JEA: We Cannot Afford To Pay Down The City's Pension Debt
The CEO of Jacksonville's municipal utility company says he doesn’t see how the company could pay an additional $40 million a year to help pay the city’s pension debt.JEA CEO Paul McElroy told Jacksonville City Council members Tuesday that JEA couldn’t boost its pension contribution without affecting customers or its bond rating.
McElroy said JEA has about $5 billion in debt to pay off along with other financial obligations that would make such additional commitments impossible.
He also said the utility expects new federal regulations to go into effect next year that will cost JEA about a billion dollars to implement.
The $40 million over 14 years JEA would pay, as proposed by Mayor Alvin Brown, works out to $560 million to get the city's pension fund paid to 80 percent of it's total debt obligation. It's an amount JEA Board Chairman Mike Hightower said is far more than the utility can afford.
"The JEA's first responsibility are to the rate payers," he said. "That is under the charter. These are not our rules it's the charter so when (the administration) says 'JEA send us your ideas,' the ideas we deal with is how do we help our rate payers."
Both Hightower and McElroy said they are willing to talk to the administration to express their concerns over pension reform or any proposal they may have. The city has not presented an official reform proposal to the JEA Board.
Several City Council members said they remain skeptical of the Mayor’s proposal.
Council President Bill Gulliford said he still doesn’t see going to JEA as a viable option.
"I think it came our loud and clear," he said. "I'm still of the same opinion I was at the outset it's not a solution. So did I get an answer? It just probably reinforces the thoughts I already had about that. it's not an option."
Mayor Brown presented his proposal to the city’s Retirement Reform Task Force last week. He lashed out at JEA officials for seeming to reject the proposal before any substantial talks with the city.
Brown maintains the utility can increase its pension payments without raising rates. He also said the pension discussions should be taking place through the Task Force.
"Let's sit down together and work together and let's flush it out and let's put the recommendation to the task force not play to the media or the city council or anybody," he said. "Take the politics out of it and have an objective, open conversation on working together."
The Retirement Reform Task Force meets Wednesday morning at City Hall. A subcommittee of the task force will meet on Thursday to discuss funding options to pay for pension reform.
You can follow Kevin Meerschaert on Twitter @KMeerschaertJax.