- 2014 - January - 23rd -

Council skeptical about JEA funds

By David Chapman, Staff Writer

The City Council member maybe closest to the JEA has seen Mayor Alvin Brown's pension plan that seeks an additional $40 million annually from the utility — and he's skeptical it will work.

"I think there is a lot of wishful thinking in it," said council member Bill Bishop. "Could it be done? Sure it could be done. Can it be done without impacting electric rates? I doubt it."

The $40 million per year would be in addition to the $110 million JEA already gives the city annually.

Bishop said Wednesday that JEA is a capital-intensive business that has "a lot of debt" it is trying to pay back. A bond rating agency's first priority, he says, is to determine "how it's going to be paid back." That's especially true when the utility is in a relatively flat revenue period, he said.

"Jacksonville is growing, but not growing that much," he said.

Bishop said he wants to see a financial model that shows JEA can support Brown's proposal without raising rates, keep the utility's existing plan for bond repayment and allow it to maintain its infrastructure.

Under Brown's plan, JEA's extra contributions would total $560 million over the 14 years.

He said there is no "magic Christmas stocking" with the money and the costs, whether it's called a tax increase or a rate increase, would come from somewhere — taxpayers or customers.

"I'm not super excited about the idea," he said. "At the end of the day, we all — as taxpayers — pay for everything ... when you try to sugarcoat it, all you're trying to do is cloud the issue."

Increased rates were a concern of several on the Jacksonville Retirement Reform Task Force after Brown presented the proposal. JEA board Chairman Mike Hightower later said there was "no way you can do that without JEA customers paying."

Chris Hand, Brown's chief of staff, was adamant Wednesday that the proposed plan would not mean a rate increase.

"We do not agree with the premise this would automatically mean higher rates," he said.

Instead, it's the "beginning of a conversation" he said can benefit the utility's bottom line while helping the city achieve $2.75 billion in savings over 35 years.

The $40 million annually over the next 14 years — until the public safety pension plans are 80 percent funded — was a suggested number based on an actuarial model.

JEA officials were not told beforehand the specific amount Brown was going to present to the task force. Hand said the figures have since been given to JEA's leaders and he expects them to come back with ideas.

"We will work with the city administration and City Council on pension reform, evaluate any proposals and present them to our board," said JEA CEO Paul McElroy in a statement.

One idea Brown and the administration pitched is for JEA to move its employees from the city's general employees' plan run by the city into a separate plan, which potentially could save money.

Council member Stephen Joost, JEA board liaison for the 2011-12 council year, said the concept might not be all that unfamiliar for the utility.

If JEA were to switch its employees over to such a system, as it did with St. Johns Power Park employees, Joost said it possibly could save money long-term. Those savings could then head back to the city to help the larger pension problems.

"There's a compromise in there. By helping them with their pension, they should help us with ours," he said.

But, he thinks the $40 million annually for 14 years might be a bit much.

"Over 14 years, I don't think they could sustain $40 million every year," he said. "The savings (under the change) could be quite substantial … I think they might be able to do it for several years. Beyond that, I don't know how they would get it."

JEA's board would have to agree to any plan, which would then be submitted to the Jacksonville Retirement Reform Task Force. The group is analyzing the city's pension issues and has suggested the city find a way to pay above the minimum annual payments to lower the city's $1.7 billion in unfunded liability and increase the funded rate, which stands at about 40 percent.

Brown's plan that includes the possibility of the JEA contributions could be one idea the group will weigh. Another is a property tax increase that has been discussed in the past.

The group is scheduled for two more meetings, one on Jan. 29 and the last on Feb. 12.



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