It’s two down, one to go for the plan that allows JEA to help reduce the city’s unfunded pension liability.
It’s that last one, though, that will be the toughest to overcome.
The utility’s board of directors Tuesday unanimously approved a plan negotiated with the city administration to allow JEA to make a one-time $120 million contribution toward the $1.6 billion unfunded pension liability.
In exchange, the utility’s annual payment to the city general fund would be reduced over a period of years and eventually be based on a percentage of sales of electricity, water and sewer service.
After the vote was recorded, Chris Hand, Mayor Alvin Brown’s chief of staff, said legislation to enact the proposal will be introduced Wednesday to council.
“We can solve our biggest problem without raising taxes or utility rates,” Hand said. “We are convinced this is the best option.”
Hand is hopeful the issue can be addressed by the current membership, but the chair of a council special committee reviewing JEA’s agreement with the city indicated that may not be the case.
At the committee’s first meeting last week, council member Bill Gulliford said it could take up to eight months before the bill would be voted up or down by council.
Under the law, since the plan involves amending the JEA portion of the City Charter, a public hearing may not be scheduled until at least 30 days after the legislation is introduced; council may not vote on the proposal for at least 60 days. And for the plan to come to fruition, a super majority – 13 of the 19 council members – must vote to adopt the proposal.
On July 1, at least 10 new members will join the 19-member council. Nine members are term-limited and one member chose not to run for re-election.
Even if the current or the successive council rejects the proposal for JEA’s $120 million partial pension fix, changing how the utility’s annual general fund contribution is calculated is an issue that won’t go away, said JEA board member Peter Bower. He’s chair of the Finance & Audit Committee, which reviewed the plan before the full board considered it.
The contribution in 1978 was about $25 million. Under the current formula, it has increased each year.
The total annual transfer, including a 3 percent franchise fee and a 10 percent public service tax, is projected to be $111 million this year.
Bower said the terms of the pension payment proposal would allow the contribution to decrease over a period of time to a more sustainable level.
“We are paying too much. We need a glide path down to a realistic number,” he said.
Bower also said city unfunded pension liability notwithstanding, if council refuses to enact the plan and declines the $120 million windfall, it won’t be the last time changing JEA’s payment formula will be on their agenda.
“We’ll be back in 2016 to ask for the same thing,” he said.
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