The Alabama Senate passed legislation last week to reform the Birmingham pension system. The legislation will increase the pension contribution of Birmingham city employees from 7 percent of their gross pay to 7.5 percent.
House Bill 510 was sponsored by state Rep. Allen Treadaway, R-Morris. The bipartisan legislation was carried in the Senate by Sen. Linda Coleman-Madison, D-Birmingham, who explained that the legislation was needed to keep the pension system fiscally sound moving forward.
“The unfunded liabilities are $400 million,” Treadaway said during the House debate. “They are $400 million short of the benefits that have been promised the employees.”
“The Birmingham Pension Fund Board voted for it unanimously, the Birmingham City Council voted for it unanimously, and the mayor of Birmingham all support this bill,” Treadaway said. “I would not have brought this otherwise.”
“Everything we’re doing is supporting, making sure this pension is solvent for our existing employees and our existing retirees,” Birmingham Mayor Randall Woodfin said when he brought the bill to the City Council.
“When I became mayor in November 2017, it became apparent the city was not on sound financial footing,” said Woodfin. “A key reason was the city was not paying into its pension at the level that was needed. Today, we have dramatically increased our payment to the pension. I want to thank the council for their support in this effort. We have reduced the cost of borrowing money and have strengthened our financial position.”
Treadaway explained that HB510 will take employees’ contribution from 7 percent to 7.5 percent.
“The city will double its contribution,” Treadaway said. “This has taken years to get to this point.”
Treadaway is a retired Birmingham Police Department deputy chief, who has served on the Birmingham retirement system board.
Some legislators in the House expressed misgivings about the bill.
Rep. John Rogers, D-Birmingham said: “The garbage workers are all opposed to this bill. What you’re doing is hurting the least of these. The retired employees are against this bill.”
“For years, the city did not put in what they were supposed to put in,” said Rep. Mary Moore, D-Birmingham.
“The federal government has stepped in and required these city governments to put their unfunded liabilities on their balance sheet,” Treadaway said. “This has hurt Birmingham’s bond rating.”
“That cost the government entity a lot of money when it came to floating bonds,” Treadaway said. “The city has been trying to deal with this for years. They could not get everybody on board until this bill.”
“The mayor has promised a one percent COLA to offset the increase,” Treadaway said. “This will require the city to pay their required portion.”
Rep. David Wheeler, R-Vestavia, brought a motion in writing to cloture debate so that the House could vote on the bill. That vote passed the House 58 to 23. The vote to actually pass the bill in the House was 24 to 2.
While there was determined opposition in the House, there was not any opposition in the state Senate, and the bill passed the body 18 to 0.
Birmingham and Huntsville are the largest two cities in the state of Alabama.
The bill was sent to Gov. Kay Ivey for her consideration.
The state Legislature will meet Tuesday for the 24th day of the 2021 Legislative Session. The Alabama Constitution limits the Legislature to just 30 days in a 105-day calendar period.