Judge Upholds Tax to Fund Jacksonville, Florida Pension

City can move ahead with pension plan changes to relieve debt problem.

A senior court judge in Florida has rejected a lawsuit that had challenged a half-cent sales tax intended to help pay for the city of Jacksonville’s unfunded pension obligations.

The tax was approved by a voter referendum last year, however, a lawsuit filed by five Duval County residents argued that the language on the ballot was so confusing and misleading that it failed to comply with state law requirements.

In his ruling, Judge Donald Moran Jr. said he saw no grounds to overturn the referendum.

“A court has a duty to only set aside an election when it finds substantial non-compliance with statutory election procedure and reasonable doubt as to whether the election expressed the will of the voters,” Moran wrote in his judgment. “In the instant case, plaintiffs have made unconvincing allegations of non-compliance and have demonstrated to the court there is not any reasonable doubt as to whether the voters were able to accurately express their will.”

Moran also denied the plaintiffs’ claims that city officials “made intentional representations and abused their authority” while asking the public to support the sales tax.

The tax was proposed to help the city eliminate its $2.86 billion pension debt, which has increased the city’s yearly pension costs to $290 million in 2017, from $78 million in 2008.

While the sales tax won’t kick in until after 2030, the city will start seeing financial relief next year from it because it will push back a significant portion of the city’s unfunded pension obligations to a later date. Future sales tax revenue will count as a current asset for the city’s pension plans. Revenues from the half-cent sales tax will only be used to pay down pension debt, and the tax will end when the plans are 100% funded, or by 2060.

According to the mayor’s office, Jacksonville owns 25% of the total unfunded pension liability of more than 400 cities and counties throughout the state, paying nearly $300 million for its three public pension funds. The funds include the Police & Fire Pension Fund, the General Employees Pension Fund, and the Corrections Officers’ Pension Fund. Jacksonville’s contribution to the three pension funds has totaled nearly 25% of the city’s operating budget.

The ruling comes not long after the Jacksonville city council unanimously approved in late April Mayor Lenny Curry’s proposal to fix the city’s pension problem, which includes closing its three pension plans to new employees.

Under the new legislation, the city will help compensate for the closing of the defined benefit funds by paying into defined contribution accounts for new hires at a rate of 25% of pay for public safety workers, and 12% of pay for general employees.

“This is not a perfect plan,” Councilman Al Ferraro said after Curry’s proposal was adopted by the city council. “This is the best we can do.”




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