ballot initiative that would semi-privatize Cincinnati’s pension system, obtained most of its financial support from out-of-town tea party groups, according to financial disclosure forms filed to the Hamilton County Board of Elections on Oct. 24.
The report confirms concerns previously raised by city officials, unions and mayoral and City Council candidates: The pension privatization effort is coming from outside Cincinnati and, in some instances, Ohio.
Up to Oct. 16, Cincinnati for Pension Reform, which successfully placed Issue 4 on the ballot, received more than $231,000 from campaign contributors. Of that money, $209,500 came from groups in West Chester, Ohio — organizations called Jobs and Progress Fund, A Public Voice, Ohio 2.0 and Ohio Rising — and $20,000 came from the Virginia-based Liberty Initiative Fund, which CityBeat previously reported as an early supporter of pension privatization schemes around the country.
Chris Littleton, a leading consultant for Issue 4 and long-time tea party activist, is also based in West Chester. He’s blogged about his involvement in Ohio Rising and Ohio 2.0, and he helped create the Cincinnati Tea Party and Ohio Liberty Coalition, another tea party group.
Upon receiving the contributions, Cincinnati for Pension Reform used more than $215,000 to circulate petitions, email blasts, advertisements and other typical campaign expenses.
The infusion of cash from out-of-town sources also helps explain why Cincinnati for Pension Reform managed to mobilize its efforts so quickly and without the knowledge of many city officials, who previously said they’re bewildered by the effort and don’t know where it came from.
If approved by voters, Issue 4 would semi-privatize Cincinnati’s pension system so city employees hired after January 2014 would contribute to and manage individual retirement accounts, which would also be supported by a proportional match from the city. That’s a shift from the current system in which the city pools pension funds and manages the investments through an independent board. The idea is to move from a public plan and instead imitate a 401k plan that’s often seen in the private sector.
The conservative Buckeye Institute, which supports Issue 4, previously studied the proposal and found it could greatly reduce retirement benefits for city employees. Although the Buckeye Institute’s report claims Issue 4 could ultimately save Cincinnati money, it was laced with caveats that could actually lead to higher costs for the city.
Another study from a finance professor at Xavier University found Issue 4, if approved, could force the city to cut services, excluding police and firefighters, by up to 41 percent or increase taxes by a similar amount in the near term by mandating that the city more expediently pay off the current pension system’s $862 million unfunded liability.
A major concern for critics of Issue 4 is that it could cost the city its Social Security exemption. Under the current pension system, the city doesn’t have to pay into Social Security. If Issue 4 passes, the city’s contributions to the pension system might not be generous enough to keep the exemption, which could force the city to make costly Social Security payments.
And if the city doesn’t lose its exemption, city workers would be left with an individual retirement plan that wouldn’t have the safety net of Social Security — unlike private-sector workers who get both an individual retirement account and Social Security.
Supporters of Issue 4 dismiss the criticisms. They say that Issue 4 is necessary to address Cincinnati’s large unfunded pension liability, which credit ratings agency Moody’s cited as one of the reasons it downgraded the city’s bond rating in July.
The city’s leaders, who unanimously oppose Issue 4, say they are working on solving the liability, but they argue it’s better to reform the system, not scrap it altogether.
Vice Mayor Roxanne Qualls previously told CityBeat that pension issues for current city employees are covered by reforms passed in 2011, and she says City Council will take up further reforms to address the unfunded liability after the election in November.
Voters will make the final decision on Issue 4 on Nov. 5.
The full financial report:
Updated with more information Chris Littleton and the involved groups.
Ex-Councilman John Cranley is outraising
Vice Mayor Roxanne Qualls in the mayoral race by $124,000, but the
history and research of money in politics suggest the lead might not
matter much, if at all. Mayor Mark Mallory was outspent more than
three-to-one in the 2005 mayoral race by David Pepper, but Mallory won
the vote 52-48 percent. Political scientists argue fundraising and
campaigns generally have a marginal impact, while economic growth, the
direction of the city, state and country, incumbency or successorship,
name likability and recognition, and political affiliation have much
bigger effects. [Correction: This originally said $134,000 when the correct number is $124,000.]
The board that manages Cincinnati employees’ struggling pension system won’t make a recommendation to City Council Monday, as originally planned, because it can’t decide how much taxpayers and employees should suffer to help fix the $862 million unfunded liability. Board members couldn’t agree on the proper balance between benefit cuts and increased funding from the city. Credit rating agency Moody’s on July 15 downgraded Cincinnati’s bond rating from Aa1 to Aa2 and revised the bonds’ outlook to “negative.” Moody’s stated one of the biggest causes of concern for Cincinnati’s debt outlook is its pension fund.
There were massive layoffs at The Cincinnati Enquirer and its parent company Gannett yesterday, including the reported closing of the newspaper’s Kentucky office. As of the latest update from Gannett Blog, more than 200 people were laid off nationwide and 11 lost their jobs at the Cincinnati offices. The news comes just two weeks after Gannett CEO Gracia Martore proudly claimed on July 22, “We are accelerating our transformation into the ‘New Gannett’ every day.”
Ariel Castro, the Cleveland man who held and raped three women at his house for years, yesterday was sentenced to life in prison plus 1,000 years.
A few dozen residents organized by a conservative group asked the Greater Cincinnati Port Authority to kill Cincinnati’s parking lease at a meeting Thursday. The Port is taking control over Cincinnati’s parking meters, lots and garages as part of a controversial deal that will net the city $92 million up front and $3 million or more a year afterward. CityBeat covered the lease in further detail here.
While the Port Authority meeting apparently warranted live tweeting and various articles from several outlets, other local media outlets never covered a streetcar social that involved roughly 200 supporters of the Cincinnati streetcar and Mayor Mallory.
State officials claim average costs for health insurance will soar by 41 percent for Ohioans who buy coverage online under Obamacare, but experts say the state’s claims are misleading. “These are sticker prices, and very few people will pay these prices,” said Larry Levitt, senior vice president of the Kaiser Family Foundation. “Many will qualify for subsidies.” The Republican officials touting the claims of higher costs, including Lt. Gov. Mary Taylor, have opposed Obamacare from the start.
Democratic gubernatorial candidate Ed FitzGerald is once again asking for an ethics probe of Gov. John Kasich and JobsOhio, the privatized development agency established by Republicans to replace the Ohio Department of Development. Republicans claim JobsOhio is creating thousands of job in the state, but Democrats argue the agency’s secretive nature makes it difficult to verify whether taxpayer dollars are being effectively used.
Ohio Attorney General Mike DeWine yesterday announced a statewide Internet cafe investigation spanning to an establishment in Middletown. “We are still in the beginning stages of what we expect to be a very lengthy investigation,” DeWine said in a statement. “While it is too early in the investigation to go into specifics, we do believe the alleged criminal activity at these locations goes beyond illegal gambling.” Earlier in the year, Gov. John Kasich and the state legislature effectively banned Internet cafes, which they claimed were hubs for online gambling and illegal activity.
The Ohio crime lab received about 3,300 untested rape kits from law enforcement around the state and found nearly 400 DNA matches after testing more than 1,300 of the kits. DeWine says the extensive tests are helping solve sexual assault crimes.
Just one day after announcing he’s quitting the mayoral race, Libertarian Jim Berns is asking to rejoin. Berns withdrew from the race
Wednesday in protest of the mayoral primary election and debate
schedule. In a statement, he said he had changed his mind because
staying in the race supposedly allows him to shed light on important issues.
Keeping Cincinnati Beautiful is offering a one-day free recycling event Saturday for hard-to-recycle items.
Evolution punishes selfish people, according to a game theory study.
A tea party-backed pension amendment yesterday cleared the hurdle of 7,443 petition signatures required to appear on the November ballot. Cincinnati for Pension Reform, the group behind the amendment, had previously paid nearly $70,000 to petitioners to gather signatures. The amendment would privatize pension plans so the city and city employees hired after January 2014 would contribute to individual retirement accounts that the employee would then manage by independently selecting investments. That’s a shift from the current system in which the city pools pension funds and manages the investments through an independent board. But unlike private-sector employees, city workers might not qualify for Social Security, which means they’ll lack the safety net that typically comes with risky 401k-style plans. If workers do qualify for Social Security, the city would have to pay into the federal entitlement program, which would cost the city more money, according to an Aug. 5 report from the city administration.
Cincinnati is cutting ties with SoMoLend, the local startup that had previously partnered with the city to connect small businesses and startups with $400,000 in loans. SoMoLend has been accused of fraud by the Ohio Division of Securities, which says the local company exaggerated its performance and financial figures and lacked the proper licenses to operate as a peer-to-peer lending business. The Division of Securities won’t issue a final order until after a hearing in October. SoMoLend’s specialty is using crowdfunding tactics to connect small businesses and startups with lenders.
Ohio Republicans are considering bringing back the “heartbeat bill,” the controversial anti-abortion bill that would ban induced abortions after a heartbeat is detected, which could happen as early as six weeks into a pregnancy. The bill could be reintroduced next week. That would come just a couple months after Republican legislators and Gov. John Kasich approved a slew of anti-abortion measures through the two-year state budget.
The Ohio Senate will today hear testimony from the Health Policy Institute of Ohio about projections that show the state could save money if it takes up the Medicaid expansion. As part of Obamacare, states are asked to expand their Medicaid programs to include anyone at or below 138 percent of the federal poverty level. In return, the federal government will pay for the expansion for the first three years and wind down to paying 90 percent of the costs after that. The Health Policy Institute previously estimated the expansion would save Ohio roughly $1.8 billion and insure nearly half a million Ohioans in the next decade.
Councilwoman Laure Quinlivan is touting Cincinnati Safe Student Housing, a website that allows university students to pick from housing options that passed a free fire inspection. The website was unanimously approved by City Council following several university students’ deaths to fires, which council members argue could have been prevented with stronger standards.
The new owner of the former Terrace Plaza Hotel says he will reopen the building as a hotel. Alan Friedberg, managing principal of the company that bought the building earlier this year, says the process of bringing back the building will take a lot of time and work, considering it’s now been vacant for three years.
Four Greater Cincinnati hospitals have been recognized for protecting the LGBT rights of patients and employees by the Human Rights Campaign Foundation: Bethesda North Hospital, Good Samaritan Hospital, the Veterans Affairs Cincinnati Medical Center and Cincinnati Children’s Hospital Medical Center.
Ohio Attorney General Mike DeWine rejected a ballot initiative that would have legalized marijuana in Ohio. DeWine claims the summary for the ballot initiative is untruthful and leaves out various important details.
Mason, a Cincinnati suburb, was ranked one of the top 10 places to live by CNNMoney. Maybe CNN really likes Kings Island.
Ohio Sen. Sherrod Brown was in Cincinnati yesterday to call on the U.S. Department of Veterans Affairs to expedite processing on benefit claims. The VA currently has a backlog of 500,000 veterans, according to a press release from Brown’s office.
Introducing Elon Musk’s Hyperloop, a proposal for a railway system that would use high-pressure tubes to shoot passengers around the country. It’s estimated traveling from Los Angeles to San Francisco, which normally takes about five and a half hours, would only take 30 minutes in the tubes.
A Sept. 27 report from the conservative Buckeye Institute echoes claims made by both sides in Cincinnati’s pension debate: A tea party-backed amendment, if approved by voters on Nov. 5, would reduce retirement benefits for new city employees by one-third. At the same time, the city’s unfunded pension liability might be three times what officials currently estimate.
The Buckeye Institute’s summary of the report vaguely supports the tea party-backed amendment and touts its benefits, but the details and findings in the report are much more mixed.
The tea party-backed amendment would privatize Cincinnati’s pension system so city employees hired after January 2014 would contribute to and manage individual retirement accounts, which would also be supported by a proportional match from the city. That’s a shift from the current system in which the city pools pension funds and manages the investments through an independent board. The idea is to move from a public plan and instead imitate a 401k plan that’s often seen in the private sector.
Opponents of the amendment say it would massively reduce city benefits and actually increase costs for the city — two issues that the Buckeye Institute’s report acknowledges as real possibilities.
Officials are also concerned that the city would be forced to pay into Social Security, which would impose additional costs, if the tea party-backed system isn’t exempt from the federal retirement program. The current pension system absolves the city government from paying into Social Security.
Supporters of the amendment say the drastic changes are necessary to help solve the city’s growing pension liability, which city officials put at $862 million.
The Buckeye Institute report argues that even the city estimates are too low. When pricing the city’s pension liabilities through fair market value — a measure widely embraced by economists — the unfunded costs actually stand at $2.57 billion. That puts the pension system at 35 percent funding, which means the city will have to make up the 65-percent hole with extra payments.
But the report also confirms a key claim for the amendment’s opposition: Future city employees would get about one-third less benefits under the tea party’s proposed system than they would under the current pension system.The benefit reductions should save Cincinnati $19.7 million a year, according to the report. But the savings estimate doesn’t consider cost-of-living adjustments, which the report says will rise for future employees and shrink savings over time. The estimate also assumes the tea party’s proposed system will be able to keep Cincinnati’s Social Security exemption, which city officials say is unlikely.
Despite the reductions, the Buckeye Institute claims the final benefits will be better than comparable 401k plans in the private sector, but the assumption hinges on the city meeting its full contribution to employees’ individual retirement accounts. The tea party amendment allows — but it doesn’t require — the city to contribute up to 9 percent of an employee’s salary to retirement accounts. The city contributes only 2 percent of payroll under the current system, which is already strained for costs.
The report also acknowledges that, if interpreted a certain way, the tea party amendment could force the city to pay for its unfunded pension liability in just 10 years, down from 30 years. Paying the liability that quickly could prove unmanageable for a city that hasn’t passed a structurally balanced budget since 2001.
The pension amendment is backed by tea party groups, some of which may reside outside of Cincinnati and Ohio. They argue the reform is necessary to stabilize the city-funded retirement system.
Meanwhile, Cincinnati for Pension Responsibility announced
its formation on Sept. 27 and promised to get voters to oppose a “risky
plan” that “could cost taxpayers millions.” Mayor Mark Mallory, all current council
members, the AFL-CIO, ProgressOhio and other groups have joined the opposition.
Opponents readily acknowledge the current system’s problems and unfunded liability, but they argue the city would be better off making reforms within the current system instead of adopting the tea party’s plan. Some of those reforms are expected to come before City Council in the next couple months.
Voters will make the final decision on the tea party’s pension amendment when it appears as Issue 4 on the Nov. 5 ballot.
National conservative groups have brought their concerted effort to weaken state energy standards to Ohio. State Sen. Bill Seitz, who’s on the board of directors of the conservative American Legislative Exchange Council (ALEC), says he will introduce a bill within two weeks that would cap how much utilities can spend on energy efficiency programs and eliminate requirements for in-state wind and solar power. ALEC and the Heartland Institute, a libertarian think tank backed in part by oil companies and global-warming deniers, have teamed up to undo energy standards in different states, but so far the groups’ efforts have failed. Seitz’s proposal would weaken Ohio’s Clean Energy Law, which environmentalists and other green energy advocates say have revitalized wind, solar and other renewable projects around the state.
Cincinnati Public Schools got six F’s, one D and two C’s in the 2012-2013 school report card released yesterday by the Ohio Department of Education (ODE). The scores come with a big caveat: The school district is still being investigated for scrubbing data, which could be favorably skewing results for CPS. This is the first year ODE is using its A-F grading system, which is much more stringent than the previous system — to the point that no school district earned straight A’s this year, according to StateImpact Ohio.
Cincinnati for Pension Reform, the group behind the controversial pension amendment that will appear on the ballot this November, officially registered with the state. The group isn’t disclosing how much money it’s raised so far. The tea party-backed amendment would privatize the city’s pension system, a pooled fund that’s managed by an independent board, so future city employees — excluding cops and firefighters, who use a different system — contribute to and manage individual 401k-style accounts. City officials and unions say the amendment will raise costs for the city and hurt gains for employees. Tea party supporters say it’s needed to deal with Cincinnati’s rising pension costs. CityBeat covered the pension amendment and the national groups who may be helping fund its campaign in further detail here.
Ohio’s oil and gas boom has apparently failed to create all the jobs state officials previously promised. “Total employment growth has been much less robust than sales activity in Ohio's shale country,” claims the Ohio Utica Shale Gas Monitor, which is produced quarterly by the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. CityBeat covered Ohio’s oil and gas boom in further detail here.
A company that received a tax credit through JobsOhio two years ago is moving some executives and operations from Ohio to Chicago. Rittal Corp. has not received the tax credit yet, but it intends to uphold its tax agreement through other operations. JobsOhio is a privatized development agency established by Gov. John Kasich and Republican legislators to replace the Ohio Department of Development. Kasich and allies argue its privatized, secretive nature allow it to more quickly establish job-creating development deals, but Democratic opponents argue the agency is too difficult to hold accountable.
CityBeat commentary on JobsOhio: “Gov. Kasich’s Bias Toward Secrecy.”
Ohio has received more than $383 million as part of the national mortgage settlement, which has helped more than 10,000 Ohioans, according to the state attorney general’s office. The payout, which is paid by banks as part of a settlement reached with states and the federal government, is meant to provide some relief to Americans who were impacted by the housing and economic crisis of 2008.
Enrollment at Ohio colleges, including the University of Cincinnati, is continuing its steady rise.
A campaign supported by AAA, local school officials and police is attempting to reduce the amount of car accidents involving school children. The “School’s Open — Drive Carefully” campaign aims to give drivers a few tips for navigating roads filled with children going to school.
Local startup incubator Hamilton County Business Center was granted $250,000 by the state to help develop tech companies. Cincinnati recently gained national recognition for its tech boom in Entrepreneur and CNBC, with Entrepreneur calling the city “an unexpected hub for tech startups.”
Cincinnati-based Macy’s will pay a civil penalty to settle accusations that it engaged in unfair documentation practices against immigrant employees.
The U.S. Department of Housing and Urban Development is charging Cincinnati-based Fifth Third Bank for allegedly discriminating against a couple with disabilities. The bank and others reportedly required unnecessary medical documentation from the couple when the two attempted to refinance their home mortgage with a Federal Housing Administration loan.
Local and national tea party groups are pushing a ballot initiative that would privatize Cincinnati’s pension system by moving city workers from a public plan to 401k-style plans, but city officials and unions are urging voters to reject the measure because they claim it would raise costs for the city and reduce gains for retirees. Cincinnati for Pension Reform paid Arno Petition Consultants nearly $70,000 to gather enough signatures to get the initiative on the ballot. It’s so far unclear where that money came from. Virginia-based Liberty Initiative Fund, which is supporting a similar pension proposal in Tucson, Ariz., is backing the Cincinnati effort, with one of two blog posts on its website praising the local initiative. Liberty Initiative Fund has given at least $81,000 to the Tucson campaign. For more information about the Cincinnati campaign and initiative, click here.
Hamilton County Judge Carl Stitch on Wednesday ruled against granting a temporary restraining order that would prevent the trio that owns and leases the Emery Theatre from evicting the nonprofit seeking to renovate the building. The ruling means Requiem Project, which was founded in 2008 to renovate the theater, might be kicked out by the University of Cincinnati, Emery Center Apartments Limited Partnership (ECALP) and the Emery Center Corporation (ECC), the groups that own and lease the Emery Theatre. Still, the judge said that the ruling should in no way indicate what the final outcome of the case will be and it could turn out that Requiem deserves a long-term lease.
Gov. John Kasich received campaign donations from and served on the board of Worthington Industries, a central Ohio steel processor, before the company got tax credits from JobsOhio, the privatized development agency. Kasich’s spokesperson told the Associated Press that the governor severed ties with Worthington before the tax deals were approved. Still, the latest discovery adds to a series of conflicts of interest that have mired JobsOhio in the past few weeks. Previously, Dayton Daily News found that most of the board members on JobsOhio had direct financial ties to some of the companies getting state aid. Republicans defend JobsOhio because they say its privatized and secretive nature allows it to carry out job-creating development deals more quickly, but Democrats say the agency is too difficult to hold accountable and might be wasting taxpayer money.
Commentary: “Disparity Study Now.”
State officials are looking to tighten limits for local governments passing budgets, issuing debt and funding pensions. State Rep. Lou Terhar, a Republican from Cincinnati, and State Auditor Dave Yost say the proposal is aimed at correcting pension problems such as the one in Cincinnati, which Yost labeled “Pension-zilla.” Cincinnati’s unfunded pension liability currently stands at $862 million, which earned the city a downgraded bond rating from Moody’s in a July 15 report.
A task force convened by Ohio Supreme Court Justice Maureen O’Connor is set to meet again to discuss possible changes to the state’s death penalty. The panel recently proposed eliminating the use of capital punishment in cases in which an aggravated murder was committed during a burglary, robbery or rape.
A record number of white women, many from rural areas, are being sent to Ohio prisons, according to a report from the Sentencing Project, a Washington, D.C., think tank.
Two City Council candidates are struggling to get their names on the ballot because of a couple different circumstances. Newcomer Mike Moroski fell 46 petition signatures short of the requirement of 500 signatures that have to be turned in by Aug. 22. Meanwhile, hundreds of Councilman P.G. Sittenfeld’s petitions might be thrown out because several dates were corrected by crossing them out and writing the accurate date on the back of the forms. The Hamilton County Board of Elections says it’s unclear whether it can accept those signatures. Both candidates are now renewing their petition drives to ensure they appear on the Nov. 5 ballot.
Candace Klein is resigning as CEO of SoMoLend, the embattled local startup that previously partnered with the city of Cincinnati to link local businesses to up to $400,000 in loans. City officials announced Monday they were severing ties with SoMoLend after it was revealed that the Ohio Division of Securities is accusing the company of fraud because SoMoLend allegedly failed to get the proper licenses and exaggerated its financial and performance figures. SoMoLend’s specialty is supposed to be using crowdfunding tactics to connect small businesses and startups with lenders, but the charges have called its expertise into question.
Metro, the city’s bus system, turns 40 today, and it plans to hold a party on Fountain Square from 11 a.m. to 1 p.m. in celebration.
Activist hedge fund manager Bill Ackman sold a majority of his Procter & Gamble stocks.
Popular Science has the list of the 10 weirdest robots at this year’s drone show here.
Despite unanimous opposition, City Council fulfilled duties dictated by the City Charter and voted to allow a controversial pension amendment to appear on the ballot this November.
Vice Mayor Roxanne Qualls explained that all council members oppose the amendment, but it’s part of City Council’s ministerial duties to allow ballot initiatives if petitioners gather enough signatures to put the issue to a public vote. The Hamilton County Board of Elections announced on Aug. 12 that petitioners had gathered enough signatures to clear the 7,443 requirement.
The amendment would privatize Cincinnati’s pension system so future city employees — excluding police and fire personnel, who are under a separate system — contribute to and manage individual 401k-style accounts. Currently, the city pools pension contributions and manages the investments through an independent board.
City officials oppose the amendment. They say it will cost the city more and hurt retirement gains for city employees.
One new concern: As written, the amendment could force the Internal Revenue Service (IRS) to revoke tax-exempt status for city employees’ retirement plans. Paula Tilsley, executive director of the Cincinnati Retirement System, says the new tax burden would force someone in a lower tax bracket with $100,000 in retirement savings to immediately pay $15,000 in taxes.
Supporters of the amendment, including out-of-state tea party groups, argue it’s necessary to address Cincinnati’s present and future pension liabilities, which currently stand at $862 million.
The current liability is a result of two issues: City Council has underfunded the pension system by varying degrees since at least 2003, and economic downturns have hurt investments in the city’s pension system.
That outstanding liability was one of the factors that led Moody’s, a credit ratings agency, to downgrade Cincinnati’s bond rating on July 15.
City officials say they’ve already taken steps to resolve future costs and the only remaining concern is how to pay for the current liability. In 2011, City Council raised the retirement age and reduced pension benefits for city employees and retirees.
“This council adopted some of the most sweeping changes to any public pension system in the country for current and future employees,” Qualls said.
Councilman Chris Smitherman clarified he doesn’t support the proposed amendment, but he says City Council has done a poor job with the current pension system.
“My recommendation to this council is to put forth a solution to solve the problem,” Smitherman said. “You can’t have your cake and eat it too. You can’t say, ‘This is bad,’ and then underfund the pension.”
Tilsley says the pension board will make recommendations to City Council within a month to address the current pension liability. The board estimates the changes would keep the system 100 percent funded after 30 years.
CityBeat covered the amendment and the groups that might be behind it in further detail here.
Updated (2:17 p.m.): Updated to reflect the full City Council vote.
More than 3,000 Cincinnatians who already voted early will get new ballots in the mail after an Ohio Supreme Court decision forced the Hamilton County Board of Elections to change the ballot language for Issue 4, the tea party-backed city charter amendment that would semi-privatize Cincinnati’s pension system.
It remains unclear whether the early voters, who represent roughly 1.5 percent of registered Cincinnati voters, will have their old votes for or against Issue 4 counted if they fail to send in a new ballot with the new language. The board will decide on that issue after hearing back from state officials and reviewing election law, according to Sally Krisel, deputy director of Hamilton County Board of Elections.
The Ohio Supreme Court on Oct. 10 upheld most of the ballot language for Issue 4, including portions that claim the amendment could lead to higher taxes and cut city services. But the court also ordered the Board of Elections to add language describing how much Cincinnati can contribute to retirement accounts under the new system and how the amendment will affect future retirees.
The court’s decision came after the Board of Elections received more than 3,000 ballots from early voters. Those voters will now get new ballots with revised language for Issue 4.
Cincinnati for Pension Reform, the
tea party group behind Issue 4, sued the Board of Elections to get the
ballot language changed. The organization complained that the ballot language included speculation not included in the actual city charter amendment, but the Supreme Court ultimately allowed the language to remain.
Krisel says the original ballot language was suggested by the city, approved by the board and signed off by Ohio’s secretary of state.
Although the Ohio Supreme Court asked the board to add new sections, Krisel notes the additions have very little to do with the tax and spending portions that led Cincinnati for Pension Reform to sue in the first place. The court’s ruling instead took issue with how the board used its discretion on other issues.
If approved by voters, the charter amendment would move future city employees into individual retirement accounts similar to 401k plans that are common in the private sector. Currently, the city pools pension funds into a public system and manages the investments through an independent board.
City officials and other opponents of Issue 4 argue the amendment could increase costs and cut benefits for city employees. Both the concerns were acknowledged in a Sept. 27 report from the conservative Buckeye Institute, even though the think tank actually backs Issue 4.
Supporters of Issue 4 argue it’s necessary to address Cincinnati’s unfunded pension liability, which reached $862 million in 2013 after the city underfunded the pension system for years and economic downturns shrunk investments financing the system. Moody’s named the liability as one of the reasons it downgraded Cincinnati’s bond rating.
City officials acknowledge the enormous financial problems posed by the unfunded pension liability, but they say it would be better to make reforms within the system instead of scrapping it altogether.
City Council passed reforms in 2011 that address future costs, and council is expected to take up reforms that address the unfunded liability after the November election, Vice Mayor Roxanne Qualls previously told CityBeat.
Voters will make the final decision on Issue 4 on Nov. 5.
Despite unanimous opposition, City Council yesterday fulfilled duties dictated by the City Charter and reluctantly voted to allow the controversial pension amendment on the November ballot. The amendment would privatize Cincinnati’s pension system so future city employees — excluding police and fire personnel, who are under a separate system — contribute to and manage individual 401k-style accounts. Currently, the city pools pension contributions and manages the investments through an independent board. City officials, including all council members, oppose the amendment because they say it will cost the city more and hurt benefits for city employees. Supporters of the amendment, who are backed by out-of-state tea party groups, claim it’s necessary to address Cincinnati’s rising pension costs. CityBeat covered the issue in greater detail here.
The conservative Coalition Opposed to Additional Spending and Taxes (COAST) is once again taking the parking lease to court. The legal pursuit comes after City Solicitor John Curp denied COAST’s challenge. COAST claims that the city manager made “significant and material” changes to the parking lease, but Curp said the changes were ministerial and only made as a result of delays caused by COAST’s first legal challenge against the parking lease. If the latest legal tactic is successful, City Council could be forced to vote on the changes made to the parking lease, which could endanger the entire lease because a majority of council members now say they oppose the plan. A hearing is scheduled for the challenge today at 11:30 a.m.
Hamilton County is evicting homeless squatters from its courthouse, but it plans to carry out the evictions by connecting the homeless with existing services. “We don’t want to get mired down in too much political debate,” Hamilton County Sheriff’s Major Charmaine McGuffey told The Cincinnati Enquirer. “It’s a public health hazard.” About 750 people in Hamilton County are homeless throughout any typical night; of those, 700 spend the night in shelters and the rest, who are mostly downtown, sleep outside.
Vice Mayor Roxanne Qualls, who’s running for mayor against ex-Councilman John Cranley, yesterday unveiled two TV advertisements: “Neighborhoods” and “Wheelbarrow.” The first ad touts Qualls’ supports for neighborhood investments. The second ad is particularly aggressive and claims Cranley was forced to resign from City Council because of ethics issues regarding his personal investments.
The number of Ohioans on welfare dropped over the past few years as Gov. John Kasich’s administration enforced federal work requirements. Ben Johnson, spokesperson for the Ohio Department of Job and Family Services, says the efforts have brought the state’s welfare program into federal compliance.
Ariel Castro, the man convicted for the decade-long kidnapping, beating and raping of three Cleveland women he held captive, was found hanging in his prison cell on Tuesday after an apparent suicide.
Attorney General Mike DeWine yesterday released an update on the state’s sexual assault kit testing initiative: So far, the attorney general’s Bureau of Criminal Investigation has received 3,530 previously untested rape kits from 105 law enforcement agencies in Ohio. The agency has tested 1,488 kits, leading to to 460 hits in the Combined DNA Index System.
Internet cafe owners submitted petitions yesterday to put a law that effectively banned their businesses on the ballot. State officials claim the cafes were hubs for criminal and illegal gambling activity, but cafe owners say the ban is unfair.
This frog listens with its mouth.