During City Council’s first crack at reviewing a pension deal Wednesday, one question kept being thrust to the forefront.
How will the city pay an additional $40 million each year to more quickly pay down its unfunded liability?
If it’s up to Mayor Alvin Brown, it won’t be a sales tax. Or a property tax. Or any tax for that matter.
If council ends up seeking the Legislature’s approval to put such a funding mechanism on the ballot, Brown would not support it.
“No, sir. I wouldn’t sign it,” Brown responded when council member John Crescimbeni asked if he’d support a bill for a tax referendum.
Brown later went a step further, telling council member Bill Gulliford he’d veto any such attempt.
“I don’t think we have to do any taxes to solve this,” Brown said.
“This” is the more than $1.6 billion in unfunded liability of the public safety pension plan. It’s about 43 percent funded, with 80 percent being a minimum goal.
Brown and Police and Fire Pension Fund administrator John Keane struck a deal this year that has the city paying a total of $400 million over the next 10 years make the stabilize the plan. That $40 million each year would be determined annually by a newly formed committee. For months, council members have said not having an identified source is a chief concern — sentiments that spilled into Wednesday’s almost four hours of talks.
Council member Lori Boyer said not having the source identified was “totally irresponsible.” The burden, she said, would come back to council for the financial wrangling “and everyone (else) can stay hands off.”
Brown told the group he and his administration are “working on it.” Chris Hand, Brown’s chief of staff, said there isn’t a dedicated funding source “yet.” The JEA proposal is the only one the administration has pitched as a funding source to this point.
One idea Brown’s administration has been keen on is a partnership with JEA, with the public utility paying an additional $40 million to the city in exchange for spinning off its employees to their own retirement plan.
Paul McElroy, JEA CEO, attended and told council the proposal has for months been under review and he expects “a significant amount” of information on the idea will be presented to the utility’s board in November.
Pressed by Gulliford on what the utility gains with such a proposal, McElroy said those savings from its own retirement plan is an “extremely long view.”
In addition, JEA still has $460 million outstanding to the General Employees Pension Plan. McElroy said Clay, Nassau and St. Johns counties also have shown “grave concerns” of the utility giving Duval County’s government the additional money.
Despite the lengthy meeting, no votes were taken on any portion of the pension deal.
An attempt to move the bill into one large committee comprising all council members failed, meaning it could stay in individual committees in the coming weeks. As of now, it’s in the council Rules and Finance committees, although several members pushed for it to be added to others.
Council President Clay Yarborough also could call another special council meeting. Many showed support for the idea in tackling the issue because it allows free-flowing conversations and questions with all 19 members present instead of being compartmentalized into seven- and 10-member committees.
Although no action was taken, there are amendments on the table that could alter the deal.
Gulliford has pitched six changes to the bill, including shortening the agreement from 10 years to three; adjusting cost-of-living adjustments to the lesser of 1.5 percent or Social Security COLA; and limiting fund board members to two four-year terms. He also wants to codify a funding source.
Any changes council makes to the deal will have to be approved by both the administration and the fund’s board.
Keane said taking away the $40 million annual payments each year would mean the board would “not likely” sign off on the deal.
The fund is contributing $61 million from two accounts that the city will use to pay the $40 million obligation for the first year and a half.
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