A recipe for placing the family budget in peril is to make just the minimum monthly payments on credit card debt. This type of payment offers very little in making any dent in the principal but causes interest expense to escalate and can drag out the debt for years. That is the situation the City of Jacksonville finds itself in when looking at its pension debt based on the reforms just passed.
City Council passed Mayor Lenny Curry’s pension relief plan that will apply a half-cent sales tax towards that debt beginning in 2031, after that same half-cent sales tax, earmarked for the Better Jacksonville Plan, sunsets. That leaves the city making only minimum payments until then, to keep the pension funded. As a result, taxpayers are pushing a large debt in excess of $5.9 Billion after 2031 going to our children and grandchildren to pay.
District 11 Council Member Danny Becton, a staunch fiscal conservative, can’t bear to see the city allow so much time to pass without making more substantial payments and avoiding what many residents feel should be more paid in “to pay our fair share”. Becton agrees and filed Bill 2017-348, which would pay an estimated half billion dollars in principal before the sales tax kicks in, without raising taxes.
Jacksonville has averaged 3.38% annual growth over the past 16 years through increased property values and its share of state sales tax revenue. It is from this extra money that Becton‘s wants to set aside 15% off the top, going forward, of any new revenue. This would be done before the funds are budgeted by the Mayor and used to grow government. This 15% would be used to make an “extra-payment” to help pay down the pension debt, like making an extra payment on your mortgage. Compounded annually, the 15 percent contribution could payoff over approximately $500 million in the next 13 years reducing future interest expense and number of years to pay.
While the plan in theory has plenty of support by fellow council members, they have not stepped up to co-sponsor the bill as of yet. Support was lacking in a sparsely attended Finance committee where it was voted down 5-1 with only incoming Council President Anna Lopez Broche voting in the affirmative. Two Council members, Gulliford and Schellenberg voiced opposition in that they felt other needed infrastructure and capital improvements were a priority and money for such use should only be considered if funds were left over after year end. As CM Becton concedes that there is always needs and wants to spend money towards, paying one’s debts should be at the top of the list, not bottom. The debt being pushed to the future generation of Jacksonville will create a burden that in the event of their own economic challenges, leaves them nowhere to go but to raise taxes, something, we are not willing to do.
In looking to have the bill passed before discussions on the 2017-2018 budget began, it was CM Becton’s desire to push this bill at year-end to a vote. In speaking favorably on the bill in the full Council meeting of June 13, Council member Anderson, who was absent from the previous Finance Committee meeting, asked if a deferral of the bill might be accepted. In looking towards the future, CM Becton accepted the deferral request and with others speaking favorably as well, the bill was re-referred back to the Finance Committee and added to the agenda of Rules, as well by a vote of 17-0.
In an interest in keeping the discussion alive and the possibility of drafting a compromise bill that addresses the problem later this year, CM Becton agreed, this was in the best interest of the city and to future generations to try and get further support while helping council members understand the bill better.
Read More on Bill 2017-348 and the presentations as presented to City Council under article "Becton Presents 2017-348 Extra Contribution Plan to Council".
Posted on Tue, June 13, 2017
by Carol D'Onofrio