The Missouri Court of Appeals heard arguments today over whether or not the city of St. Louis' new pension plan for firefighters will hold. Officials say the plan will save St. Louis almost $4 million a year. The union representing the firefighters doesn't dispute the cost savings, but says the city had no right to pass the plan in the first place.
Today's court hearing was more than two years in the making. It turned into a legal as well as political battle that caused Lewis Reed to enter the race for mayor and probably contributed to Mayor Francis Slay's closest Democratic primary election since 2005.
Slay was in the courtroom for today's oral arguments, underscoring how important he believes the changes are to the financial health of the city. But the city's fiscal well-being is not something the three judges — Roy Richter, Clifford Ahrens and Glenn Norton — will consider.
The case starts off with one basic question — was it legally OK for the city in 2012 to end the old retirement system for firefighters and create a new one?
The argument is kind of like the kid's game"Mother, May I," where you have to ask permission to take big steps forward, or jumps forward, while trying to get to the other side of the room. If you forget to say "Mother, May I," players not allowed to do what they want want. St. Louis firefighters say the city keeps forgetting to ask permission, while city officials say they don't need to.
The city of St. Louis and the firefighters who sued are at odds over what, exactly, the city did when it passed the legislation establishing the new pension system. The city argues that it merely repealed the old system, which it always had the right to do.
The firefighters disagree, saying that because the old system is still paying out benefits, the 2012 changes were amendments, which definitely need approval from state lawmakers. Attorney Dan Tobben observed in court today that the city essentially admitted that in their own briefs. Tobben, who represents the firefighters, also argued that even a repeal isn't allowed without the General Assembly's permission.
If the court agrees with the firefighters and decides that the city couldn't legally pass the 2012 changes, then the case stops there. However, it's not entirely clear what the pension system would look like if that happened because the changes took effect in February 2013.
If the appeals panel agrees with two earlier rulings that the city does have the authority to change its pension system without permission from state lawmakers, then the judges could consider whether the state constitution (rather than state law) limits the power of city lawmakers to amend the pension system.
If they choose to, judges Richter, Ahrens and Norton could also rule on how broad the state's constitutional protections are for pension benefits.
The firefighters are arguing that the state's contracts clause protects not only benefits that a person has already earned, but also benefits they have yet to earn. The 2012 law changed the rules for those who had yet to work long enough to be eligible to draw a pension. (The vesting period is 20 years of service for city firefighters, although their monthly check is smaller if they start drawing a pension that early.) They also argue that the changes are an unconstitutional reduction in benefits because firefighters now have to contribute more of their paycheck to their pensions; won't get any of their contributions back when they retire; and have to work longer to earn a full pension.
The city disagrees. In its brief, it says state law and court precedent limit protection only to those benefits that have already been earned unless the law creating the pension system says otherwise:
" ... There can be no serious dispute that if City lawmakers intended to create permanent, unalterable contract rights to future pension benefits accruals, they would have said so, and not instead have reserve the right to amend or repeal the legislation." (Emphasis in original brief)
"We took nothing away," said Amanda Hettinger, an attorney at Thompson Coburn who was hired to argue the case for the city. "We just exercised our right to repeal the the system, which we always retained."
A ruling on the case will likely take a few months. Both sides expect whoever loses to ask the state Supreme Court to hear the case.
Read the city's brief.
Follow Rachel Lippmann on Twitter: @rlippmann