Jacksonville maintains high ratings on its special revenue and general obligation bonds, but a lack of an approved pension reform deal "could pressure" its ratings, according to a global rating agency report issued Tuesday.
Fitch Ratings affirmed an "AA" rating on the City's $703 million in outstanding special revenue bonds and an "AA+" on its general obligation bonds.
It classified the City's rating outlook as stable, describing an "excellent fiscal track record" the past seven fiscal years and "solid financial position" for building a financial cushion against emergencies, among other factors.
But, the agency described a "weak pension picture" because of unfunded liability concerns.
"Concerns remain as to the strain placed on the credit profile of the city given its high pension liability, although the current rating and Stable Outlook assume implementation of recent agreements," the report stated.
"Delay in implementing reforms could pressure the rating," it said.
Brown announced in May the City and public safety unions had agreed to a pension reform deal to save $1.1 billion over 30 years, which includes $50 million in pension-related savings for the 2013-14 budget year that begins Oct. 1.
The legislation for the proposal has been introduced to City Council, which must approve it.
"In Fitch's view, these agreements create a more sustainable pension situation for the city over the long term, although pension contributions remain an ongoing challenge," the report said.
City Council President Bill Gulliford said this morning he has the report, but has not yet reviewed it. Asked if the pension-related comments in the report put additional stress on the Council's pension review process, he said it does.
"Obviously it does, but I am not ready to say the sky is falling," based on one agency report, he said.
Gulliford said he thought the agency was being "very shallow" in its understanding of Jacksonville's pension predicament.
The deal continues to be the subject of outside review.
The Jacksonville Civic Council, a group of about 60 civic and business leaders, issued a letter to Brown and Gulliford in late June that said the deal "makes very substantial progress" but "isn't enough" and should not be approved by Council.
The group offered recommendations that included adjusting the rate the City is willing to guarantee on retirement savings, reducing plan costs, making employees contribute more to their pensions and considering new revenue.
The plan also is the focus of a task force created by Brown last week that will begin its review at 2 p.m. today.
Attorney Bill Scheu will lead the 11-member Jacksonville Retirement Task Force, which includes Council member Greg Anderson, chair of the Council Finance Committee.
Scheu said last week that the task force will review the plan as an independent group and provide recommendations.
Brown will submit his budget to Council on Monday.
The administration said the budget will include $64 million in budget cuts to services and additional legal expenses because the pension deal is not approved. With an approved deal, the deficit would be just under $19 million.
The Fitch report notes the deficit, with and without the savings, and said that absent a deal it "likely would necessitate furloughs and layoffs," and indicated 750-850 affected employees.
David DeCamp, Brown's spokesman, said the agency likely used an equivalency to the projected cuts.
He said this morning that under current departmental proposals, not including the Jacksonville Sheriff's Office or Constitutional officers, the budget has 120 positions eliminated. They comprise positions filled and unfilled.
Departments were asked to submit spending reductions of just fewer than 14 percent as part of the budget process.
DeCamp said the Fitch report reinforces the work that has gone into the current proposal.
"This is a long-term agreement that, in the end, resolves a lot of the issues the city has been confronting," DeCamp said.
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