I hope you have all been enjoying this warm summer! Things are heating up at City Council, too as we begin the budget review and the August campaign season is in full swing. But nothing on the August ballot is of greater importance to our City than Referendum #1 on the pension sales tax.
As you know by now, the Mayor successfully persuaded the Legislature to give us this unique opportunity to solve our pension debt crisis once and for all. You will have the opportunity to vote August 30th, regardless of party affiliation, on this important decision for our future. (Absentee ballots are already out. This tax will simply replace the existing ½ cent sales tax beginning in 2030 and does not increase the tax burden above what is being paid today. I hope you will vote yes!
Our operating budget is strangled by the unfunded pension liability contribution we are required to make each year- the $270+ million this year equals 27% of the entire operating budget and over 50% of the total property tax revenue we collect. This payment is not what we pay out in the coming year to those receiving benefits today. It also is not something we can reduce through negotiation or refuse to pay- the amount represents benefits already earned that will need to be paid in the future. It is a debt of the City just as if we had borrowed money from a bank and had to pay it back over time for the next 20 years. The benefits earned were part of the compensation given to employees, and we cannot retroactively change that. State law requires that we make annual payments into the fund to insure the money will be there in the future to make the benefit payments. It is this annual payment that is preventing us from providing the current services and level of maintenance you are entitled to receive.
So how does the pension sales tax solve that problem? First the State legislature provided you, the citizens of Jacksonville, important safeguards. The money generated can only be used for the sole purpose of paying down this debt. Secondly, even if you vote yes, the tax cannot go into effect in 2030 unless one or more of the pension plans have been closed to new employees and the money is only available for the closed plan’s debt- in other words the debt has to be fixed and cannot continue to grow unchecked. Third, because the plan is closed, and many of the benefits are actually due in future years, the timing of revenue matches the timing of much of the liability.
If you pass the referendum, our budget picture will improve in the coming years. That action will impact the current budget primarily in terms of perspective- are we able to look toward growth and investment in the City for the future, or must we continue to focus only on immediate crises and needs. It may also have a modest positive impact on the currently required annual payments providing a small amount of current budget relief. Please take the time to learn about this decision and I hope you will join the Mayor and entire City Council who voted in support of the referendum.