The city’s financial health at the moment isn’t dire.
A $1 billion budget just went into effect without much angst from City Hall leaders. There’s been a modest surplus built from several years of cost-cutting and increased revenue.
Like a routine annual physical, a much-anticipated 90-day review promised by Mayor Lenny Curry shows a current financial situation that is relatively healthy.
Yet, like anyone who ages, there are major warning signs. Without proper maintenance, diet and intake, the healthy situation today turns south within five years.
The causes have been widely discussed in recent months and years, but are highlighted in a draft report of Curry’s 90-day audit conducted by Ernst & Young.
Unfunded pension liabilities of $2.7 billion could cripple future budgets. A possible $35 million declining annual JEA contribution. The loss of more than 1,000 city positions in recent years.
Overall, the general fund deficit could hit $24 million by fiscal 2019 and the report suggests that “additional revenue or cost saving initiatives should be explored.”
Remedies could come in the form of increased revenue options, but that could be a bitter pill for some.
It could be tax increases, for which Jacksonville has capacity compared to its peers. The report shows the city’s total millage rate is below Florida’s other five largest cities and property taxes are the lowest among the top six.
Curry said his first pension funding solution won’t include a tax increase and he campaigned on not raising them.
Bringing it up to the average would generate close to $40 million more in revenue. A doubling of JEA’s franchise fee could bring in another $40 million.
Conversely, additional pension contributions from the city for just the public safety plan ramp up in the next few years, with an extra $32 million being paid annually starting in three years.
For council members receiving a first look, it’s a financial situation they’ve known has been brewing.
“I don’t think there are any surprises in it, at least from my standpoint,” said City Council President Greg Anderson, “but what it does present is how the city has relied on relatively few revenue sources … and how susceptible they are to fluctuation.”
Anderson and council member Bill Gulliford both said if they were proponents for a sales-tax referendum over other possible sources like doubling the franchise fee or raising property tax rates.
That recommendation is consistent with recommendations a pension task force made, which Anderson served on.
As for a breakdown of potential revenue sources, council member Anna Lopez Brosche said she doesn’t think it’s time to have that discussion yet. Instead, she said she wants to ensure current city dollars are being used properly before the search for more funding begins.
Council approved $300,000 for the audit at the urging of Curry and his administration, which wanted a deeper look at the situation moving forward.
Like Anderson, Bill Gulliford, chair of the council Finance Committee, said there wasn’t much surprise coming from the report. But, he did think 34-page analysis allows Curry and his team a better handle on the financial future.
“It gets them up to speed better,” he said.
Council member Lori Boyer said such a review provides a nonpolitical, holistic review of the situation from a credible source.
However, another council member felt differently.
“Is it too late to get our money back?” asked John Crescimbeni.
He said he expected the audit to be a “deep dive” into city finances and the report is “anything but.”
“In fact, it’s nothing more than a resuscitation of news that’s appeared on the front page of local newspapers for the past several years,” he said. “For $300,000, I was expecting to read something I didn’t already know.”
Additionally, he said he was “perplexed” why council had to appropriate the money immediately as an emergency in early June when the agreement wasn’t signed until mid-July.
As for observations, Gulliford said the pension comparisons to other municipalities showed just how “miserable” Jacksonville’s has been.
“When you look at Tampa’s … what a tremendous position to be in,” he said.
Tampa’s combined pension plans are 96 percent funded, while Jacksonville’s sit at 55 percent, the report shows.
Brosche said after her review of the draft, the pension portions better presented the complete picture rather than just the much-discussed public safety plans.
Curry spokeswoman Marsha Oliver said Sam Mousa, the mayor’s chief administrative officer, and Mike Weinstein, city chief financial officer, declined to comment on the draft.
Instead, she said, they would when the report becomes final in the next several days.
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