Jacksonville, FL - Under review.
Moody’s Investor Service put Jacksonville on notice this month over the “general obligation bond rating”. WOKV has learned Jacksonville’s current rating is “AA1”, which is the highest level of the second tier rating, with “AAA” being the highest. Moody has now changed how they distribute these ratings, however, placing a greater weight on pension obligation and debt.
WOKV’s Financial Advisor Hank Madden says a downgraded rating could make it more expensive for Jacksonville to borrow money. That could, in turn, trickle down to you.
“Then they have to collect more in taxes to pay for that,” he says.
A pension reform solution is now in the works. WOKV has continued to follow negotiations for more than a year, since Jacksonville’s City Council voted down a proposal. This month, Jacksonville Mayor Alvin Brown put a new proposal in front of the specially created Retirement Reform Task Force that he says would save $2.75 billion. The plan has already started to meet resistance, however, and we’ve outlined the latest on that proposal in our series to the left.
The Task Force is incrementally moving forward with a proposal, however. This week, they came to an agreement on several rules regarding governance of the Police and Fire Pension Fund. That includes creating a professional investment advisory committee, placing new ethical certification requirements and phasing back the time frame of the current governance agreement.
One governance rule supported by the Task Force, but opposed right now by the Fund, would allow the Mayor to appoint the fifth member of the Pension Fund Board with City Council confirmation, instead of having that person be nominated by the other four members of the Board.
Task Force Chairman Bill Scheu says it’s a way of equalizing the stake the City has in the Fund.
“It’s putting up all the money and has all the risks,” he says.
Because pension has been such a long running discussion in Jacksonville, however, Madden thinks Moody’s will want to see more than just progress to keep the current rating steady.
“Everyone’s willing to tell you whatever you need to hear to look better- show me,” he says.
Moody’s expects to complete its review within 90-180 days.
Jacksonville’s pension obligation this year is expected to be around $180 million. The Task Force meets again on February 12th and 19th to finalize proposals for how to pay down the pension debt.
Stay with WOKV for more of your top financial stories. You can tune in Saturdays at 10AM for Smart Money with Hank Madden.