Staff Writer
Mayor John Peyton warned of a budget deficit topping $200 million in five years, which City Council Finance Committee Chairman Stephen Joost pronounced “sobering” at a committee meeting Wednesday.
Peyton also warns of city layoffs if budget challenges aren’t resolved.
With the looming large budget deficits, Council members met with Peyton to discuss the problems city leaders face in trying to balance future fiscal budgets.
“The house is on fire and we’re going in,” Finance Committee member and Council Vice President Jack Webb said before the meeting.
Peyton met with Joost, Webb and Council President Richard Clark on Wednesday to discuss the next fiscal budget, which must be balanced before it takes effect Oct. 1. There’s a preliminary $58 million gap for the coming budget.
Peyton’s report was developed after the committee requested the administration review all fees charged for city services to find out whether the city was capturing the full cost to provide those services.
“In good economic times, you really don’t have to worry about revenues because we know they are coming in,” Webb said. “Now that we have experienced a tougher economic climate, we are reviewing the system that is in place to see where we can do things better.”
Both the mayor and Council expect they can make the budget process more transparent and accessible to the public, which was why they met Wednesday. Joost, Webb and Clark had scheduled the budget discussion for Feb. 23 but delayed it so that Peyton could attend and present an analysis of the fee structure.
The mayor’s research found that employee-related expenses were the largest chunk of the city budget. His analysis illustrated that the budget deficits would grow substantially without changes in employee expenses.
Some of the suggested changes included pension reform, such as adjusting the retirement requirement from 20 years of service at any age to 25 years of serve at age 52; changing the Deferred Retirement Option Program investments, which now carry a return of 8.4 percent, to a self-directed account; and calculating final average pay based on the five highest-paid years of the last 10 years rather than based on the last two years of service.
Peyton also suggested a 3 percent pay cut for employees, a freeze of step raises and an increase in employees’ share of health-care premiums.
“We have a serious challenge with employee-related expenses growing at an unprecedented rate,” said Peyton, explaining that he did not support the council’s call for a 3 percent pay cut across the board during the last budget cycle.
However, Peyton indicated options are dwindling.
“We have two options. We either negotiate with our unions for pay reductions or we expect across-the-board layoffs,” he said.
Peyton also identified fees that were not covering the cost of services, including fees charged for planning and zoning; solid waste; and recreation.
He proposed several changes in those fee structures:
• Increasing the flat fees for conventional rezoning and Planning Unit Developments from $1,500 to $2,000.
• Increasing the flat fees for Land Use Amendments-Development of Regional Impact Reviews from $1,500 to $2,000 for small-scale and from $3,000 to $3,500 for large-scale DRIs.
• Increasing the monthly household residential solid waste fee from $6 to $12.65.
• Raising fees for youth softball tournaments from $75 to $250 for slow pitch and from $100 to $450 for fast pitch.
The mayor’s staff developed the fees and projections based on modest growth in the economy and an expectation of the economy remaining flat in the next year.
“What you find normally is overly optimistic increases in revenues and growth rates to try to minimize the problems,” Joost said. “I think these assumed rates of growth in this model are realistic and I commend the mayor in trying to get the real numbers out there.”
Information about the city budget, the development process and public meetings is available at www.myjaxbudget.com.
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