Peterson leaves pension problem for Ballard

Mayor Bart Peterson’s plan to permanently settle Indianapolis’ massive liability for unfunded police and firefighter pensions will not be completed before he leaves office.

Peterson, who approved a local income-tax hike this summer in part to underwrite nearly $500 million in pension bonds, told IBJ in an interview that Mayor-elect Greg Ballard will decide whether to move forward with the plan.

Ire over the income-tax hike contributed significantly to Peterson’s defeat at the polls in November.

In the spring, Indianapolis sought and received a special exemption from the General Assembly for the enormous bond issue. Peterson, a Democrat, said he remains convinced that permanently settling the city’s police and firefighter pension debt soon is necessary.

Ballard, a Republican, has publicly argued that Indianapolis should delay addressing the issue and instead plead with the General Assembly to take over the pension obligation.

“What we have in place is the money to do it. I don’t think there’s any question it’s the right thing to do,” Peterson said. “But we’re leaving that to the next administration to go ahead and move forward with those bonds, assuming they think that’s the right thing to do. They’re going to have to deal with the problem one way or the other.”

Indianapolis’ massive debt for pre-1977 police and firefighter pensions has plagued mayors for decades. Because the city pays the debt from its annual public safety budget, the pensions draw resources from current needs, such as police and firefighter paychecks or equipment purchases. The city now spends $23.5 million annually on the pensions, and, if not settled, their costs are expected to steadily increase until they peak at $64.9 million in 2031.

Ballard did not support Peterson’s pension bond plan before the election.

“The mayor says it’s a public safety tax increase, but it doesn’t put another cop on the street. Do we need to deal with the pensions? Yes. But what’s the immediate need?” Ballard told IBJ in June. “At every neighborhood or business association meeting, I’m hearing worries about crime on the street.”