Jacksonville, FL (September 7, 2017) With the passage of Mayor Lenny Curry’s pension plan that continues to use the half-cent sales tax that is funding Better Jacksonville Plan (BJP) projects until 2030, a major funding source has been found to provide for the city’s pension liability but only after the BJP ends. However, as passed, the city doesn’t make any major additional contribution to the fund for the next 13 years but pays a “minimum payment” based on new actuarial analysis. These minimum payments along with the delayed payments from the ½ penny will add considerable interest expense to the Unfunded Liability. Future generations are looking at paying an estimated $10 billion in total debt with $4 billion coming from a Sales Tax and $6 billion coming from city coffers when the pension is fully funded by 2060.
“The number one concern that I received as a Council Member is that we, current taxpayers are not paying our fair-share and are kicking the can down the road to our children and grandchildren for them to pay this enormous debt in the future”, explained CM Becton. “No one likes the idea of raising taxes but as revenue in the future grows, the responsible thing to do is to take part of those increased revenues and help pay down our debt.”
On April 25, 2017, District 11 Council Member Danny Becton, officially filed legislation 2017-348 that commits the idea of an “annual” payment for an “extra contribution” based on a percentage of future revenues that the city will receive as compared to the 2016-2017 baseline amount of $1,088,466,862. This annual extra contribution would be paid each year on growing revenues only, prior to those funds being allocated to new projects or expense to the growth and cost of government. This annual extra contribution payment would end upon the sales tax being implemented in 2031.
Projections show that property values and new construction of homes and businesses will increase the general fund each year. CM Becton’s bill, sets aside a percentage of this natural growth to devote in making extra-payments on the pension debt. Based on the annual increases, we will be setting aside a set portion of new funds to be used in making additional contributions to this debt.
Over the next 13 years, revenue projected by the administration using a paltry 3% growth rate, ends with the city receiving annually, $1,683,021,605. As stated by CFO, Mike Weinstein, when questioned by CM Becton as to the probably of that estimate, Weinstein noted that it was a very conservative projection. Property taxes in 2017-2018 are now budgeted to be $58 million which is a 5.29% increase.
As monies are raised through increased property values, state sales taxes, JEA franchise fees and all other sources of revenue the city receives to augment pension fund payments during the next 13 years, this bill will only take from future increases without having to raise millage rates and will reduce the funding responsibility future generations will face.
For example, let’s suppose when passed that it is decided that 10 percent of the annual new funds will be used for pension payments. Say that for fiscal year 2017-18 the city has $40 million additional dollars compared to fiscal year 2016-2017. That would provide $4 million to be paid to the pension fund and create a recurrence for the remaining years. The next year, let’s say there’s an additional $30 million, now $3 million more can be paid and again create a recurrence for the remaining years now totaling $7 million for the 2018-19 payment. This extra annual general fund payment will increase or decrease based on year after year growth of new money provided because of the city’s financial success. This would continue until fiscal year 2029-30 when the half-cent sales tax would become the funding source as a replacement.
By making additional pension payments now, the cost and time frame of funding the pension could be cut considerably when compared to doing nothing and saddling future taxpayers with a multi-billion dollar pension bill caused by interest accrued from now until 2031. It would improve our credit rating, reducing current and future borrowing costs and just like any payroll deduction that we all take for retirement, if it’s taken out first before we have a chance to spend it, we’ll never miss it.
CM Becton’s bill takes a fiscally responsible approach to attacking pension costs. It partners with Mayor Curry’s historic reformed retirement plan and provides another funding source to allow the pension burden to be addressed in a more equitable fashion by current and future Jacksonville taxpayers.
As of today, CM Becton has worked with several council members to create a compromise bill that he hopes will get additional support. The compromise is to create a gradual payment as a percent thru 2022-23, when it then would become fixed at 15%. Those gradual payments would be:
2017-18 (0%), 2018-19 (7%), 2019-20 (9%), 2020-21 (11%), 2021-22 (13%),
The graphs and charts included below, reflect this new gradual payment compromise.
Important Dates to Remember:
Oct 17th – (9am) Finance Committee, takes up the Bill
Oct 17th – (1:30pm) Rules Committee, takes up the Bill
Oct 24th – (5pm) City Council take up bill, If its voted out of committee!
All above meetings in the City Council Chambers, City Hall
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