Paterson repeals tax deferral plan for retiring police and fire employees | Paterson Times Paterson Times

Paterson repeals tax deferral plan for retiring police and fire employees

By Jayed Rahman
Published: December 31, 2019

city-hall

A week after passing a measure to set up what’s called a 401(a) plan, tax-deferred retirement saving accounts for retiring public safety employees, the City Council on Monday afternoon rescinded the resolution.

Members of the City Council approved the repeal without opposition in an emergency meeting.

Municipal officials cited a pair of reasons for rescinding the measure. “Numerous” retiring police and fire employees “objected” to their unions’ plan to channel a portion of their payouts into tax-deferred accounts. Under the approved plan, retires “lack discretion” as to how much of their funds get directed to the accounts.

“It just didn’t look good to me, didn’t sound good,” said Flavio Rivera, councilman at-large, chairman of the finance committee.

Mayor Andre Sayegh’s administration presented the measure at the last minute and rushed council members to approve the measure last week. Council president Maritza Davila said the governing body did not have sufficient information last week when it approved the measure.

Under the plan, those who are younger than 59.5 years of age would face a withdrawal penalty, pointed out William McKoy, 3rd Ward councilman. He also opposed mandatory enrollment for retiring members into the 401(a) plan.

“It’s not for anybody else to dictate to them what they want to do [with their money],” said McKoy. He was not present during last week’s vote.

McKoy accused Michael Schiller of AXA Advisors of Edison, firm managing the plan for the unions, of misleading the council.

“You’re being evasive in the same way that you were the last time,” said McKoy.

Schiller rejected the assertion. He said he made it clear last week that all retiring public safety employees would be enrolled into the plan. However, that was not clear in last week’s discussion. Davila said she thought the plan was for the 19 employees that had agreed to be part it.

“Should an employee be entitled to the right to determine where their money goes; whether or not they want to participate in a 401(a)?” McKoy asked Schiller. “The issue at hand is whether or not each of these individuals that are retiring, that retired as of the end of June, have a right to say where their money goes and whether they want to participate or not.”

McKoy said he favored a voluntary program.

Schiller suggested the Sayegh administration did not provide council members all the details of the plan.

“I didn’t know that you didn’t know that information,” said Schiller. He said his firm has been working with the administration for some time.

McKoy also clashed with Mason Maher, president of the police Superior Officers Association. Maher chastised McKoy for his curt and “out of line” treatment of Schiller.

“I don’t appreciate you trying to chide me on what it is that I can say. I don’t tell you what to say,” responded McKoy.

Both men talked over each other.

“I said your demeanor. I didn’t say what you said,” replied Maher.

McKoy said Maher should be removed from the chambers.

“You are out of order. You are out of line. Sit down and get away from the mic!” remarked McKoy.

During the meeting it emerged fire union members took a vote on the plan. Maher said presidents of police unions have “executive privilege” to take steps that benefit their members. He said taking a vote on everything is an “impossibility.”

“There’s no intention to harm anyone. It was to have something that’s good for all. It wasn’t done to help a few,” said Maher.

Sayegh administration officials last week pushed hard to get the measure passed before the end of the year. Business administrator Vaughn McKoy suggested the measure was intended to buy more time to pay the approximately $5 million in severance pay to retired police and fire employees without litigation. He said the city had trouble making payment due to not having enough cash on hand.

On Monday, Sayegh said governor Phil Murphy agreed to disburse nearly half of the transitional aid award in advance. The city applied for $24.6 million in transitional aid earlier in the year.

“This is unprecedented,” said Sayegh.

Last week, council members approved $1.2 million for retirees. On Monday the council approved more than $3 million to pay retirees.

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