Opinion: 4 Reasons to Vote Yes on Pension Referendum

[Tacachale]

Honestly, I think if this sales tax increase happened right away I would probably be more on board with it. There are benefits to it, like having tourists dollars contributing, and being dedicated specifically to the pension, but kicking the can down the road for 15 years is not an option any more, not to mention it costs way more in the long run.

I concur. I am not opposed to it because it is Curry's plan or because it involves Sales Taxes. I am opposed for the reasons you stated very clearly.

Why not impose a 1/4 cent sales tax NOW.  What would be the overall difference by over the 50-60 years we are talking about?

The mayor's argument is that it wouldn't have gotten through the legislature or governor's office. I doubt it would get through a referendum either. At any rate, it certainly won't get through if this proposal fails. This is the best available option for using the sales tax to help the pension crisis.

[vicupstate]

^^ Is it that the money is being spent n a Pension instead of capital projects that made a change in state law necessary?   

[Tacachale]

^^ Is it that the money is being spent n a Pension instead of capital projects that made a change in state law necessary?   

Yes, for the most part. It also specifies how the tax can be implemented, including talking about the BJP portion having to terminate first. The fact that the bill specifically includes that condition (rather than it just being the county's choice) suggests it wouldn't have passed without it.

[Chris Hand]

Except that I disagree that the citizens are taking it on the chin. They are paying for the services of one of the largest public safety operations in the country, services that they rely on every single day.

The best answer so far has been Alvin Brown's. An annual payout by JEA, after years of underpaying the city for the franchise, and a millage increase.

I had reservations about that plan because it capped the amount of money that the JEA contributes to the city.

The city has the right to 20% of the profits from the Utility.  For years they have been paying less that 5%.

Alvin's plan raised their contribution slightly, and paid off the plan fairly speedily.

The problem is that whatever profits the city doesn't take is doled out to the bondholders. That group includes several donor families represented by the old regime/curry administration.

This kick the can down the road measure doesn't pay the obligation fully but it add 1.5 billion dollars to the obligation.  All to spare a few families cuts to their bond dividends.

And it comes at the cost of tying up money that is supposed to be used for big building projects for the next 45 years.

And for what?  So that this miserable mayor can point to a fake 'success' in order to run for governor to replace the jackass he helped to get elected?

In my view its basically a way of getting the taxpayers of duval county to help pay for his political career.

And Im not for it.

Thanks for giving an alternative, Stephen. Was genuinely curious about what other options there are. Why hasn't the city taken its 20% of the JEA profit? That seems ludicrous.

As far as 'taking it on the chin' I meant that sometimes you gotta pay taxes to fix problems. But you're right - you have to pay for what services you expect. This is part of that, right?

I (and many others) never thought the plans to tie pension reform to JEA money were realistic, or necessarily beneficial. As Stephen said, the first one involved JEA paying a big lump sum in exchange for lowering the annual contribution to the city in later years. Over the years, we'd have lost a lot more money from JEA than what they contributed. The second plan I didn't fully get, but I'm skeptical it could, or at least would be done without a rate increase, at which point, why not just use taxes? At the end of the day, the city spent 4 years on these plans, but couldn't pull them off. After spending all that time and resources, we have little to show for it, and meanwhile our debts have kept growing at unsustainable rates. If there's going to be reform at JEA, it would be better to do it separately from pension reform; the pension needs new revenue a lot sooner than we'll get sufficient money out of those other plans.

Not to continue the pattern of Tacachale posting about recent pension history and me posting to set the record straight and correct numerous misstatements, but I feel that I must. Tacachale is a thoughtful poster who I respect, and a good sport about my counterpoints, so I don't think he will mind.

Mayor Brown endorsed two pension debt repayment plans involving JEA.

First, he sought to partner with JEA, which happens to be a City-owned asset with $2 billion in annual revenues. His first plan asked JEA to contribute an additional $40 million per year to the City for 10 years, in exchange for JEA receiving some significant cost-saving measures such as control over their own pension plan.  Despite what Tacachale says above, this initiative did not involve any decrease in the annual JEA contribution. While some criticized that proposal at the time, it was later vindicated by a study released by highly regarded public finance consulting firm MAEVA: http://jacksonville.com/news/2015-10-05/story/new-study-says-jea-could-improve-its-bottom-line-and-save-millions-each-year.

Second, Mayor Brown supported a plan was designed by two Republicans -- one of the best financial minds in Jacksonville (former CEO and long-time community leader Charlie Appleby) and one of the most experienced public servants in Jacksonville's recent history (former Council President Matt Carlucci, who served as both a district and at-large Council member). It involved JEA partnering with the COJ to make an significant up-front payment aimed at reducing the unfunded liability immediately. In exchange, the City would work with the JEA on the above-mentioned JEA pension issues and to address some of the utility's concerns about its annual contribution levels. Contrary to Tacachale's statement above, JEA certified that the partnership would have no impact on utility rates.

Now that we have exploded those myths, let me turn to the biggest piece of fiction in Tacachale's post -- the ideas that "At the end of the day, the city spent 4 years on these plans, but couldn't pull them off. After spending all that time and resources, we have little to show for it, and meanwhile our debts have kept growing at unsustainable rates."

On June 19, 2015, Mayor Brown signed into law a comprehensive pension reform agreement with the Jacksonville Police and Fire Pension Fund (PFPF). You can read all about it here: http://www.coj.net/welcome/news/mayor,-pension-board-accomplish-historic-reform.aspx and http://jacksonville.com/news/crime/2015-06-19/story/major-jacksonville-pension-reform-bill-gets-green-light.

The pact significantly modified benefits for both current and new public employees to make them financially sustainable and lowered the City's cost for new employee pension benefits to about 10% of pay. That's roughly the same as what private employers pay when they make their 6.25% Social Security contribution and provide a 401(k) match. In other words, the agreement brought the City's cost of pension benefits under control.

The agreement also enhanced accountability and transparency at the PFPF through stringent governance reforms. This step was critically important for preventing the COJ from ever again finding itself in this kind of pension situation. Finally, the agreement established a structure for both the City of Jacksonville and the PFPF to jointly contribute additional pension payments each year through FY2028 to bring the unfunded liability under control.

While we did not reach closure on a COJ funding source, the idea that the city has "little to show" from our administration's work on pension reform is just flat wrong.

[Elwood]

All city employees, including those in the GEPP, have no social security benefits. JSO is far from alone in that matter.  JSO and JFRD also contribute far less to their pension than other city employees. Just doing a little "fact" correcting.

[Chris Hand]

All city employees, including those in the GEPP, have no social security benefits. JSO is far from alone in that matter.  JSO and JFRD also contribute far less to their pension than other city employees. Just doing a little "fact" correcting.

So what are you correcting?

You seem to be agreeing that cops decided to forego Social Security benefits.

?

When the comprehensive reform agreement took effect on June 19, 2015 (see http://www.coj.net/welcome/news/mayor,-pension-board-accomplish-historic-reform.aspx and http://jacksonville.com/news/crime/2015-06-19/story/major-jacksonville-pension-reform-bill-gets-green-light), current police and fire employees saw an immediate increase in their pension contributions from 7% to 8% of pay. Under the agreement, those contributions will increase to 10% of pay when the City restores the 2% pay cut that firefighters took in 2010 and equivalent pay cut that police employees took in 2012. New police or fire employees hired after June 19, 2015 contribute 10% of pay.

If memory serves, general employees contribute 8% of pay toward their pensions. The City reached tentative agreements with two of the general employees unions in 2013 to raise that contribution amount for both new and current employees, but City Council did not take up those agreements out of a desire to address the police and fire pension issues first.

[tufsu1]

Honestly, I think if this sales tax increase happened right away I would probably be more on board with it. There are benefits to it, like having tourists dollars contributing, and being dedicated specifically to the pension, but kicking the can down the road for 15 years is not an option any more, not to mention it costs way more in the long run.

EXACTLY!!!

[Chris Hand]

In other words, the agreement brought the City's cost of pension benefits under control.

These are defined benefit plans so the "City's costs "(TAX PAYER COSTS) are not "under control". It is the complete opposite.

Agreed that these are taxpayer costs. But Defined Contribution (DC) plans may not be the solution your envision. We ran detailed actuarial studies on the possibility of shifting police and fire employees to a DC plan. Those analyses showed that DC plans would actually cost taxpayers more money than modifying the Defined Benefit (DB) plan to make it financially sustainable.

Moreover, putting police and fire employees in DC plan could put the City of Jacksonville at a competitive disadvantage. No major city in Florida has its police and fire employees in a DC plan. The Florida Retirement System (which provides pension benefits for public safety employees in nearly every FL county but ours) provides a DB plan.  Former Sheriff John Rutherford and Fire Chief Marty Senterfitt both told the Jacksonville Retirement Reform Task Force that moving to a DC plan would hurt recruitment and retention.

[KenFSU]

Really interesting, enlightening discussion on both sides of the vote.

Thanks guys.

TU/UNF poll has the city leaning very, very slightly (just over 50%) toward a yes, 38% no, 12% undecided.

[Tacachale]

Except that I disagree that the citizens are taking it on the chin. They are paying for the services of one of the largest public safety operations in the country, services that they rely on every single day.

The best answer so far has been Alvin Brown's. An annual payout by JEA, after years of underpaying the city for the franchise, and a millage increase.

I had reservations about that plan because it capped the amount of money that the JEA contributes to the city.

The city has the right to 20% of the profits from the Utility.  For years they have been paying less that 5%.

Alvin's plan raised their contribution slightly, and paid off the plan fairly speedily.

The problem is that whatever profits the city doesn't take is doled out to the bondholders. That group includes several donor families represented by the old regime/curry administration.

This kick the can down the road measure doesn't pay the obligation fully but it add 1.5 billion dollars to the obligation.  All to spare a few families cuts to their bond dividends.

And it comes at the cost of tying up money that is supposed to be used for big building projects for the next 45 years.

And for what?  So that this miserable mayor can point to a fake 'success' in order to run for governor to replace the jackass he helped to get elected?

In my view its basically a way of getting the taxpayers of duval county to help pay for his political career.

And Im not for it.

Thanks for giving an alternative, Stephen. Was genuinely curious about what other options there are. Why hasn't the city taken its 20% of the JEA profit? That seems ludicrous.

As far as 'taking it on the chin' I meant that sometimes you gotta pay taxes to fix problems. But you're right - you have to pay for what services you expect. This is part of that, right?

I (and many others) never thought the plans to tie pension reform to JEA money were realistic, or necessarily beneficial. As Stephen said, the first one involved JEA paying a big lump sum in exchange for lowering the annual contribution to the city in later years. Over the years, we'd have lost a lot more money from JEA than what they contributed. The second plan I didn't fully get, but I'm skeptical it could, or at least would be done without a rate increase, at which point, why not just use taxes? At the end of the day, the city spent 4 years on these plans, but couldn't pull them off. After spending all that time and resources, we have little to show for it, and meanwhile our debts have kept growing at unsustainable rates. If there's going to be reform at JEA, it would be better to do it separately from pension reform; the pension needs new revenue a lot sooner than we'll get sufficient money out of those other plans.

Not to continue the pattern of Tacachale posting about recent pension history and me posting to set the record straight and correct numerous misstatements, but I feel that I must. Tacachale is a thoughtful poster who I respect, and a good sport about my counterpoints, so I don't think he will mind.

Mayor Brown endorsed two pension debt repayment plans involving JEA.

First, he sought to partner with JEA, which happens to be a City-owned asset with $2 billion in annual revenues. His first plan asked JEA to contribute an additional $40 million per year to the City for 10 years, in exchange for JEA receiving some significant cost-saving measures such as control over their own pension plan.  Despite what Tacachale says above, this initiative did not involve any decrease in the annual JEA contribution. While some criticized that proposal at the time, it was later vindicated by a study released by highly regarded public finance consulting firm MAEVA: http://jacksonville.com/news/2015-10-05/story/new-study-says-jea-could-improve-its-bottom-line-and-save-millions-each-year.

Second, Mayor Brown supported a plan was designed by two Republicans -- one of the best financial minds in Jacksonville (former CEO and long-time community leader Charlie Appleby) and one of the most experienced public servants in Jacksonville's recent history (former Council President Matt Carlucci, who served as both a district and at-large Council member). It involved JEA partnering with the COJ to make an significant up-front payment aimed at reducing the unfunded liability immediately. In exchange, the City would work with the JEA on the above-mentioned JEA pension issues and to address some of the utility's concerns about its annual contribution levels. Contrary to Tacachale's statement above, JEA certified that the partnership would have no impact on utility rates.

Now that we have exploded those myths, let me turn to the biggest piece of fiction in Tacachale's post -- the ideas that "At the end of the day, the city spent 4 years on these plans, but couldn't pull them off. After spending all that time and resources, we have little to show for it, and meanwhile our debts have kept growing at unsustainable rates."

On June 19, 2015, Mayor Brown signed into law a comprehensive pension reform agreement with the Jacksonville Police and Fire Pension Fund (PFPF). You can read all about it here: http://www.coj.net/welcome/news/mayor,-pension-board-accomplish-historic-reform.aspx and http://jacksonville.com/news/crime/2015-06-19/story/major-jacksonville-pension-reform-bill-gets-green-light.

The pact significantly modified benefits for both current and new public employees to make them financially sustainable and lowered the City's cost for new employee pension benefits to about 10% of pay. That's roughly the same as what private employers pay when they make their 6.25% Social Security contribution and provide a 401(k) match. In other words, the agreement brought the City's cost of pension benefits under control.

The agreement also enhanced accountability and transparency at the PFPF through stringent governance reforms. This step was critically important for preventing the COJ from ever again finding itself in this kind of pension situation. Finally, the agreement established a structure for both the City of Jacksonville and the PFPF to jointly contribute additional pension payments each year through FY2028 to bring the unfunded liability under control.

While we did not reach closure on a COJ funding source, the idea that the city has "little to show" from our administration's work on pension reform is just flat wrong.

Off topic, but as before, I disagree. The fact is that the city didn't hammer out a non-tax funding source despite spending another 4 years on pension reform. And now, they've moved away from the prospect to a plan using tax revenue.

In other words, the agreement brought the City's cost of pension benefits under control.

These are defined benefit plans so the "City's costs "(TAX PAYER COSTS) are not "under control". It is the complete opposite.

Agreed that these are taxpayer costs. But Defined Contribution (DC) plans may not be the solution your envision. We ran detailed actuarial studies on the possibility of shifting police and fire employees to a DC plan. Those analyses showed that DC plans would actually cost taxpayers more money than modifying the Defined Benefit (DB) plan to make it financially sustainable.

Moreover, putting police and fire employees in DC plan could put the City of Jacksonville at a competitive disadvantage. No major city in Florida has its police and fire employees in a DC plan. The Florida Retirement System (which provides pension benefits for public safety employees in nearly every FL county but ours) provides a DB plan.  Former Sheriff John Rutherford and Fire Chief Marty Senterfitt both told the Jacksonville Retirement Reform Task Force that moving to a DC plan would hurt recruitment and retention.

On this, I agree. There's a myth that police and fires are getting disproportionately "rich" pensions. This isn't true compared to other large counties, and besides, good benefits are important in recruiting and keeping good employees. Beyond that, there's just no way to remove current employees' benefits that could be done in a short enough time frame to provide budget relief anytime soon, even if it were a good idea. That dog won't hunt.

[Jimmy]

This was a very well-written piece, Tacachale.  I appreciate your thoughtful insight.

[Noone]

All city employees, including those in the GEPP, have no social security benefits. JSO is far from alone in that matter.  JSO and JFRD also contribute far less to their pension than other city employees. Just doing a little "fact" correcting.

All city employees 2005-1007? So who gets the legislative credit for that?

[KenFSU]

The pension plan passed by a large margin, per the TU.

[coredumped]

Tell my unborn children's children that I tried...

[tufsu1]

^ I sure hope Mayor Curry doesn't get weak here, and truly gets all 3 existing pension plans closed to new employees.