Mayor Addresses Jacksonville's Financial Crisis

June 25, 2009 13 comments Open printer friendly version of this article Print Article

Mayor John Peyton today outlined a three-part plan to address Jacksonville's financial crisis, ensuring that critical government services remain intact and that the city continues necessary investments to preserve the quality of life for Jacksonville?s residents.

Lost revenue and skyrocketing pension expenses have taken $180 million from the coffers of the city in the upcoming budget year.  This includes $100 million in forced cuts from Tallahassee, $40 million from the global economic crisis and $40 million in increased pension costs.  

“Cities across the state and country are struggling with significant budgetary challenges and Jacksonville is no different,” said Mayor Peyton.  “Given this city’s $180 million challenge it is clear that the math of Jacksonville’s budget does not work.  We must make cuts.  We must reform the pension system.  And we must generate new revenue.  However, all three elements must work together to ensure modest impacts to property owners, while ensuring that basic city services are still available to the community.”

The mayor’s plan includes significant cuts to the city’s operating budget, sustainable pension reform and a modest revenue increase.

Cuts to the city’s operating budget
At the mayor’s direction, the city’s budget and management teams have identified $40 million in additional cuts for the upcoming budget.  These cuts include a 5 percent, across-the-board budget cut in all non-public safety departments and the elimination of more than 100 positions.  In addition, Peyton will take to the collective bargaining table a proposal to freeze pay for all city employees and an unpaid furlough for all non-public safety employees.

“My administration has consistently taken steps to keep our operations lean,” said the mayor.  “Our employees have done a phenomenal job of keeping pace with service demand with a smaller workforce and a tight rein on expenses.  And we will continue to work toward new efficiency gains every day for the balance of my term.”

Since 2006, Peyton has eliminated approximately 400 positions in government. In addition, government has been reorganized to seek greater efficiencies by more closely aligning like-functions.  Further, the Jacksonville Economic Development Commission has been cut in half and a number of other departments and divisions have been trimmed.  

Sustainable pension reform
The second step in the mayor’s plan is to propose a series of reforms that will be fair, competitive and sustainable to address the city’s current pension model. In total, the current unfunded pension liability is $1.2 billion.

The magnitude of the city’s pension obligation is real and exponentially increasing.  For example, six years ago, the city’s annual pension obligation was approximately $40 million. Next year, it will be nearly $110 million. Ten years from now, the pension obligation will be $260 million.

Key elements of pension reform could include modifying the 8.4 percent DROP guarantee, the retirement age and years of service criteria, employee contribution rate, cost of living implementation and other issues.  These reforms will be negotiated at the collective bargaining table.

Revenue increase
Despite aggressive cuts, filling the budget gap requires an additional $60 million.  In order to close this gap, the mayor will propose to the Jacksonville City Council on July 13, a millage rate increase. Based on the current estimates provided by the Duval County Property Appraiser, the proposal may include an increase of approximately 1.2 mils.  An increase from 8.48 to 9.69 mils will cost the average homeowner in Jacksonville approximately $115 more next year than in the current year.  The final millage proposal will be based on the July 1 tax roll as identified by the property appraiser.

“This decision to raise new revenue is difficult, and was not made hastily.  However, the alterative to this revenue increase would be $100 million in cuts next year and detrimental financial, social, cultural and safety impacts on this community,” said Mayor Peyton.

Examples of such cuts, in the absence of a millage increase, would include:
- Closing two fire stations,
- Closing five libraries,
- Close 10 community and senior centers,
- Closing the Cecil Equestrian Center,
- Eliminating the city’s residential recycling program,
- Closing The Ritz Theater and LaVilla Museum,
- Significantly reducing the city’s special events, and
- Cutting children’s programs.

“The proposed millage increase would take our property tax rate to approximately what it was prior to Tallahassee’s micromanagement of our local budget,” said Mayor Peyton.  “If we don’t fix it now, it will take more than a decade to get back to where we need to be, even if the economic boom were to start again tomorrow.”

Community engagement

Mayor Peyton called for a broad community conversation about his budget proposal and the importance of investing in Jacksonville.  He will be announcing a series of budget workshops next week.

“Through two-way dialogue and focused efforts to build consensus, we build a stronger community and confidence in our budget and this government.  Our goal will be candid, transparent engagement about this year’s budget as we work though this process together,” Peyton said.

Peyton noted that two years ago, when Tallahassee forced property-tax reforms across the state, the people of Jacksonville began a community-wide conversation about the city’s financial condition. In the end, Duval County was the only urban county in Florida to vote against Amendment One. Our financial condition has been a near constant topic of conversation almost every day over the last two years.

The mayor encouraged residents to educate themselves about the budget by visiting, a Web site created by the Mayor’s Office.