The Philadelphia-based consultants who drew up the mayor’s 10-year plan for financial reform will be awarded nearly half-a-million dollars to guide the mayor and her staff over the next year.
The Board of Estimates is expected to approve tomorrow a $423,730 extension of its contract with Public Financial Management (PFM) to continue consulting work through September 2014.
PFM won the original $460,942 contract in September 2011. Together with a $125,000 supplemental agreement last year and tomorrow’s award, the company will have received $1,009,672 to provide financial advice and forecasts for the city.
So far, the group’s most notable conclusion is that Baltimore faces a cumulative deficit of $745 million over the next decade if it does not rein in employee benefits and pension costs.
NOT headed for bankruptcy
That prediction caused a brief sensation last February when an Associated Press article interpreted the data to mean that Baltimore was headed toward bankruptcy.
Officials quickly pointed out that the forecast was based on what might happen if the city did not undertake the reforms that the mayor says she is determined to implement.
Among those reforms: a 52-hour workweek for firefighters (now in arbitration between the city and the fire unions), a 401(k)-style retirement plan for new civilian hires, a hybrid defined contribution/defined pension plan for new police and firefighters, and a panoply of “users fees” – including for garbage collection – for homeowners and businesses.
Mayor Stephanie Rawlings-Blake has invested much political capital on these reforms, insisting they are the only way to straighten out the city’s finances and lower property taxes. So far, no elected official has questioned the plan or its assumptions.
At her office’s request, the Board of Estimates approved $100,000 to create a new position in the Department of Finance to implement the report’s recommendations.
The funding for the position will presumably continue over the life of the plan, which would commit about $1 million in salary obligations through 2023.