Jax Council passes $1.5 billion pension reform plan

Jacksonville has taken a big step toward pension reform, but the road ahead remains long.

The City Council has approved the latest reform package- which was crafted by Councilman Bill Gulliford off the foundation built by Mayor Alvin Brown’s attempts. The package includes benefits changes, tweaks in governance, and a plan to pay down the City’s $1.6 billion pension debt-, among other things. It’s projected to save $1.5 billion over 30 years, according to the Mayor’s Office.

Time and again during the 90 minute debate, Councilmen brought up how long running the efforts to create a comprehensive reform plan have been, and the amount the City could have save in that span of time, in order to build support for this plan. The phrase "it's not perfect, but we have to do something" came from multiple reps.

Potential issues

There were serious questions raised, including whether this reform plan will hold up, legally. Councilwoman Lori Boyer led a handful who were concerned that, because they didn’t believe the bill to be “collectively bargained”- by the Unions rather than the Police and Fire Pension Fund- provisions of the package dealing with benefits would eventually be overturned in the courts. Councilman Bill Bishop joined her concerns, saying if that happened, there would be an “even bigger mess”.

Ultimately, the City’s Pension Counsel noted that they would have a strong standing in the courts because the Unions involved did not object to how the proceedings were moving forward. Further, Gulliford pointed out that this deal returns future negotiations specifically to the Unions.

Next stop, Pension Fund

The term of this plan still doesn't quite meet what the Police and Fire Pension Fund had previously hoped for, preventing the City from declaring impasse for seven years, rather than ten. City Council had initially wanted a much shorter term than seven years because of concern about encumbering future Councils, but Gulliford offered this time frame as a compromise. This provision of the reform plan was a true sticking point in the PFPF Board's debate of prior pension reform proposals, so it's unclear how receptive they will be to the offer.

The PFPF Executive Director has indicated the Board will take up this latest reform plan at their June 19^th meeting. They must act by the end of the month, or the entire proposal sunsets.

The last reform plan sank after the PFPF Board made several changes to the Council-approved bill. When the amendments were brought back to Council, they couldn't win a majority vote.

Funding question

Even if this bill does clear the Board, the looming question is how the City will commit to funding about $350 million over the next 13 years to pay down the pension debt. Jacksonville is committed to $5 million the first year, $10 million the next, and the escalation continues..

Gulliford favors a sales tax to fund the increase. He had previously put forward a bill to get that on a ballot, but it didn't gain steam in time. He says he will still push the option, and as one of only a few returning councilmen, he may be in a unique position to do that.

If, in any year, the City fails to meet their designated payment amount, there are penalties. The PFPF is contributing to paying down the debt as well, so they would be allowed to reduce that contribution if the City falls short. The Board had sought stiff penalties against the City if it failed to meet its obligation, and harsher standards were adopted through amendment Tuesday night.

Path forward

Jacksonville Mayor Alvin Brown issued a statement following the vote calling it a “great result for taxpayers and out hardworking first responders.” He vows to work with the PFPF to enact the reforms.

Coming up with the funding line will likely be high up on the agenda for the incoming Council members and Mayor-elect, who take over soon. Several of the incoming councilmen attended this meeting.

Aside from the sales tax option, the City could weight other options which have been floated, like a property tax increase or plan that requires a boosted JEA contribution and borrowing.

The vote was 14-4, with Bishop, Boyer, John Crescimbeni, and Matt Schellenberg dissenting. Councilwoman Kimberly Daniels was absent.

We will continue to track this reform plan as it moves closer to taking effect and will break down what that means for your wallet.