Jacksonville Civic Council endorses sales tax for pension costs

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A half-cent sales tax on the Aug. 30 ballot got backing Monday from the Jacksonville Civic Council, an influential group of business executives that has been pushing since 2013 for a fix to the city’s pension woes.

If approved by voters, the half-cent sales tax would start after the existing sales tax for the Better Jacksonville Plan expires in 2030.

“Without ‘Yes for Jacksonville,’ the city’s annual required contribution will continue to increase and the city simply cannot operate with such a large proportion of its budget dedicated to pension costs,” the Civic Council said in announcing its endorsement.

The Civic Council’s announcement did not say how a sales tax starting in 14 years would prevent the city’s annual pension costs from continuing to increase in the coming years.

The pension cost this year was $260 million and that will go up to $280 million next year. Mayor Lenny Curry has said the cost will go up again to $300 million the following year.

The city has commissioned an actuarial study that will show what the projected future costs will be over the next 30 years. That report is expected this week.

Curry has said the city can get some budget relief by spreading the pension payments over a longer period of time. That would be akin to refinancing a home mortgage — the annual payments would be less, but because it would be paid off over more years, the total cost would be higher.

The Civic Council has regularly sounded off on various proposals put forward by city leaders. For instance, its opposition in 2013 to Mayor Alvin Brown’s first attempt at pension reform contributed to City Council’s rejection of that pension package, which the Civic Council said did not go far enough.

The Civic Council said the half-cent sales tax on the Aug. 30 ballot would be a “stable and dedicated source of revenue” to pay down the $2.87 billion in unfunded pension obligations.

The council said other “key benefits” are the city would close the existing pension plans to new hires and put them in retirement plans that “reflect current market practices.” The city would negotiate with the unions on plans for new hires, which could range from pension plans to 401(k) style plans.

Another piece of the reform involves all employees to pay 10 percent of their paychecks for their pension benefits, up from 8 percent now.

http://jacksonville.com/news/metro/2016-06-27/story/jacksonville-civic-council-endorses-sales-tax-pension-costs