Curry warns of 30-percent property tax increase if sales tax idea not supported

[strider]

Since the idea of borrowing against this future collection of the 1/2% sales tax has been floated and if the above payment schedule is correct then is not the entire premise of this sales tax vote nothing but a scheme to give the city leadership another asset to borrow against?  It seems that is the only way this administration is ever going to get extra funds to play with unless there is either a complete change in the management of the finances such that we stop the gross waste or a tax increase.

Isn't the real issue that we are in severe debt over the current pension plans and won't this sales tax idea do nothing but increase our debt long term?

I also find it interesting the promoters of this tax on this site kept insisting there was no other way and yet when another option was presented, no comments.  Maybe the idea presented was not viable, I don't know, but no comment leaves it out there as a better alternative than just kicking the can down the road.

[TheCat]

I realized that I posted the same chart twice, the one comparing scenario 1 to scenario 2.

The chart comparing Scenario 1 and 3 is above.

[Tacachale]

Since the idea of borrowing against this future collection of the 1/2% sales tax has been floated and if the above payment schedule is correct then is not the entire premise of this sales tax vote nothing but a scheme to give the city leadership another asset to borrow against?  It seems that is the only way this administration is ever going to get extra funds to play with unless there is either a complete change in the management of the finances such that we stop the gross waste or a tax increase.

Isn't the real issue that we are in severe debt over the current pension plans and won't this sales tax idea do nothing but increase our debt long term?

I also find it interesting the promoters of this tax on this site kept insisting there was no other way and yet when another option was presented, no comments.  Maybe the idea presented was not viable, I don't know, but no comment leaves it out there as a better alternative than just kicking the can down the road.

LOL. I've been busy the last several days, and I've spent a good deal of time discussing this issue on the internet already. I had never heard of the the proposal you linked, and the author himself notes that the city already looked at it and rejected it.

At a glance, no, it doesn't seem viable. For starters, I see no functional difference between this "pay-go" scheme and what we're doing already, which is paying down the debt as we go. The proposal says it would save money by doing things like somehow abolishing the pension fund and board, taking the unions out of the discussion entirely, and basically having the city taking take the current money and invest it. I could see this working only if the city greatly strips down current benefits, which I suspect is the authors' real goal.

Here is what the plan entails:

a.  Complete dissolution of the entity currently known as Jacksonville Police and Fire Pension Board of Trustees. This may require a City Charter Amendment along with an adoption of that amendment by the State Legislature.

Good luck getting something like that past not only the unions themselves, but the City Council and Florida Legislature (!) Especially as the unions (and their lobbyists) have no incentive whatsover to go along with it.

b.  Complete assumption by the City Government of responsibility, control and operation of the Jacksonville Police and Fire Pension System or Plan. This conversion to a Hybrid Pay-Go system would maintain all aspects of the current pension agreement in place, including every syllable of the pension aspects of the negotiated labor contracts with the two unions.

The city doesn't have the infrastructure to deal with this kind of thing. It would essentially create new, taxpayer-funded bureaucracy to take it on. And the union members (ie all cops and firefighters) would have no incentive to go along with it, as it takes away all their negotiation power.

c.  The City would also assume possession, control and responsibility for the cashed out value of the System's portfolio investments (currently 1.438 billion dollars). The City would create a Special Reserve Account for this money, untouchable for any purpose except for paying pension benefits.  The funds in the special reserve account would be invested in "near zero risk" issues and all earnings would pay benefits only.  T-Bills currently pay about 2.04% per annum. Pre-cautions must be put in place to prevent the City from using money from this account to save money for other City expenditures.

In other words, he plans that the current investments would make less money than they currently do.

d.  Pension benefit payments would come from the City's General Fund and the Special Reserve Account in some appropriate ratio, to be determined. Two possible ratios are presented in attached spreadsheet analyses.

The city is already making benefit payments from the general fund. How would this improve things? Talk about "fuzzy math".

e.  The current Unfunded Actuarial Accrued Liability of 1.8 billion dollars would be dissolved and become meaningless. The assumption of responsibility for paying pension benefits by the City from its General Fund simultaneously obviates the existence of and compensates for the UAAL. The Pension System members do not own the pension system, thus have no claim for the reimbursement of the UAAL.  To be sure, the taxpayer does not want it paid.  The money, which is NOT put into paying off a phony debt and its interest, would pay pension benefits for decades.

So he just wants to "dissolve" $1.8 billion dollars? I guess that would save money, I wish I'd thought of that when we still paying down student loans. But insisting that "Pension System members" (current and retired cops and firefighters) have no claim to money the city contractually promised them when they took on their dangerous jobs seems fairly cruel. And again, they'd have absolutely no reason to go along with the plan.

f.  The City would sell all real or tangible property owned by the Pension Fund and place the revenue into the Special Reserve Account for use as described above.

This is actually an interesting idea, from the standpoint of the city in general. However, if they didn't get back what the Pension Fund put into acquiring the properties, it's hard to see how this would help the pension in particular.

In other words, I don't see that this scheme is a viable solution to the pension crisis, and even if it were, it's not achievable.

[strider]

Cool, you don't believe the hybrid plan (which was not actually vetted (from the article) but rather simply dismissed as "illegal" which the author says is not the case) to be viable.  No worries.  Your opinion is being valued on this thread.  But.

When the Mayors office is out promoting the sales tax plan as an in your face "this or else" program, I would not find it surprising that any alternative plans will be rejected out of hand.  There is an agenda here over and above the pension issue and we tax payers are not privy to it yet.

Were our pension plans originally more like this proposal?

Does not the sales tax plan depend upon the good graces of the various unions just as much as this proposed hybrid plan?

Did it not take the passage of a bill at the state level to be able to even get the sales tax plan on a ballot?  Is that really that much different that trying to do what is presented in the hybrid plan?

How do you explain the apparent fact that the city will not see any relief from the high debt payments for several years?

Unless of course funds are somehow borrowed against the future sales tax funds and then how will that work out with the requirement that the sales tax funds are only for the pension debt?

[Tacachale]

Cool, you don't believe the hybrid plan (which was not actually vetted (from the article) but rather simply dismissed as "illegal" which the author says is not the case) to be viable.  No worries.  Your opinion is being valued on this thread.  But.

When the Mayors office is out promoting the sales tax plan as an in your face "this or else" program, I would not find it surprising that any alternative plans will be rejected out of hand.  There is an agenda here over and above the pension issue and we tax payers are not privy to it yet.

Were our pension plans originally more like this proposal?

Does not the sales tax plan depend upon the good graces of the various unions just as much as this proposed hybrid plan?

Did it not take the passage of a bill at the state level to be able to even get the sales tax plan on a ballot?  Is that really that much different that trying to do what is presented in the hybrid plan?

How do you explain the apparent fact that the city will not see any relief from the high debt payments for several years?

Unless of course funds are somehow borrowed against the future sales tax funds and then how will that work out with the requirement that the sales tax funds are only for the pension debt?

I agree that the mayor's office hasn't been selling this well. I'd hoped they'd be doing more by now; maybe they will later in the summer as we closer to the vote.

I don't want to spend that much time talking about the Concerned Taxpayers of Duval County proposal, as it doesn't sound realistic or achievable. The sales tax plan (and potentially other options) do involve having the employees make increased contributions (10%) to reduce costs. But this would be achieved through the framework of the pension plan, which was approved through collective bargaining with the police and firefighters. The Concerned Taxpayers idea would remove their right to collective bargaining entirely. The union would never go for that without a fight, meaning it's much less likely to get through the City Council or Legislature even if it had a powerful advocate (which it doesn't). That's another difference between that plan and this one. Even Curry acknowledged that some other options (like a sales tax that takes affect today) would not have gotten through the legislature if he had pushed for it. And outside all that, I don't see how the suggestion would really improve things without drastically slashing current benefits, which I imagine is what the Concerned Taxpayers really want.

To my knowledge our pension plan has been the same for a long time. The difference is that it went from being fully funded in 2003 to being tens of millions in the hole today, due to the city failing to make adequate payments, the recession, and the city not making a real effort to deal with the problem until now.

As for budget relief, my position would be that the plan provides long-term budget relief. It should also provide some short term relief due to the way payments are structured and by having current employees put in 10%. I also don't have a problem with taking out bonds to pay down money now to provide short-term relief - paying more now means less that can compound into future debt. I don't think there would be a problem taking out bonds to make pension payments. I haven't read if there are any new developments on that front recently, but I haven't been keeping track.

[TheCat]

I think there is, as others have pointed out, too many unknowns and the whole 3 mil increase is a scare tactic. Can someone point us to the actual math involved?  How the having a future funding source 12 years from now will  translate into keeping the payments low enough to help in any real way...without borrowing?

Not even the mayor's office is prepared to answer your questions, let alone tacha.

This is my understanding of the pension plan:

Mayor: The sky is falling and I have a plan
Voters: What is the plan?
Mayor: This plan is our only option. It is the best plan we have.
Voters: Sounds interesting, so what is it?
Mayor: I'm not going to raise your taxes unless you don't vote for my plan.
Voters: Okay, what is the plan?
Mayor: Stop being critical and please get behind this, it is our only option.
Voters: So, you're really not going to tell us.
Mayor: No.

Tacha, the better solution is to just pay our obligation. It will suck for 15 years vs it sucking for the next 45 years.

Arguing that Curry's plan is the best option because the other fancy options aren't workable isn't a defense. I wouldn't encourage a friend to go to a payday loan place even if they were in desperate straights nor would I tell him to work a street corner to earn a few bucks because that was the best most immediate plan.

This plan is absolutely irresponsible.

I've got to say odd to see Metro Jacksonville principals arguing that the status quo is a-ok, and if we just keep doing the same things, everything will work out fine. I'm not sure I've seen anyone besides the "Concerned Taxpayers" guy actually argue that our current payment schedule of paying tens of millions of dollars out of the general fund indefinitely is sustainable or advisable.

First, it's not an indefinite amount of time.

I'm saying, Curry's option is a much worst option than the situation we are in now.

Just because it is a plan doesn't mean it's our best worst option. It's like pouring water on a grease fire. Yeah, grease fires aren't good but I can promise you it's not going to get better if you try to solve the problem with water.

Our best worst option may be paying the obligation out of the budget. If I have to choose between what we are doing now and Mayor Curry's tax, I choose what we are doing now because we will be better off in the short and long run.

Curry's plan is our worst worst option. It will absolutely hurt our city in serious ways.