Former Jacksonville Mayor Calls for Tax Increase to Fund Pension Reform

palm tree

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.


Photo by  pshab via Flickr CC License

New Jersey Pension Panel Faces “Big Test”

New Jersey State House

When Chris Christie created the Pension and Benefit Study Commission, the skeptics were quick to point out the politics of the decision.

The panel was formed to recommend reforms for the state’s pension system; but when Christie announced his appointees, some thought its real function was to act as a political shield for the governor, who has said benefit cuts are likely on the horizon for state workers.

The panel is set to release its latest report in November. The editorial board of the New Jersey Star-Ledger says the report will be a “big test” for the panel:

The panel is expected to issue its report within a month. If it offers a lopsided solution that relies entirely on a second round of benefit cuts, its report will be dead on arrival. Democrats would not consider a solution like that, and for good reason.


Democratic leaders say they will not consider more benefits cuts until Christie restores full payments. That can’t be done without a tax increase, which Christie finds equally repugnant.

The job of this panel is to find the political sweet spot, to come up with a repair plan that both sides might accept. If it fails that test, its report will gather dust and its mission will have failed.

In the end, Democrats will have to accept some new benefit cuts. The state’s fiscal condition is much worse than anyone expected when this deal was signed in 2011, thanks mostly to the sputtering economy. If New Jersey had simply matched the average state since the Great Recession, it would have raised roughly $3 billion more in annual revenues and the 2011 reform would probably have survived.

Democrats can’t expect taxpayers to make up the entire shortfall if there are reasonable cuts to be made. One example: In its preliminary report, this panel noted that the state’s health benefits remain generous, and that some might qualify as “Cadillac plans” under Obama care. The state also treats early retirees more generously than Social Security does. The panel, no doubt, will have a long list of soft spots like this.

Christie needs to face reality, too. He can’t expect public workers to bear the entire burden when the state that has shortchanged these funds for so long, and when Christie himself broke his commitment to do better. And after years of fiscal crisis, there is simply no spare money in the treasury. That means a tax increase is needed.

This is a bipartisan panel, but Christie made all the appointments, a big mistake that undercuts its credibility. If its members want to have impact, they will have to declare their independence by offering a balanced repair plan.

If that leaves both sides unhappy, then the panel will have done its job by telling the hard truth about this unforgiving math.

The panel’s first report can be read here.