Against the wishes of Mayor Michael Nutter, Philadelphia City Council is modifying the DROP early retirement incentive program instead of abolishing it.
Currently, DROP participants earn a guaranteed 4 percent interest on their accounts. The new version would cut costs by providing interest based on U.S. Treasury rates. Right now, that rate is 0.02 percent. The change would also make most workers wait two years longer to qualify for DROP.
Residents came to testify Wednesday, upset about the compromise. Fred Fisher, a former city worker, said the benefit should be eliminated completely.
“It’s ridiculous. It’s shameful. I think this program is going to go down as one of the most shameful things in the city of Philadelphia,” Fisher said.
The city unions say DROP can’t be abolished without first negotiating that in contract talks.
“The Deferred Retirement Option Program is part of the existing pension program and as such is part of bargaining and as such can only be addressed at the bargaining table for union-represented employees,” said Cathy Scott, head of District Council 47.
Zack Stalberg, head of the good government group The Committee of 70, urged council members not to compromise on DROP.
“This council can honor the public’s outrage over DROP, it can take the responsible fiscal step and it can fight the unions that threaten to go to court over even a less-costly DROP program,” Stalberg said.
City resident Aaron Proctor also testified in favor of ending DROP.
“I just feel this is the wrong thing for Philadelphia,” Proctor said. “I think we are running out of money. I’m tired of paying a higher sales tax, I’m tired of paying a higher property tax .I’m tired of being penalized because I am not a taker and I think the program should be eliminated.”
Nutter is upset about council’s decision.
“The DROP program needs to end. It needs to go away,” he said. “It needs to die a very quick death, immediately.”
But Nutter has not said if he would veto the plan.