Opinion: 7.5 Reasons to VOTE NO on Referendum 1

[Metro Jacksonville]

Opinion: 7.5 Reasons to VOTE NO on Referendum 1





Read More: http://www.metrojacksonville.com/article/2016-aug-opinion-75-reasons-to-vote-no-on-referendum-1

[Adam White]

Your first page has a link for a (source) with no link for a source. Can you fix that?

I'm a simple man - so I don't necessarily follow your argument. I'm not saying you're wrong - I'm saying I just don't understand it the way you've presented it. So I'll explain what it is that I don't get and maybe you can explain why there is a problem:

1) How does passing a 1/2 cent sales tax increase the City's debt by $1.5 billion? Is this because the tax won't take effect until 2030 and so the city will have to take a loan in the meantime? I think the missing source might've helped explain this one.

2) If the city knows the pension is underfunded by however much, what steps can be taken to pay this off without a) increasing the debt to the city and b) ensuring that the employees get the pensions they were promised, as they were promised?

[spuwho]

  http://www.jaxdailyrecord.com/showstory.php?Story_id=548214

UNF poll show "Yes" is leading but undecideds could still swing it.

[Tacachale]

This piece is mostly well done, good work, Arash. However, the last reason (or half a reason?), "Beaches Communities Will Pay...and Get Nothing" is misleading.

First, the Beaches are in Duval County, and receive county-level services from JSO,  Jacksonville Fire and Rescue Department, JTA and others. They'd certainly get the benefits of pension reform. In fact, Mayport and other nearby Beaches neighborhoods that aren't part of the incorporated towns are totally reliant on Jax police, fire and other services.

Second, because they're in Duval County, Beaches residents would also be affected by a property tax increase, or virtually any other solution imaginable. They're also currently being affected by the constrained budget.

Third, even if Beaches residents weren't receiving direct services, they, like St. Johns County, Clay, and Nassau residents and tourists, come into Jacksonville for work, shopping, etc. They use the infrastructure and services while there and certainly reap the benefit of us being able to keep up with it.

[Kay]

Arash:  Well done!

[Frustrated]

Many people are missing the most obvious objections.
1.  The Better Jacksonville Plan was sold by promising it would go away after 30 years.  We are only on year 15 and they already want to break that promise (as I knew they would 15 years ago).
2.  The Better Jacksonville Plan was sold as a way to get ahead of future traffic problems.  Remember that the next time it takes you over thirty minutes to get from Baymeadows to Emerson.
3.  The only people who benefited were the already overstuffed over paid lawyers sitting in that mausoleum we call a courthouse that they fought over for years.
4.  Don't even get me started on the new empty downtown library.  How much do taxpayers shell out to heat and cool that ridiculous entryway?
Politicians like Lenny, a supposed Republican (thought we were against tax hikes, and passing debt to our children) make lots of promises about what will happen, they did fifteen years ago. It is rarely what does happen.  Still waiting for my insurance costs to go down $2500 a year, but hey at least I can no longer AFFORD to go to the doctor.
Modify message

[TheCat]

Your first page has a link for a (source) with no link for a source. Can you fix that?

I'm a simple man - so I don't necessarily follow your argument. I'm not saying you're wrong - I'm saying I just don't understand it the way you've presented it. So I'll explain what it is that I don't get and maybe you can explain why there is a problem:

1) How does passing a 1/2 cent sales tax increase the City's debt by $1.5 billion? Is this because the tax won't take effect until 2030 and so the city will have to take a loan in the meantime? I think the missing source might've helped explain this one.

2) If the city knows the pension is underfunded by however much, what steps can be taken to pay this off without a) increasing the debt to the city and b) ensuring that the employees get the pensions they were promised, as they were promised?

1. My understanding is we're refinancing our current pension obligation in the style of a balloon mortgage payment, which is why the debt increases by $1.5 Billion. It's in the same vain as a homeowner deciding to refinance his/her 15 year mortgage into a 30 (or is it 45) year mortgage. This would mean the homeowner is on the hook for a larger amount of total debt and payments to the bank. Does that clarify?

We'll pay less on the front end but on the back end payments get larger and larger...approaching nearly $500 million.

2. Well, that's the $2.5 billion dollar question.

Obviously, city council and the mayor's office think we are able to handle the pension obligation over the next 15 years.

Curry's plan allows us to defer around $50 annually through 2030.

This means if we are supposed to pay $357 million in the year 2021 as it stands now, under Curry's plan we will pay $302 million. A difference of $55 million. That's the extent of break...around $50 to $60 million.

It's estimated that a one mill property tax increase will generate around $50 million each year. To me, this is the simplest solution. When we get to the year 2034 under the current plan everything changes. Our payments begin to drop with significance.

Under Curry's plan, this is when the shit begins to hit the fan. If we can't handle payments that are nearing $400 million now; how will we handle payments nearing $500 million, even with the half cent sales tax revenue.

[Adam White]

Your first page has a link for a (source) with no link for a source. Can you fix that?

I'm a simple man - so I don't necessarily follow your argument. I'm not saying you're wrong - I'm saying I just don't understand it the way you've presented it. So I'll explain what it is that I don't get and maybe you can explain why there is a problem:

1) How does passing a 1/2 cent sales tax increase the City's debt by $1.5 billion? Is this because the tax won't take effect until 2030 and so the city will have to take a loan in the meantime? I think the missing source might've helped explain this one.

2) If the city knows the pension is underfunded by however much, what steps can be taken to pay this off without a) increasing the debt to the city and b) ensuring that the employees get the pensions they were promised, as they were promised?

1. My understanding is we're refinancing our current pension obligation in the style of a balloon mortgage payment, which is why the debt increases by $1.5 Billion. It's in the same vain as a homeowner deciding to refinance his/her 15 year mortgage into a 30 (or is it 45) year mortgage. This would mean the homeowner is on the hook for a larger amount of total debt and payments to the bank. Does that clarify?

We'll pay less on the front end but on the back end payments get larger and larger...approaching nearly $500 million.

2. Well, that's the $2.5 billion dollar question.

Obviously, city council and the mayor's office think we are able to handle the pension obligation over the next 15 years.

Curry's plan allows us to defer around $50 annually through 2030.

This means if we are supposed to pay $357 million in the year 2021 as it stands now, under Curry's plan we will pay $302 million. A difference of $55 million. That's the extent of break...around $50 to $60 million.

It's estimated that a one mill property tax increase will generate around $50 million each year. To me, this is the simplest solution. When we get to the year 2034 under the current plan everything changes. Our payments begin to drop with significance.

Under Curry's plan, this is when the shit begins to hit the fan. If we can't handle payments that are nearing $400 million now; how will we handle payments nearing $500 million, even with the half cent sales tax revenue.

Thanks TheCat! That does clarify it a lot.

[Sunbeam]

not sure if this was mentioned but police and firefighters dont even have to begin "bargaining" for another 6 years.  think about it...when curry was driving to and from tallahassee with randy wise to push this deal what is it you think they talked about? giving up that guaranteed 3% COLA, maybe getting rid of the drop program with its guaranteed 7% return??? maybe their "shared sacrifice" of 10% isnt enough as that requires taxpayers to cover 90%?

Im pretty sure they had quite the conversations and I doubt getting rid of that very lucrative  pension was part of the discussion.

BTW look at the answers from weinstein from the may second finance meeting-NO answers there and hazouri accepts it?


WEINSTEIN: "CONFUSING PEOPLE AND HAVING THEM VOTE AGAINST IT"

9:30     MIKE WEINSTEIN:

Yes sir, through the chair, if the referendum is successful then we will restart, because we have stopped to a certain extent our negotiations with the six (6) union groups, we will restart our negotiations with the unions, and part of those negotiations will be the pension program discussion.

Um, if in fact they turn out to be successful, and we're able to get an agreement to close one, two, or three of the funds, then we would come back to Council, as we always do, to ratify the agreements with the unions, and the council would decide if those union agreements are acceptable – if one (1) of those, or three (3) of those, or two (2) of those do close then we could start and be – um – meet all the requirements for the revenue stream to start.  But nothing can happen until successful negotiations, and then a Council implementation ordinance would be introduced.  That's when the real discussion will be about how things will work and the reason why we don't discuss them now is they're all hypothetical and we're at least a year — and there is no deadline – if for some reason we can't get to negotiations and have them be successful there's no – in the Bill there's no requirement to be within a year, or two (2) or three (3).  So this would be an ongoing process to try to get all three funds closed, and then come back with implementing ordinances relating to each of the funds.

22:00   into the May 2nd Finance Committee meeting (transcribed – video on coj.net)

Weinstein:       ... There is no requirement to do anything other than wait for 2030 when the revenue starts to come.

Hazouri:           ... How do we generate dollars while we are waiting for the tax to be effective?

Weinstein:       I wish you weren't asking, because I don't know the answers to that, and it's not a requirement to do that.  I just think that you should hold off and wait for the referendum, it doesn't – the referendum doesn't lock in anything, it doesn't extend the tax by itself, nothing will happen after the referendum until other balls fall down, other steps are taken, but it's not a discussion we think we should get into because of the jeopardy of confusing people and having them vote against it because of a hypothetical that may or may not happen.  There'll be lots of public debate, there'll be a lot of council public meetings where we can discuss how to benefit from it, but, um, it'll be up to you as to how much you want to benefit if at all, and it won't be 16 years, or 14, it'll probably be closer to 12, as we get further and further down the line.  The pension next year is going up from 260 to 282.  We already know 22 million out of next years' revenue—extra revenue – is going toward the pension.  So it is a problem we are trying to solve, and the referendum will solve it, um, with the steps that have to follow.  But immediate relief for the mayors and the councils over the next 12, 13 years maybe, will be something to debate and discuss in the public for the next 12 or 13 years.  It's not going to be dictated now.

The reality of the situation is it's a two-step process, and we don't want to lose the first step because of conversations and controversy on the second step.  It will be just as public.

[strider]

So, just to clarify.  the referendum does nothing what so ever except allow for a possible use of future sales tax revenue if and when the unions agree to the requirements.  But a million plus is being spent, the ads for voting Yes use false narratives and Curry is going around saying this will save money and fix the issue without raising taxes.

If Mayor Curry was trying to be honest in any way, he would instead be saying: Pass this and maybe it will allow us to figure out a way to get the unions to agree to something that may or may not make things worse down the road, afterall, the unions will want something for helping us all out, but just may allow us to use future collected sales taxes to pay down the much larger debt. If we get really lucky we will free up 40 to 60 million in the budget for a few years and if you get even luckier, we'll use the money for something useful rather than just give it away for basically nothing to the people who helped me pass this maybe, if we are lucky, budget saving Pension Plan.

Isn't that the more accurate description of this so called Plan?

[DeathByPensions]

As one of those dreaded millennials who older generations tend to pass judgement on, I am terrified by not just Jacksonville's pension problems, but the greater problem of endless future promises it seems as though most seniors and politicians expect me to blindly backstop.

This specific pension "reform" plan is the equivalent of a 6 year old shoving all of their garbage under their bed, and their parents coming in and patting each other on the back for solving the problem of their child not cleaning his or her room. The crap is still there, but 95% of people won't realize it until it starts to smell a few years down the road.

In the sane, non public sector world, stretching debt over a longer period of time to fix a problem is called bankruptcy restructuring, and normally the creditors at least make meaningful concessions to solve a problem of solvency. To praise anyone for coming up with this idea, especially when the end result is a balloon payment and a tax increase that can't legally occur for 15 years until all of these politicians are out of dodge is the definition of insanity.

But it gets worse. The only way this taped together plan holds is assuming 7% returns on the pension assets occurs consistently for years and years. Forward capital market expectations from the most reputable financial firms are ~1% on the Barclays AGG and ~4% on domestic stocks. The nearly broke state of Illinois just dropped their pension return assumptions from 7.5% to 7% and blindsided tax payers with an extra 500 million dollar a year tax burden to backstop retiree benefits. Every year our pension returns average less than 7%, it compounds making the problem significantly worse. For reference, CALpers, the CA public pension plan and biggest in the country, earned a .6% return on investments in 2016.

For those of us who actually have to worry about market returns, we would bite our left arm off for some poor taxpayer to subsidize a 7% guaranteed rate of return on our investments in perpetuity. We would love a 3% COLA in a world where inflation is tracking in the low 1's.

Unfortunately, when you look at municipal bankruptcies over the past few years, courts have favored pensioners and made virtually zero changes to benefits despite the fact that they are unrealistic, unsustainable and well above what the free market pays. And all at the expense of taxpayers and funding redirected from our broken infrastructure and education system.

There are trillions of dollars at the federal level promised that we don't have and never will, as everyone whistles past the graveyard banking on politicians being able to figure it out (lol) or unrealistic market returns bail us out. Meanwhile, the tidal wave of baby boomers nearing retirement is slowly crawling towards the shore expecting nothing less than their full benefits while younger generations struggle to get by, while spineless and or clueless politicians smile. This is how nations fall.

None of this will end well. 

[Guy Fawkes]

not sure if this was mentioned but police and firefighters dont even have to begin "bargaining" for another 6 years.  think about it...when curry was driving to and from tallahassee with randy wise to push this deal what is it you think they talked about? giving up that guaranteed 3% COLA, maybe getting rid of the drop program with its guaranteed 7% return??? maybe their "shared sacrifice" of 10% isnt enough as that requires taxpayers to cover 90%?

Im pretty sure they had quite the conversations and I doubt getting rid of that very lucrative  pension was part of the discussion.

BTW look at the answers from weinstein from the may second finance meeting-NO answers there and hazouri accepts it?


Sunbeam your numbers on the current pension plan are misleading. There is no guaranteed 3% cola or 7% drop for all employees under

20 years of service as they were promised when they accepted positions with COJ. The pension was changed by trustee vote for current

employees and  those hired after the change are on a different plan which is poor enough to see folks regularly leave for greener pastures

south of Jacksonville. As for shared sacrifice that was Councilman Guliford's favorite saying but the council still gets a pension for a part

time job after 8 years and next time you have an emergency I'm sure they'll in minutes...

[bast553]

How did the City of Jacksonville get bound into a 30-year pension agreement to begin with? The Charter [Sec. 19-207(e)] states explicitly that no collective bargaining agreement shall be for a term exceeding three years. Subsequent collective bargaining agreements reference the "Pension Plan," but do not reauthorize the agreement.

Another item of interest to me is that the terms of the Pension Plan are codified in the Ordinance Code [Sec. 121, generally]. A question that lingers is whether the terms of the Pension Plan, when codified but not incorporated into the collective bargaining agreement nor explicitly reauthorized, constitutes an "agreement" for purposes of the collective bargaining guarantee expressed in Article I, section 6 of the Florida Constitution and the city charter.

The General Counsel has the authority to issue a binding opinion on this subject. If I am correct in my analysis, there are two possible answers:

• The Pension Plan is a collective bargaining agreement: Any change in terms require negotiation, and the terms cannot be in effect for a period of more than three years.
• The Pension Plan is not a collective bargaining agreement: Any change in terms does not require negotiation, and the terms can be in effect for an infinite period.

Either outcome is beneficial to the city as the administration sorts through this mess. To assume that a 30-year obligation is binding and therefore payable is asinine, before determining to what extent the city is limited by collective bargaining guarantees in further reforms.

[Tacachale]

There is no "30 year agreement", no matter how much that phrase keeps getting used. The city always had options in dealing with the contract that for whatever reason were never used. However, the benefits aren't the entirety of the problem.

[bast553]

There is no "30 year agreement", no matter how much that phrase keeps getting used. The city always had options in dealing with the contract that for whatever reason were never used. However, the benefits aren't the entirety of the problem.

You are correct, the agreement was not for a 30 year period. The agreement appears to be of an infinite period, which is also barred by the city charter.