What's On Your Ballot? County Referendum No. 1: Pension Half-Cent Sales Tax

Aug 12, 2016

At City Hall in July, Mayor Lenny Curry talked about how pension debt is preventing him from funding other city programs, like the Jacksonville Journey, as much as he'd like to.
Credit Jessica Palombo / WJCT News

Note: For Information about Duval County Referendum 1 on the November  ballot, go here. To read about the referendum that passed on the August ballot, continue reading. 

First in our “What’s On Your Ballot?” series, we’re taking a deep look at County Referendum No. 1: Pension Liability ½-cent Sales Tax Plan.

Walking around downtown Jacksonville recently, WJCT News asked Duval County residents to read Referendum 1 out loud and stop if they had questions. Everyone who talked to us said they were confused by at least part of the wording.

READ BELOW: County Referendum No. 1  

And here’s what that means:

Background

Jacksonville taxpayers are already paying a ton in pensions for police, fire fighters and general city employees. Pension costs are just under a third of Mayor Lenny Curry’s proposed operating budget. And they’re projected to rise every year for about 20 years, as Curry reminded bystanders in Hemming Park Thursday.

“To those that say, ‘I don’t want to have to deal with these pension costs,’ your taxpayer dollars right now are paying for these pension costs. And they’re your taxpayer dollars that ought to be providing city services to you, like roads, infrastructure, parks, sidewalks and investments in public safety,” he said.

Read the entire bill City Council approved to put the tax on the ballot here

Curry’s Proposed Solution: County Referendum No. 1

Curry wants to take an existing half-cent-per-dollar sales tax called the Better Jacksonville Plan tax, which is set to end in 2030, and extend it starting in 2031 as a dedicated pension funding source. Last year, that tax brought in about $73 million. But its extension comes with conditions outlined in the referendum:  At least one of three city pensions has to close to new members, and current members have to kick in at least 10 percent of their salary toward it. The three funds are for general employees, corrections officers, and police and firefighters.

AFSCME Local Vice President Ben Carder (at lectern) stands beside Mayor Curry before endorsing the pension tax plan.
Credit Jessica Palombo / WJCT News

And unions representing those workers are OK with that.

“All of the current employees who are in it will keep the benefits that they have. They’re not going to lose anything,” says Ben Carder, vice president of the biggest union for general city employees, the American Federation of State, County and Municipal Employees, or AFSCME.

Carder says closing pensions to new hires will help end a long period of uncertainty for city workers.

“In fact, I took a 2 percent pay cut seven years ago. So for our families, we’ve been put on hold, if you will, for those seven years, trying to wait for this pension debt to be taken care of,” he said.

Carder blames equal parts mismanagement and the Great Recession for Jacksonville’s underfunded pensions. If voters approve the referendum, his and several other unions will start negotiating whether they’ll close their funds and what happens next, meaning new hires could get a new kind of pension or enter the state retirement system or a privately managed plan.

The math

A city-commissioned actuarial report predicts the closure and increased employee contributions will together reduce the city’s pension costs by tens of millions of dollars a year for several years and then increase them at a time when there’s a dedicated funding source in place. Overall, the changes would cost $1.5 billion more — the cost of deferring debt payments — spread over about two decades. But if the half-cent tax revenue continues coming in at its current rate, it would add up to more than $2 billion over that same time period, more than offsetting the increase.

WJCT News Director Jessica Palombo solicits responses to Referendum 1 on the sidewalks of downtown Jacksonville.
Credit Vince Kong / WJCT News

  The opposition

Curry has many opponents to his plan, and several live in Duval’s beach towns. Beaches Watch Vice President Rory Diamond says many of his neighbors are among the “no” voters.

“‘We’re officially part of Jacksonville, but we’re our own cities who’ve made our own choices, so why should we have to bail out the city of Jacksonville?’ We hear a lot of that,” he says.

Diamond himself supports the measure, but he understands their point of view.

Other opponents are asking why the sales tax is the only option on the table and why the city doesn’t engage in collective bargaining to change the pension structure before asking taxpayers to fund it. Other opponents are saying the sales tax disproportionately affects the poorest residents while not providing them a tangible return on investment. At least under the Better Jacksonville Plan, the tax is applied to a wide range of infrastructure improvements, they say.

And former City Council Presidents Stephen Joost and Bill Bishop recently told the Florida Times-Union they oppose the plan for “kicking the can down the road” by delaying debt payments.

Perhaps the most vocal opponent is Concerned Taxpayers of Duval County, the group behind a lawsuit seeking to knock the pension referendum off the ballot for being too confusingly and misleadingly written. Read their entire legal complaint here.

The city has until Aug. 25 to respond in writing to the suit, and it’s not expected to get a hearing before the August 30 primary, meaning the vote will proceed and be counted.

Concerned Taxpayers President John Winkler says if voters approve Referendum 1, the suit will continue, and if it’s eventually successful after working through the legal process, the vote would be thrown out. That means, the earliest the issue could likely appear on a ballot again would be 2018, Winkler says.

If voters reject the referendum, he says, the suit would be moot. But there’s nothing preventing the city from rewording it and putting it on November’s ballot. 

Corrected: The spelling of Mr. Ben Carder's name was originally incorrect. The percent of a pay cut he took has also been corrected. 

Contact Jessica Palombo at 904-358-6315, jpalombo@wjct.org or on Twitter at @JessicaPubRadio.