Amid inflation, interest rate hikes by the Federal Reserve and a slowing stock market, the town of Beckley is taking a break from seeking bonds to fund its fire and police pensions. .
Beckley Mayor Rob Rappold made the announcement during a Beckley Town Council meeting on Tuesday evening.
The board was scheduled to vote on an additional resolution for pension funding bonds to fund the unfunded liabilities of the Beckley Police Department and the Beckley Fire Department Pension Fund, but that vote was suspended.
“We have encountered a small bump in the road due to interest rates and the stock market at this point on our pension funding obligations,” Rappold said. “We’re still working on it, and we had a call this week with our bond adviser and our lawyers working on it, but right now we’re putting it in neutral until market conditions improve.”
In an interview with The Register-Herald on Wednesday, City Treasurer Billie Trump, who is also a retired Beckley firefighter, said the purpose of pension funding bonds was to save money for the city, but if they had put them on the market now, they would end up doing the opposite.
“We were in a position where the Federal Reserve had raised rates…and that had the effect of making borrowing too expensive,” Trump said. “If we were to go ahead now, it would eliminate any savings we could make.”
In October, the Beckley Common Council approved an ordinance to use up to $37 million in pension fund revenue bonds to fund the unfunded liabilities of the Beckley Police Department and Fire Department pension funds. by Beckley.
As of Sept. 30, Trump said the total market value of the firefighters’ pension fund was about $20.9 million, while the police pension fund was about $26 million.
Trump said the main reason the city chose to continue with the bond program was the rate at which the city’s obligations to those pension funds were growing.
For fiscal year 2022, which began July 1, Trump said the city has allocated about $1.45 million to contribute to the two pensions. He added that these allocations are increasing every year and will reach nearly $3 million in 10 years, an unmanageable rate for the city.
Since the city already has its allowances for police and firefighters squared off for the year, Trump said there was no harm in waiting for a better deal.
“The market has temporarily pulled the rug out from under us, but everything is settled, everything is ready to go,” he said. “We just watch the market conditions. If the market recovers and the Fed lowers interest rates, as many people have said they will, we may be able to move forward in the next few months.
Citing Covid concerns, the council held its in-person meeting for council members and city officials, but the public could only join virtually by phone or web link.