Baltimore County Executive Kevin Kamenetz has expressed interest in gaining local authority to use pension bonds – a vehicle to add to the county’s defined benefit pension plan assets with a long term repayment. From coverage in the Baltimore Sun (limited free views permitted):
County Administrative Officer Fred Homan told the County Council at a briefing Tuesday that the administration would introduce legislation next week to allow the county to issue pension obligation bonds. The bond issue would not have to be approved by voters.
In July, the county lowered its projections on the assumed investment earnings for its retirement system, meaning taxpayers must contribute an additional $15 million annually to the retirement system starting next year.
Issuing pension bonds would help close that gap “at the lowest possible cost to taxpayers,” said Homan, who was joined at the meeting by county consultants, including financial advisers and bond lawyers. The county would invest the borrowed money along with other funds in the pension system.
Governments throughout the nation have issued pension obligation bonds, though it’s not a widespread practice, said Jeffrey Esser, executive director and CEO of the Government Finance Officers Association, a professional organization representing members in the United States and Canada.