Jacksonville Pension Task Force Member: Use Sales Tax to Fund Pensions

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A member of Jacksonville’s Pension Reform Task Force is calling for the levy of a sales tax, with revenues going toward the city’s Police and Fire Pension Fund.

Dr. Sherry Magill, the president of the Jessie Ball Du Pont Fund and a member of Jacksonville’s Pension Reform Task Force, is latching on to a sales tax measure proposed last month by Councilman Bill Gulliford.

Gulliford’s measure would put a half-penny sales tax on the May ballot. Voters would then decide its fate.

More from the Florida Times-Union:

As a member of the mayor’s task force on pension reform, I urge members of City Council to pass Councilman Bill Gulliford’s bill to place a half-penny sales tax on the ballot.

I appeal to voters to pass the measure. Without a dedicated revenue source to pay down the police and fire pension obligation we incurred over many years, City Council will have no choice but to close libraries, stop mowing parks and eventually eliminate the basic functions of local government.

[…]

The city’s finances will only get worse over time. The fairest method of raising revenue is the sales tax, spreading our obligation across the community.

Since the task force released its report 11 months ago, many City Council members have reached the identical conclusion: We cannot maintain basic functions of local government if we do not raise new funds to spend down the debt. Both the Fitch and Moody credit rating agencies downgraded the city’s bond ratings, warning us to pay our debts.

[…]

The task force called for shared sacrifice. Police and firefighters have agreed to make additional pension payments and reduce benefits. It’s time for the public to keep faith with the people who protect us and to pay our debts.

Jacksonville Mayor Alvin Brown has said he will veto any measure to put a sales tax on the ballot.

 

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Florida Lawmaker Turns to Legislature for Pension Audit

Florida

Florida Gov. Rick Scott recently shot down calls by state Rep. Janet Adkins and others for an investigation into Jacksonville’s Police and Fire Pension Fund.

Scott said the issue was a local matter and should be handled locally.

But Rep. Adkins is now asking her colleagues in the state legislature to help her investigate the pension fund and its deferred retirement option program.

From News 4 Jax:

Ongoing problems with the Jacksonville Police and Fire Pension Fund is the subject of a meeting of state lawmakers Monday.

The Joint Legislative Auditing Committee will consider a request by Rep. Janet Adkins, R-Fernandina Beach, for an audit of the pension fund.

Two weeks ago, Gov. Rick Scott’s chief inspector general turn downed Adkins’ request to investigate the pension. That request was joined by City Council President Clay Yarborough and the mayors of Atlantic and Neptune Beach.

Melinda Miguel, chief inspector general, wrote Adkins saying, “It appears that your concerns would be more appropriately handled at the local level.”

[…]

“Clearly, the public trust is broken as it relates to how the Jacksonville Police and Fire Pension Fund has handled its responsibilities,” Adkins said. “While I am disappointed that the Chief Inspector General has decided not to investigate the concerns I raised regarding the Jacksonville Fire and Police Pension Fund, I am committed to seeking a review of the pension fund and the questions that have surfaced over the last year.”

Specifically, Rep. Adkins wants an investigation into whether regulations were broken in the administration of the pension fund’s DROP.

 

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Jacksonville Voters Could Decide Fate of Sales Tax to Fund Pension Debt

Florida

A Jacksonville city councilman has moved forward with the idea of levying a sales tax to help fund the city’s Police and Fire Pension Fund.

The tax would have to be passed by voters, and could appear on the May ballot.

From WOKV:

Councilman Bill Gulliford has filed a bill which would allow a sales tax option to get on to the May ballot. The tax can’t be specifically earmarked for the pension debt, but rather it is for fire services. The intent behind the action is to use the tax as revenue for fire services and then take the money in the budget that would have been used for that and dedicate it toward the pension debt pay down.

Unfortunately, the process has another hitch still.

By state law, any new sales tax is offset by a change in the property tax. So, in order to actually generate revenue from the new sales tax, the City Council would have to vote to raise the property tax rate, but again that would drop back down when the sales tax takes effect.

Jacksonville Mayor Alvin Brown has repeatedly said he opposes any tax increases, so it’s unclear if he will move to veto the measure.

 

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Public Utility Back in Fold of Jacksonville Pension Reform Plan

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Jacksonville public utility company JEA is back on board with the city’s pension reform plan.

The company is helping to finance much of the city’s current reform proposal; JEA will make a $120 million lump sum payments to the city’s Police and Fire Pension Fund.

Last week, it was unclear whether JEA would go through with the plan.

More from the Florida Times-Union:

After a series of fast-paced negotiations between Mayor Alvin Brown’s administration and top JEA officials, prompted by a public rift last month, a plan to use the financial wherewithal of JEA and the city to pay the hefty price tag of Jacksonville pension reform is back on track.

JEA audit and finance committee members Thursday unanimously approved an agreement that stipulates the utility would — in exchange for financial and administrative concessions — make a $120 million lump sum payment to the city. Brown wants the city to use that payment, plus an additional $120 million the city would borrow, to more quickly pay down the $1.62 billion debt to the Police and Fire Pension Fund.

[…]

JEA’s annual general fund contribution currently increases by $2.5 million each year, maxing out at a total $114.2 million in 2016. That contribution formula — which expires next year — means that even as JEA’s revenues have declined in recent years, its contribution to the city has ballooned, a gulf that has become a top concern for JEA officials in recent years.

In exchange for borrowing $120 million for pension reform, however, the city had agreed to, in broad terms, reduce those JEA contributions by $2.5 million for the next several years and ultimately revert to a formula linked to JEA revenues.

JEA’s participation isn’t yet fully guaranteed; the utility’s board will meet later this month to vote on its participation.

 

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Florida Supreme Court Hears Jacksonville Pension Records Case

Florida

The Florida Supreme Court on Tuesday began hearing a case centered on public records requests and the Jacksonville public safety pension system.

The dispute is between the Jacksonville Police and Fire Pension Fund and a resident who says he was charged exorbitant fees to gain access to public pension records – records which are supposed to be available to the public at reasonable cost.

Background on the case, from the Florida Times-Union:

The case began in 2009 when [Jacksonville resident Curtis] Lee, a frequent critic of the pension fund, was told he would have to pay $326 before he could review documents that were sitting on a table at the pension fund office.

Lee was then told he would have to pay $280 in advance so that a staff member could watch over him while he reviewed records for up to eight hours. Pension fund managers then wanted Lee to pay $27.66 an hour for another employee to make copies of Lee’s public record’s request.

Lee sued, arguing that the pension fund was excessively charging him in an attempt to discourage him from seeing documents that are subject to the state’s Government in the Sunshine Law. Circuit Judge James Daniel agreed that Lee had been overcharged but declined to award him attorney fees, saying that the pension fund didn’t knowingly violate public records laws.

An appeals court then sided with Lee, and ordered the pension fund to reimburse Lee for his legal fees. The fund appealed the case to the state Supreme Court.

 

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Florida Gov. Rick Scott Rejects Call for State Investigation Into Jacksonville Pension Fund

Florida

A state lawmaker, Jacksonville city council members and others have called repeatedly for a state investigation into the city’s Police and Fire Pension fund since late 2014.

Specifically, they want an investigation into whether regulations were broken in the administration of the fund’s DROP.

Florida Gov. Rick Scott finally addressed the issue on Tuesday, and declined to launch a state investigation. The matter, his office said, should be “handled on the local level”.

More from the Florida Times-Union:

Gov. Rick Scott rejected Tuesday state Rep. Janet Adkins’ request for him to call for an investigation of the Jacksonville Police and Fire Pension Fund.

Scott’s office will deliver Adkins a letter today signed by his chief inspector general, Melinda Miguel, who wrote that her office was choosing to stay out of the pension issues in Jacksonville.

“Based on our review, it appears that your concerns would be more appropriately handled at the local level,” Miguel wrote. “If you are aware of specific criminal violations, you may refer this information to local law enforcement or the state attorney’s office.”

Adkins’ letter to Scott on Dec. 15 requested that he assign his inspector general and the Florida Department of Law Enforcement to look into the pension fund’s operations to see if any state laws or regulations had been broken.

Adkins cited Times-Union coverage of Jacksonville’s pension issues in describing why she felt a state investigation was warranted.

The Atlantic Beach City Commission and various members of the Jacksonville City Council, including President Clay Yarborough, sent letters of support backing Adkins’ request.

This doesn’t mean, however, that Florida is letting pension funding slip under the radar. The state sent out letters to 19 pension funds last month demanding that they formulate a plan to shore up their funding levels.

 

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Former Jacksonville Mayor Calls for Tax Increase to Fund Pension Reform

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Former Jacksonville mayor and current city Chamber president John Delaney said Monday that a tax increase is likely the best way to fund the city’s pension reform measure.

The city has been weighing a pension reform bill for months, and one of the points of debate has been the source of funding for the measure. Current Mayor Alvin Brown’s plan was to team with a public utility company and borrow the money.

But Delaney says a tax increase is more likely.

From the Florida Times-Union:

JAX Chamber Chairman John Delaney said Monday a pension financing plan supported by Mayor Alvin Brown is “not viable” and the solution “probably is going to be a tax increase to solve that problem.”

[…]

In regard to pension reform, Brown favors a plan for the city and JEA to borrow $240 million to more quickly pay down the city’s $1.62 billion debt to the Police and Fire Pension Fund.

JEA would pay off its $120 million in borrowing by getting reductions in the amount it pays in annual contributions to City Hall. The city would repay its $120 million by using savings from its annual pension contributions to the Police and Fire Pension Fund, along with projected growth in tax revenues from an improving economy.

[…]

But Delaney said City Hall already is financially strained in paying the day-to-day costs of city services, so reductions in future JEA revenue would hurt the city. He said the same financial constraints affect the city’s ability to borrow $120 million and repay it.

He said to “dig out of the pension hole, it’s going to take a new independent slug of money, which ultimately probably is going to have to be a tax increase to solve that problem.”

Read more Pension360 coverage of the Jacksonville pension reform saga here.

 

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Florida to 19 Local Pension Plans: Fix Funding Issues Now

Florida

Nineteen of Florida’s most underfunded local pension plans received “call to action” letters from the state Tuesday, calling for the systems to immediately begin formulating a plan to deal with their funding issues.

From the Florida Times-Union:

The 19 pension plans all are less than 50 percent funded, prompting the terse letter from the Department of Management Services, the state agency tasked with reviewing local pensions.

DMS Secretary Chad Poppell sent letters to Jacksonville Police and Fire Pension Fund executive director John Keane and Raymond Ferngren, administrator of the Jacksonville Corrections Officers’ Pension Fund and the Jacksonville General Employees’ Disability Fund. The Alachua School Board Early Retirement Plan and Ocala General Employees’ Retirement System also received letters, and Jacksonville Chief Financial Officer Ronald Belton was copied.

The letter to Keane pointed to the Police and Fire Pension’s $1.6 billion unfunded liability and said current funding was only enough to pay 37.3 cents of every dollar owned to retirees and current employees.

“As a result, your plan should consider taking action to prevent future taxpayers from having to incur costs,” Poppell wrote.

Coincidentally, Poppell serviced as Jacksonville’s chief of human resources under Jacksonville Mayor John Peyton.

The Police and Fire Pension letter also mentions ongoing discussions with city officials to reform the pension, saying they “are not yet realized.”

“The Department of Management Services requests you immediately notify all active and retired members of the plan regarding the plan’s conditions and what actions will be taken to improve it,” it said.

It’s unclear whether the funds will have any punishment if they don’t comply with the letter’s demands.

 

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Atlantic Beach May Throw Support Behind State Investigation of Jacksonville Pension Fund

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There is growing support for a state investigation into Jacksonville’s Police and Fire Pension Fund and its deferred retirement option plan (DROP).

At least one state representative and a handful of others, including city council members and a mayor, have called for a state investigation into whether the fund engaged in regulatory violations in its administration of the DROP.

Now the city of Atlantic Beach is considering joining the calls for an investigation.

From the Jacksonville Business Journal:

The Atlantic Beach City Commission may get behind calls for an investigation into the Police and Fire Pension Fund.

The commission, which meets Monday, could join Rep. Janet Adkins in requesting Gov. Rick Scott to order an investigation of the pension fund.

Atlantic Beach doesn’t contribute to the pension fund, but does contract with Jacksonville for its firefighting service, according to the Florida Times-Union.

In addition, the Atlantic Beach mayor, Carolyn Woods, has said that her constituents have a stake in the pension fund, as contributors to both Jacksonville and Atlantic Beach.

The city commission backing Adkins’ request would mark the first time a government agency has joined the pursuit.

Read more Pension360 coverage of the Jacksonville Police and Fire fund here.

 

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Jacksonville Mayor Submits New, Updated Reform Bill

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Jacksonville Mayor Alvin Brown has submitted a reworked version of the city’s pension reform proposal, which was previously passed by City Council but wasn’t approved by the city’s Police and Fire Pension Fund.

The bill needs to be approved by both entities before it passes into law. The City Council may vote on the new bill next month, according to the Jacksonville Business Journal.

More details from the Jacksonville Business Journal:

Brown’s bill comes in the wake of a City Council version of pension reform legislation, which was approved by a 16-3 margin in December, being sent back by the Police and Fire Pension Fund.

City Council worked with Brown to come up with changes that will, hopefully, appease the board. City Council still expects to make some changes, though, President Clay Yarborough told the Florida Times-Union.

Some of the sticking points of the council-approved bill were the interest rate that firefighters and police officers get on Deferred Retirement Option Program accounts, cost-of-living adjustments and City Council’s power to change benefits.

The council’s agreement with the Police and Fire Pension Fund will go until 2030. After 2030, the city and unions will have to settle all disputes through collective bargaining.

Additionally, City Council will be able to make changes to benefits if the groups are not able to reach an agreement.

The city’s Police and Fire Pension Fund was 43 percent funded at the end of 2013.

 

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