By Lee Roop
The Huntsville City Council voted Thursday – against advice from the mayor and city finance director – and spent nearly $1 million to give retired city employees a onetime bonus.
The bonus was authorized by state law in 2021, Finance Director Penny Smith said. The bonus ranges between $300 and $1,000 depending on length of service.
The cost to the city will be just under $1 million, Smith said. The city already helps support a trust that pays 30 percent of retirees’ health insurance and has bolstered that by a special appropriation of $4.5 million. Healthcare costs are rising for the city, partly because of retiree costs, and spending the extra money now could be “fiscally insensitive,” Smith said.
Councilman Bill Kling, who proposed the bonus, said it would be about $600 for a retired employee with 25 years’ service. Kling cited rising costs of gas and other necessities and said, “If we’re a great city, and we are, we owe a lot to what retirees have done to get us where we are now.”
Mayor Tommy Battle urged the council to be careful with the city’s money.
“One of the things we’re charged with here in the council is to be fiscally responsible,” Battle said, “and we’ve got to be sure that we stay fiscally responsible.”
Battle said the city will have to look this year at low and even negative returns reported nationally for retirement funds. “It’s best for us as a city to hold our powder,” Battle said, “to make sure we have the funds to put back in to re-shore these funds as necessary” so everyone gets a retirement check. “That’s why we’ve not brought this to you before,” Battle said. He urged the council “to be careful with your dollars right now.”
Council member Jennie Robinson agreed with Battle about the current national financial situation and cited “fairness.” The council turned down a bonus to current employees earlier this year, she said.
“There’s always unknowns,” Council member Frances Akridge said. Alabama’s public employee retirement system is not in trouble, she said, “and healthcare costs will probably continue to go up and, yes, we’ll probably have to do that also.”
This is not a “feel-good opportunity,” Akridge said. She called it critical for retention and recruitment of city employees.
Councilman Devyn Keith said microeconomics says anyone with an extra $1,000 spends that in the local economy. The city benefits from citizens doing things with the money like paying a light bill, he said.
Keith said an “injection of funds to people inside the city” will probably turn into a purchase in coming months. The value of the injection is more important than a volatile market that has been volatile for the past three-and-a-half years.
The bonus passed by a 4-1 vote with Robinson opposed.