Mayor Alvin Brown on Tuesday proposed a new plan to fund the deficit in the Jacksonville's Police and Fire Pension Fund: Have JEA -- the city-owned utility -- contribute $40 million per year.
Asked if this plan to avoid a tax increase by asking the JEA for the money could result in an increase in electric or water/sewer rates, he said he did not believe it would.
The JEA has not responded to the idea.
In announcing the proposal to the Jacksonville Retirement Task Force, Brown stressed the urgency of finding a dedicated funding source.
"On Thursday, the Moody's ratings agency announced that Jacksonville was one of 256 American cities being place on credit review for the next 90 days," Brown told the panel. "A downgrade in that credit rating would not only hurt our city prestige, but also hurt taxpayers."
In addition to asking for the JEA contribution to funding pensions, Brown proposed three changes that would affect current employees:
- Ask current police officers and firefighters to increase their pension contribution from 7 to 8 percent. And once the city restores the 2 percent pay cut that fire employees took in 2010 and police officers took in 2012, the pension contribution would increase to 10 percent.
- Modify the guaranteed rate of return for current employees in the Deferred Retirement Option Program (DROP) from the current 8.4 percent guaranteed return to the actual rate of return, subject to a cap of 10 percent and a floor of 0 percent.
- Modify the coast of living adjustment (COLA) for current employees from the current guaranteed 3 percent to a rate tied to the Social Security COLA and capped at 1.5 percent.
Brown says the plan would save the city $2.75 billion over 35 years and, "To help once and for all solve retirement reform.
Brown also also spoke against suggestions that the City Council devote an additional $200 million per year from the general fund to reduce the deficit.
"Some Task Force members have suggested increasing taxes to accelerate payment of the unfunded liability," Brown said. "I cannot support a tax increase. Our economy is growing, but that growth is fragile. We do not need to raise taxes to achieve comprehensive retirement reform."
He added that the proposal is contingent on reaching agreement with JEA on their contributions, but "I am confident that we will find a way to partner that supports JEA's bottom line and provides the city with a funding source to accelerate the payment of our unfunded liability."
Chairman of the JEA board, Mike Hightower, said late Tuesday this was the first he'd heard of the proposal, and while he would have to review all the details, past efforts to get the JEA to contribute more to the city's general fund have not been considered favorably.
The mayor's plan would also require approve of City Council and the Pension Fund.