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Merger or not, pension remains problem:

October 24, 2005

Few want to talk about the prospect. But if the police merger should fail, it won't mean a return to business as usual. Local government can't sustain the status quo much longer.

There's a reason Mayor Bart Peterson, a Democrat, is exploring cop consolidation now. Because of the rising cost of police and fire pensions, every year it becomes more difficult to keep public safety budgets in the black.

This year, the city will pay $21.6 million toward the pension obligations. In 10 years, the figure will be nearly $30 million annually. And by the year 2031, it will be almost $65 million.

But the price tag could skyrocket even higher in just two years. Right now, the General Assembly picks up half the cost of the pensions. State payments are scheduled to expire in 2007. By 2008, Indianapolis could be on the hook for an extra $34 million-and more every year after that.

Peterson is hopeful the state will continue its subsidy. But even so, he has a business problem any manager can understand. Within the public safety system, costs have far outpaced revenue. And as the pension tab escalates, the situation gets ever worse.

That's why the mayor is so keen to find $3 million to $8 million in annual savings from the police merger. And that's why he'll try again in the General Assembly to get his full Indianapolis Works proposal passed. Doing so, he says, would say $35 million.

Without savings from a merger, it won't be long before even more money will have to be diverted from other areas in the public safety system to support pensions, City Controller Bob Clifford said. That could force cuts from the courts, prosecutor's office or public defender's offices. Or it might mean fewer cops on the street.

Republicans concede the extent of the problem. They just don't like Peterson's way of addressing it, insisting he's just putting off the inevitable day of reckoning. They would rather explore other options, like asking the state to take on a larger share of the cost.

But with or without the merger, the pensions will continue to be the largest unfunded liability on the city's balance sheet for years to come.
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