Richmond's battle of the budgets has claimed a first casualty: a 1.5 percent cost-of-living adjustment for retirees' pensions.

In a note sent at 4:58 p.m. the evening before the three-day Fourth of July holiday, Richmond Chief Financial Officer Harry E. Black told Richmond Retirement System officials that he would not write a check to pay for the increase.

That means any cost-of-living adjustment is on hold indefinitely, retirement system Executive Director Philip R. Langham said yesterday. The city's chief financial officer must make disbursements for the system, or it cannot pay the increase.

Press secretary Linwood Norman said Mayor L. Douglas Wilder does not plan to pay a cost-of-living increase this year.

Langham said the retirement system is seeking advice from outside counsel on what do next.

The contested increase for 3,857 retirees, spouses of deceased city employees, and disabled former city employees is caught in the budget dispute between Wilder, who is Black's boss, and the City Council.

The council enacted a budget that, among other things, calls for the 1.5 percent increase for retirees, but Wilder has said the budget is not valid because the council missed a critical deadline.

"The mayor will be sending amendments to cut city spending by $6 million to uphold the reduced $1.20 tax rate," said Chief Administrative Officer Sheila Hill-Christian, referring to the rate cut that the council passed over Wilder's objection. "That $6 million, representing the cut in the tax rate, could have been used for other services and necessities, among them a cost-of-living allowance."

Wilder wanted to keep the rate at $1.23 per $100 of assessed value.

Council members say they were able to balance a budget with the reduced tax rate and the cost-of-living adjustment. They and the city attorney say Wilder is incorrect when he argues that their budget is invalid.

Last year, the council and the mayor agreed on a 0.79 percent cost-of-living adjustment for retirees.

That was their first adjustment since a 1.9 percent increase on July 1, 2004. Since 2004, the Consumer Price Index -- the benchmark measure of inflation -- has increased more than 14 percent, according to U.S. Bureau of Labor Statistics data.

Councilman Douglas G. Conner Jr., who often backs Wilder in council debates, said he was disappointed that the administration hasn't provided for a cost-of-living increase for retirees.

"It's going to be really unpopular, and I think it's the wrong thing to do," he said.

Council President William J. Pantele said the council is considering its legal options.

"This is the fourth year in a row we've had threats of lawsuits or budget shenanigans," said Pantele, who is running for mayor. "I think people are tired of this."

Del. Dwight Clinton Jones, D-Richmond, who is running for mayor, called the decision not to pay a cost-of-living adjustment "startlingly bad policy. . . . These retirees are relying on this cost-of-living increase to help them live day to day. And to deny them this increase to the FY09 budget, all because of petty arguing between the mayor and City Council, is wrong."

Mayoral candidate Robert C. Grey Jr. said he wants to see if the mayor and the council could resolve the issue.

Mayoral candidate Lawrence E. Williams Sr. did not return calls seeking comment.

Mayoral candidate Paul Goldman said the standoff shows a need for basic change at City Hall.

"Retirees were promised a [cost-of-living increase] by City Council, and they are entitled to it, and it is caught up in a political tug of war," he said. "People are being hurt while politicians play with people's lives."
Contact David Ress at (804) 649-6051 or dress@timesdispatch.com.

Staff writer Michael Martz contributed to this report.