Pension fix only issue on Mayor Lenny Curry's agenda

[TheCat]

It never ceases to amaze me as to how un-fiscally conservative republicans are. At the end of the day, the repubs in this city will pass this plan.

[Non-RedNeck Westsider]

It never ceases to amaze me as to how un-fiscally conservative republicans are. At the end of the day, the repubs in this city will pass this plan.

Well Cat, on the surface, it's not a horrible plan.  Use some nifty accounting to immediately reduce our contributions until the taxes kick in which frees up budget money now.

The problem as I see it is that if they fail to negotiate a restructuring of the pension plan, then where have we gotten?

So IMO, until we have a new pension plan that's been vetted and approved, we have nothing.

[Tacachale]

I'm not a particularly "smart poster", but I'm voting for this plan for the reasons I've stated a number of times here. I'll write up an editorial later in the summer if you like.

The main points:

*It creates dedicated funding for the retirement fund that can't be changed by future officials. Raising property taxes can't be dedicated to a specific use, and the rate can just be cut later anyway.
*It's comparatively painless. People won't see an increase, they'll just continue paying the same amount of sales tax they're paying now. A property tax hike would need to be 3 mills, about a 30% increase, a much more onerous burden.
*Despite what some are fearing (and claimed a bit in the last article) the new tax plan does involve cutting expenses. Future employees will be shifted to a 401k plan and current employees will contribute 10% to the plan. Plus the city will negotiate with the pension board every 3 years.
*No one has presented a better plan. Since Mayor Peyton's pension plan was scrapped in 2011, there have been no (viable) alternatives until now, and we've been bleeding for another five years. A property tax increase would have most of these same problems, and a lot of other ones.

[Non-RedNeck Westsider]

*Despite what some are fearing (and claimed a bit in the last article) the new tax plan does involve cutting expenses. Future employees will be shifted to a 401k plan and current employees will contribute 10% to the plan. Plus the city will negotiate with the pension board every 3 years.

You're smart enough. 

What I've quoted above has been my main point of contention.  Is this plan in place, ready to go?  Or is this one of those 'this is our plan after the referendum passes' plans?

If it's in place and ready to go, then why aren't they pushing those cost saving numbers harder rather than focusing on a tax (which I agree with you completely will be painless) that they need to pass? 

[Tacachale]

*Despite what some are fearing (and claimed a bit in the last article) the new tax plan does involve cutting expenses. Future employees will be shifted to a 401k plan and current employees will contribute 10% to the plan. Plus the city will negotiate with the pension board every 3 years.

You're smart enough. 

What I've quoted above has been my main point of contention.  Is this plan in place, ready to go?  Or is this one of those 'this is our plan after the referendum passes' plans?

If it's in place and ready to go, then why aren't they pushing those cost saving numbers harder rather than focusing on a tax (which I agree with you completely will be painless) that they need to pass? 

Well, it's collective bargaining, so there won't be anything set in stone until negotiating with the union. But the collective bargaining itself is part of the deal, and that's what the city will demand from their end.

I imagine they will push for similar cuts regardless of the outcome of the referendum (though it will be a lot harder for the union to swallow). But it won't do enough to reduce our obligation on its own, especially not for several years.

[Non-RedNeck Westsider]

*Despite what some are fearing (and claimed a bit in the last article) the new tax plan does involve cutting expenses. Future employees will be shifted to a 401k plan and current employees will contribute 10% to the plan. Plus the city will negotiate with the pension board every 3 years.

You're smart enough. 

What I've quoted above has been my main point of contention.  Is this plan in place, ready to go?  Or is this one of those 'this is our plan after the referendum passes' plans?

If it's in place and ready to go, then why aren't they pushing those cost saving numbers harder rather than focusing on a tax (which I agree with you completely will be painless) that they need to pass? 

Well, it's collective bargaining, so there won't be anything set in stone until negotiating with the union. But the collective bargaining itself is part of the deal, and that's what the city will demand from their end.

I imagine they will push for similar cuts regardless of the outcome of the referendum (though it will be a lot harder for the union to swallow). But it won't do enough to reduce our obligation on its own, especially not for several years.

I'm aware of that.  And let's say the referendum passes.  What leverage does the city hold when negotiating?   A gentleman's agreement?  If you secure the money, we'll work with you on the terms.  By us the taxpayers approving the tax through referendum, we've all but guaranteed that the pensions will be funded for many years to come.  The city wouldn't even be able to use a threat of bankruptcy (most extreme measure) to bring the union to better terms.   

That's why I believe the restructuring of the pension plan, the collective bargaining, needs to happen first.  At least have the general terms agreed upon in principle with opt out clauses on both sides.

[brainstormer]

Without a snarky, political response, can someone recap the pension progress that was made under Mayor Brown? Wasn't there progress made regarding contributions to the pension by some of the bargaining units?

[TheCat]

I'm not a particularly "smart poster", but I'm voting for this plan for the reasons I've stated a number of times here. I'll write up an editorial later in the summer if you like.

The main points:

*It creates dedicated funding for the retirement fund that can't be changed by future officials. Raising property taxes can't be dedicated to a specific use, and the rate can just be cut later anyway.
*It's comparatively painless. People won't see an increase, they'll just continue paying the same amount of sales tax they're paying now. A property tax hike would need to be 3 mills, about a 30% increase, a much more onerous burden.
*Despite what some are fearing (and claimed a bit in the last article) the new tax plan does involve cutting expenses. Future employees will be shifted to a 401k plan and current employees will contribute 10% to the plan. Plus the city will negotiate with the pension board every 3 years.
*No one has presented a better plan. Since Mayor Peyton's pension plan was scrapped in 2011, there have been no (viable) alternatives until now, and we've been bleeding for another five years. A property tax increase would have most of these same problems, and a lot of other ones.

How about for a better plan we pay the obligation and renegotiate the "illegal" 30-year agreement that was made 15 years ago. This way in 15 years we are no longer in a predicament. I'd like to suggest that this is the best plan on the table.

Also, it seems like the weird accounting trick is not going to be in play. The trick where we somehow free up our current obligation based on a tax that is 15 years away. So, if that is not going to happen, I'm not sure how the tax is supposed to free up our obligation for the next 15 years.

Taca, do you know how much additional revenue the 3 mill increase would bring into the city? If you have a link that would be very helpful?

[TheCat]

Ron Littlepage's Op-ed:

A recent poll of Duval County residents found that perhaps as many as 40 percent are undecided about Mayor Lenny Curry's proposal to pay down pension debt with a new half-cent sales tax to be collected far in the future.Count me in that group. After listening to Curry make his pitch to the Times-Union editorial board for a little more than an hour Monday morning, several concerns came to mind.

When the plan was first talked about, mouth-watering numbers were used.The city's public employee pension plans carry a staggering unfunded liability of $2.87 billion. During the current budget year, $260 million of the general fund went to the pension plans; $185 million of that was because of the debt. Curry's proposal, which got the required approval of the Legislature and Gov. Rick Scott, would create a new half-cent sales tax that would go into effect when the Better Jacksonville Plan sales tax ends in 2030.

What stirred the original excitement was the suggestion that doing that could free up to $100 million in annual budgets going forward although it was never made clear how collecting a tax 12 years later would help present-day budgets. That message has changed, however, and Curry and his team are very disciplined in what they are saying now.


Curry told the editorial board that the sales tax proposal isn't about budget relief; it's only about solving the debt.
There might be some budget relief by finding a way to lower the annual required contribution to the pension plans, Curry said, but he added the city "could let it ride" until the sales tax is collected in 2031.

That would be unacceptable with the annual contribution slated to rise to $280 million in the next budget year and as high as $433 million in future years. That's general fund money that won't be available to pay for other city needs from infrastructure to public safety to other quality-of-life improvements. And that's what made the idea of $100 million in annual budget savings early on so attractive. We can't continue to muddle along for a dozen more years.

To move people out of the undecided to the supportive camp will require a better explanation. Curry correctly asserts that by law, the money collected from the new sales tax could only be used to pay down the pension debt. Once that is done, Curry says, Jacksonville will never face this problem again. That's another area of concern.

To get the sales tax money, a current pension plan would have to be closed, and new employees would have to go into a new plan that would be negotiated with the respective union. Take the Police and Fire Pension Plan as an example. If that plan is closed, new employees would go into a new plan that could be a defined contribution plan or a new defined benefit plan. If the latter is chosen, who's to say a future mayor and City Council couldn't add new lucrative benefits during negotiations with police and fire unions like the 3 percent COLA and the guaranteed 8 percent return on DROP money that played a large part in getting us into the mess we are in today?

Defined benefit plans for public employees aren't popular with those who saw such plans in the private sector go by the wayside, and the possibility of continuing them could be a hurdle to overcome with some voters.

If Curry's plan is approved, the sales tax could be collected for up to 30 years, but Curry and his team are now projecting pensions will be fully funded by 2045, which would end the tax.

That's worth a word of caution. When voters approved the Better Jacksonville Plan in 2000, they were told the sales tax would likely end early, perhaps by as much as 10 or 15 years.

Then came the recession, and it's going to take at least 29 of the full 30 years to pay off the BJP debt.
Curry promises to work hard to persuade voters to approve his plan when they go to the polls on Aug. 30.
He expects the "Yes for Jacksonville" campaign will have private donations in "the seven figures" to fund television ads, mailers, town hall meetings, etc.

His main message will be that Jacksonville is facing a pension debt crisis and that his plan will solve it.
Some of us will need more details.

http://jacksonville.com/opinion/ron-littlepage/2016-05-10/story/ron-littlepage-mayors-pension-plan-still-lacks-details

[Non-RedNeck Westsider]

Also, it seems like the weird accounting trick is not going to be in play. The trick where we somehow free up our current obligation based on a tax that is 15 years away. So, if that is not going to happen, I'm not sure how the tax is supposed to free up our obligation for the next 15 years.

I thought the same thing about a week ago, but through some reading and discussion this is how it's presented in the nutshell version:

The reduction in our obligation payments today are based on future increase of payments via the tax down the road using whatever actuarial formula they use.

So essentially another formula will be used and the assumed revenue generated from the tax can be listed as an asset now to offset and reduce our current payments.

[TheCat]

Curry was on Melissa Ross this morning. He says the city's annual payment is actually up to $260,000,000 and it will continue to increase, rising to $300,000,000 within a few years (presumably this is the 30% figure Cat was talking about). Additionally, Curry expects the pension to be fully funded by 2060 under his plan, as it will also include collective bargaining that would require current employees to contribute 10% to their plans, with future employees being shifted to a 401k plan. In the future, the city and pension board will meet to negotiate every 3 years (which we probably should have been doing all along), so it shouldn't be as difficult to keep things at the market rate in the future.

He also talked about some of the other proposed options to help deal with the crisis. He says that trying for a sales tax that takes effect now (on top of the BJP tax) would never get through the legislature. He also said that he opposes a millage rate increase - it would take a 3 mill increase all at once (around a 30% hike) and there would be no way to tie it specifically to the pension. More than likely, the money would be re-appropriated by a future mayor, or the rate would be cut again. And certainly if it were put to a vote it would never pass.

I think what he's going to need to sell people on is what he'll do with the savings. We would have tens of millions more in the budget every year that's not just going to pay down debt c. He talked this morning (and before) about dedicating part of it for police and crime prevention. That's likely be one of the more impactful things we could put it toward, but it doesn't have the power of building something new.

Is there an actuarial study that extends through the life of the tax, 2060?

Why does the report on the below link stop conveniently at 2045 as the payments start to balloon?

https://www.scribd.com/doc/299766293/Mayor-Curry-pension-plan-actuarial-report

[The_Choose_1]

Corporations for years have not paid Pensions to their Employees. Why can't the City Of Jacksonville Florida tell the JSO & JFRD. Sorry but there is no way we can get out of this hole that past, Mayor's, City Council Members and residents of Jacksonville Florida have put us in. So at this time pensions will be up to the Employee and not part of the City. Take it or leave it.

[Charles Hunter]

Because that would generate costly lawsuits that the City would lose.  Not having a pension plan for new hires is part of the plan. But taking away contractual benefits gets legal action. And, probably more importantly to the Council and Mayor, the unions would support anyone who run against the incumbents.

[The_Choose_1]

Because that would generate costly lawsuits that the City would lose.  Not having a pension plan for new hires is part of the plan. But taking away contractual benefits gets legal action. And, probably more importantly to the Council and Mayor, the unions would support anyone who run against the incumbents.

So around we go into the rabbit hole. 

[tufsu1]

So the City's fireworks downtown tonight were nothing short of embarrassing. While there's clearly not much of a relationship between Toney Sleiman and Mayor Curry, shooting the fireworks solely off the Acosta Bridge meant most of the people in the Landing Courtyard saw very little.  Even worse, the fireworks messed with the flight pattern of the thousands of bats that come out around the TUPAC every night.  Many were disoriented and crashed into windows and people at the Landing.

I'm sure this is all part of the Mayor's plan to get folks to vote for his pension plan, but it may have backfired.  People left VERY disappointed!