County Pension Bond Sale Saves Additional $83M
The proceeds of the sale will be used for the county employee's pension plan.
County officials say a better than expected bond sale to be used for the pension system will save county taxpayers $83 million more than originally estimated.
The county sold $256 million in bonds at an interest rate of about 3.43 percent—nearly a full percentage point lower than expected. The better than expected result means the county will pay $416 million in principal and interest over the next 30 years instead of nearly $500 million.
The County Council approved the bond sale in October.
The borrowed money is needed because the board of the Baltimore County Employees Retirement System voted to reduce its expected rate of return on investments. That change, made in July, would result in an additional $15 million payment from the county next year.
Without the bond sale, county officials estimated it would have to contribute $4.8 billion to the retirement system. Now, with the bond sale, the county will reduce that contribution to $4.1 billion over the same time period.
The overall savings to taxpayers, after principal and interest payments is $343 million.
County estimates on saving are predicated on earning more on its investments than interest on the borrowed money. If those assumptions are wrong, the county could lose money and taxpayers could end up footing the bill.
"When we can protect employees and save taxpayers $343 million, it's been a very good day," said County Executive Kevin Kamenetz, in a statement.