OC mayor vetoes cuts to benefits
Initial cost was not accounted for
OCEAN CITY -- Ocean City Mayor Rick Meehan vetoed two ordinances passed by the Town Council majority that would have snipped retirement and health insurance benefits for some new town hires.
Meehan opted not to sign the ordinances that would have enacted a new high-deductible health insurance plan option and a defined contribution pension plan.
The vetoes came Tuesday, less than two weeks before the council is scheduled to hold a first reading of the fiscal year 2012 town budget.
Meehan will have an emergency meeting with the council on Monday, when they will attempt to come to a compromise on an ordinance Meehan would be able to sign into law before the budget is due.
The bill Meehan vetoed was meant to save the town money in the long term. But preparing for the elimination of the current health plan would have cost the town more than $800,000 in the coming year, a figure that has not been accounted for in the proposed budget, Meehan said.
"I'm certainly not looking to veto ordinances, but I could not in good conscience support the two that increased the cost of the general fund and to the taxpayers," Meehan said.
Meehan made a recommendation to the council to institute a soft cap health plan that he says will reduce the town's long-term liability by $12 million while saving taxpayers $1.6 million this year.
Meehan's proposed plan would include a freeze on the town's liability for retiree health at today's level with a maximum of a 3 percent increase per year.
Under the plan the council approved in a 4-3 vote at its April 18 meeting, the town would contribute funds to a retirement health savings account for its workers until the end of employment. Employees could retain the town's other health insurance plan only by paying the entire, unsubsidized premium when they retired.
Councilman Joe Hall -- who voted in favor of the plan with Jim Hall, Brent Ashley and Margaret Pillas -- said the council majority's goal is to pay as much up front for employee retirement benefits as possible and to lessen contributions after the employee's career with the town is finished.
"We would still have a relationship with them at the end of employment, but we believe that by the end of employment, we should have already provided enough to sustain them in the future if they manage their health funds correctly," Hall said.
Meehan's disapproval of both ordinances was tied more closely to the health plan than the pension plan, he said, but he opted to veto both because he believes the two plans mirror each other. The two main retirement benefits are typically pensions and health insurance, he said.
"I think we want to have a plan in place where those two complement each other," Meehan said, adding the proposed defined contribution plan is about "as good as you can have" since the recent additions of a contribution level and vesting schedule.
Meehan vetoed an ordinance to go to a defined contribution plan in January on the basis of its vagueness and lack of those two features.
Councilwoman Mary Knight, who voted against the ordinance with Doug Cymek and Lloyd Martin, said she still has concerns about how competitive the town will be as a potential employer if changes to retirement plans are made. She is also concerned about ending the current health plan and having to find excess money during the budgeting process.
In a previous interview, budget manager Jennie Knapp said enacting the health plan ordinance would cost about $1.3 million in the coming year. Meehan cited a figure of $800,000 in each of the next two years, while Knight cited a figure of $900,000 this year and $700,000 next year.
smuska@dmg.gannett.com
410-213-9442, ext. 14
Meehan opted not to sign the ordinances that would have enacted a new high-deductible health insurance plan option and a defined contribution pension plan.
The vetoes came Tuesday, less than two weeks before the council is scheduled to hold a first reading of the fiscal year 2012 town budget.
Meehan will have an emergency meeting with the council on Monday, when they will attempt to come to a compromise on an ordinance Meehan would be able to sign into law before the budget is due.
The bill Meehan vetoed was meant to save the town money in the long term. But preparing for the elimination of the current health plan would have cost the town more than $800,000 in the coming year, a figure that has not been accounted for in the proposed budget, Meehan said.
"I'm certainly not looking to veto ordinances, but I could not in good conscience support the two that increased the cost of the general fund and to the taxpayers," Meehan said.
Meehan made a recommendation to the council to institute a soft cap health plan that he says will reduce the town's long-term liability by $12 million while saving taxpayers $1.6 million this year.
Meehan's proposed plan would include a freeze on the town's liability for retiree health at today's level with a maximum of a 3 percent increase per year.
Under the plan the council approved in a 4-3 vote at its April 18 meeting, the town would contribute funds to a retirement health savings account for its workers until the end of employment. Employees could retain the town's other health insurance plan only by paying the entire, unsubsidized premium when they retired.
Councilman Joe Hall -- who voted in favor of the plan with Jim Hall, Brent Ashley and Margaret Pillas -- said the council majority's goal is to pay as much up front for employee retirement benefits as possible and to lessen contributions after the employee's career with the town is finished.
"We would still have a relationship with them at the end of employment, but we believe that by the end of employment, we should have already provided enough to sustain them in the future if they manage their health funds correctly," Hall said.
Meehan's disapproval of both ordinances was tied more closely to the health plan than the pension plan, he said, but he opted to veto both because he believes the two plans mirror each other. The two main retirement benefits are typically pensions and health insurance, he said.
"I think we want to have a plan in place where those two complement each other," Meehan said, adding the proposed defined contribution plan is about "as good as you can have" since the recent additions of a contribution level and vesting schedule.
Meehan vetoed an ordinance to go to a defined contribution plan in January on the basis of its vagueness and lack of those two features.
Councilwoman Mary Knight, who voted against the ordinance with Doug Cymek and Lloyd Martin, said she still has concerns about how competitive the town will be as a potential employer if changes to retirement plans are made. She is also concerned about ending the current health plan and having to find excess money during the budgeting process.
In a previous interview, budget manager Jennie Knapp said enacting the health plan ordinance would cost about $1.3 million in the coming year. Meehan cited a figure of $800,000 in each of the next two years, while Knight cited a figure of $900,000 this year and $700,000 next year.
smuska@dmg.gannett.com
410-213-9442, ext. 14
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