4 Reasons to VOTE NO on Mayor Curry's Tax Proposal

[Metro Jacksonville]

4 Reasons to VOTE NO on Mayor Curry's Tax Proposal





Read More: http://www.metrojacksonville.com/article/2016-jun-4-reasons-to-vote-no-on-mayor-currys-tax-proposal

[Charles Hunter]

Interesting. Anxious to see the rebuttal.

Oh, and what does the MPP with Aresh's name mean?

[TheCat]

I'm interested in seeing the rebuttal too but the mayor's office seems reticent to provide concrete information.

They know the actuarial report that everyone is reviewing is not helping their case.

The mayor's office has calculated that the payment will increase to $430 million. The actuarial firm that created the report I referenced in the article does not come anywhere near that number. So, Financial Services Director Mike Weinstein has told the Times-Union not to worry that they are working with the actuarial firm to create a more threatening report. 

http://jacksonville.com/news/metro/2016-05-15/story/reports-jacksonvilles-future-pension-costs-have-dramatically-different

While making the case for voter approval of a half-cent sales tax in August, Mayor Lenny Curry has said the city’s annual pension costs for its three plans — police and fire, general employees, and corrections officers — will balloon from $260 million this year to $433 million in 2039. That figure comes from in-house calculations done in early January by the city’s finance department.

But a different report issued in February by Milliman, an actuarial firm hired by the city, paints a much less dire picture for the portion of pension costs attributable to the Police and Fire Pension Fund. Based on Milliman’s long-range projections, the city would be paying about $113 million less in 2039 for police and fire pension costs than the city’s in-house number-crunching estimates.

The long-range cost projections are important because voters will be deciding Aug. 30 on whether they will support a half-cent sales tax as a long-term funding source for paying down the city’s $2.85 billion pension debt.

Financial Services Director Mike Weinstein acknowledged the variance in the financial projections.

“You can basically say that under different scenarios that have been done over the past six months, you get different numbers,” Weinstein said.

He said the city recently told Milliman to do an updated 30-year projection for the Police and Fire Pension Fund that would use the most current data and assumptions available to pin down future costs. The city will likewise do actuarial studies for long-term costs of funding the General Employees Pension Plan and the Corrections Officers Plan.

“They’ll be the most accurate numbers that we have,” Weinstein said.

Weinstein said those reports should be done in mid-June, so the information will be available before voters head to the polls for the Aug. 30 referendum unanimously supported last week by City Council.

If approved by voters, the half-cent sales tax would begin after the Better Jacksonville Plan’s sales tax expires around 2030. The pension-funding sales tax would run through 2060 or when the city achieves full funding of its existing pension plans, whichever comes first. The city’s target for full funding is around 2045.

A year ago, the city completed pension reform for police and firefighters by cutting back what new hires will get when they retire. The agreement also modified the benefits that police and firefighters already on the job would earn.

The February report by Milliman showed that based on that agreement, the city’s annual costs for the police and firefighter plans would rise from around $160 million this year to $202 million in 2027. Then the payments would glide down and stabilize. For instance, the estimated payment would be $157 million in 2039.

In contrast, the spreadsheet done in-house by the city shows the cost for police and firefighter pensions will keep rising until it peaks at almost $270 million in 2039. The cost for the general employee pension plan would be $140 million and the corrections officers plan would be roughly $23 million, adding up to nearly $433 million cited by Curry and other administration officials.

But that report calculated future pension debt paydown costs based only on expected payroll growth, and it wasn’t intended to take into all the other complicated factors that go into an actuarial study.

The Milliman report in February is an actuarial study. But Weinstein noted that Milliman put disclaimers into the report stating the results were based in part on data going back to 2012. The reports expected next month will use more current information, and that will result in different cost projections.

“It doesn’t change the picture,” Weinstein said. “The picture is a bad picture, but we don’t know exactly what the costs are going to be because they change literally every year.”

 

[TheCat]

Oh, Masters in Public Policy. I'm part of the first cohort to go through JU's Public Policy Institute, which is under the directorship of Rick Mullaney.

Spelled,  Arash 

[UNFurbanist]

So here's my thing... Personally I don't support the plan but Curry essentially has a strangle hold on the city. If it doesn't pass then we will start to see budgets cut to desperately tiny levels and not a single new project downtown or anywhere else will get funding. We will go anaemic and won't be able to pay for any quality of life improvements which will tank our standing as a city even worse. We desperately need improvements right now to even hope to compete with other large cities in the US. So how will voting no on this help in any way on that front?

[TheCat]

How will voting yes help on  that front? For the next 15 years this plan does essentially nothing to help with the obligation. post-2030, we're still managing to take out big chucks of $$$ from the budget to subsidize the pension tax.

If you look at page 3, "still constrains the budget" ( hopefully I explained it well enough) the tax frees up at either $56 million or $68 million. Even that amount is dubious because the mayor's office has not outlined how he plans to reduce the obligation if the tax passes.

The general budget is still on the hook for well over a hundred million dollars each year, well before the tax ever kicks in. We're still struggling even if Curry figures out a way to lower our obligation payment.

A lowered obligation is only temporary. What ever we don't pay comes back to haunt us at a much larger and more unmanageable levels.

[thelakelander]

So here's my thing... Personally I don't support the plan but Curry essentially has a strangle hold on the city. If it doesn't pass then we will start to see budgets cut to desperately tiny levels and not a single new project downtown or anywhere else will get funding. We will go anaemic and won't be able to pay for any quality of life improvements which will tank our standing as a city even worse. We desperately need improvements right now to even hope to compete with other large cities in the US. So how will voting no on this help in any way on that front?

What improvements specifically? With the different type of funding mechanisms out there, several projects won't be impacted by the results of the vote either way. For example, the JAXIS project already has its funding, which comes from JTA and the feds and the Fuller Warren bike path is being paid for by FDOT. Projects like Vestcor's LaVilla Lofts and Beneficial's Houston Street Manor are both being largely funded with federal tax credits. Some others like Baptist MD Anderson, Broadstone Riverhouse and the CVS at Brooklyn Station are being funded with private dollars. Also, I believe Riverplace Blvd's revamp is being paid with TIF money. To a degree, downtown development in general should probably be a separate discussion altogether. Even communities like Detroit and Birmingham, that have actually filed for bankruptcy, are still seeing heavy reinvestment in their downtown cores. Jax can get there too, but Jax's issues have just as much to do with revamping public policy as money for subsidizing development projects.

[hiddentrack]

The follow-up posts have reminded me of something I always try to keep in mind: if one side is trying to scare you into supporting their position, if they're holding a process hostage until they have your support, they're most likely supported by a very weak argument. It's hard not to see this is the case with Curry right now.

I hope a counter-argument (if there's someone here willing to make one) will be shared so both sides can make their case, but this article makes a very strong argument. I don't know what the best solution to this problem would be, but I can't believe it's going to come easy, and this fix just seems like trying to take the easy way out. Curry's ambitions beyond Jacksonville are obvious, and this is the low-risk gamble he's willing to take in the hope it will offend no one. Unfortunately it doesn't seem like it's going to help anyone either...

[TheCat]

^+1

[vicupstate]

So here's my thing... Personally I don't support the plan but Curry essentially has a strangle hold on the city. If it doesn't pass then we will start to see budgets cut to desperately tiny levels and not a single new project downtown or anywhere else will get funding. We will go anaemic and won't be able to pay for any quality of life improvements which will tank our standing as a city even worse. We desperately need improvements right now to even hope to compete with other large cities in the US. So how will voting no on this help in any way on that front?

If it doesn't pass, the city will have to go to plan B. And yes there is one, they just won't say what it is. If Curry wants to be re-elected, he simply can't hold everything else in the city hostage to the pension. 

[UNFurbanist]

So here's my thing... Personally I don't support the plan but Curry essentially has a strangle hold on the city. If it doesn't pass then we will start to see budgets cut to desperately tiny levels and not a single new project downtown or anywhere else will get funding. We will go anaemic and won't be able to pay for any quality of life improvements which will tank our standing as a city even worse. We desperately need improvements right now to even hope to compete with other large cities in the US. So how will voting no on this help in any way on that front?

What improvements specifically? With the different type of funding mechanisms out there, several projects won't be impacted by the results of the vote either way. For example, the JAXIS project already has its funding, which comes from JTA and the feds and the Fuller Warren bike path is being paid for by FDOT. Projects like Vestcor's LaVilla Lofts and Beneficial's Houston Street Manor are both being largely funded with federal tax credits. Some others like Baptist MD Anderson, Broadstone Riverhouse and the CVS at Brooklyn Station are being funded with private dollars. Also, I believe Riverplace Blvd's revamp is being paid with TIF money. To a degree, downtown development in general should probably be a separate discussion altogether. Even communities like Detroit and Birmingham, that have actually filed for bankruptcy, are still seeing heavy reinvestment in their downtown cores. Jax can get there too, but Jax's issues have just as much to do with revamping public policy as money for subsidizing development projects.

Overall, I agree with you. I guess the specific downtown project I was thinking of was the Trio and Barnett. That will require a significant public investment and if this doesn't pass then there isn't a snowball's chance in hell it'll get that funding. Which is sad because I see that as the most important project DT. Maybe this is naive because it probably doesn't have much of a shot at getting funding anyways but I just know I won't be able to stand 3 more years of Curry basically refusing to fund or even talk about any project because this pension plan didn't pass. I am no expert at pension issues by any means and I know there are much better was to tackle this problem but I guess I just wanted to hear how shooting this down will cost DT/Urban Core development.

[coredumped]

If it doesn't pass, the city will have to go to plan B. And yes there is one, they just won't say what it is. If Curry wants to be re-elected, he simply can't hold everything else in the city hostage to the pension. 

I thought he said plan B was to raise our property taxes 30 percent:
http://jacksonville.com/news/metro/2016-05-31/story/curry-warns-30-percent-property-tax-increase-if-voters-dont-support

[Non-RedNeck Westsider]

Arash, can you, or anyone for that matter, explain why there's such a massive change from '42-'43?

I think I understand the larger moving parts behind the plan, but I don't understand why there's such a jump - both ways - 27 years from now.

[bast553]

I have a few questions:

1. We have never considered pension obligation bonds. Interest rates are extremely low now, and it's better over a long term period to incur low-interest debt now and invest the capital to pay dividends in the future. Pension bond money can be invested in areas closed off to general muni bonds (which I believe is how we're finding contributions now, unless we're just funding it through tax receipts). The capital for pension bonds can be spread further to allocate risk and hedge against inflation and recession, thereby mitigating the damage of systematic, long-term, grossly-negligent mismanagement (see generally the management of Keane et al).

2. Curry does not explain what happens when we need BJP money for BJP things.... This is an issue, as the BJP investments have costs associated with them.

3. Are there seriously no other ways to fund PFPF? I remember Curry saying a billion dollars was enough money to run a city. I bet if you look hard enough you can find savings. See generally EverBank Field improvements, a series of incidents during which the City Council rubber stamped proposals to add to a stadium the city cannot afford for the purpose of pleasing the personal desires of a billionaire, whose income increases as a result of the capital improvements funded by spontaneously-available tax revenue.

4. Nobody since 2001 has ever invalidated (or attempted to invalidate) the 30-year CB agreements with the unions, contrary to what is permissible under the Florida constitution...

I'm sure I can think of other questions I have about this ridiculous idea.

[thelakelander]

So here's my thing... Personally I don't support the plan but Curry essentially has a strangle hold on the city. If it doesn't pass then we will start to see budgets cut to desperately tiny levels and not a single new project downtown or anywhere else will get funding. We will go anaemic and won't be able to pay for any quality of life improvements which will tank our standing as a city even worse. We desperately need improvements right now to even hope to compete with other large cities in the US. So how will voting no on this help in any way on that front?

What improvements specifically? With the different type of funding mechanisms out there, several projects won't be impacted by the results of the vote either way. For example, the JAXIS project already has its funding, which comes from JTA and the feds and the Fuller Warren bike path is being paid for by FDOT. Projects like Vestcor's LaVilla Lofts and Beneficial's Houston Street Manor are both being largely funded with federal tax credits. Some others like Baptist MD Anderson, Broadstone Riverhouse and the CVS at Brooklyn Station are being funded with private dollars. Also, I believe Riverplace Blvd's revamp is being paid with TIF money. To a degree, downtown development in general should probably be a separate discussion altogether. Even communities like Detroit and Birmingham, that have actually filed for bankruptcy, are still seeing heavy reinvestment in their downtown cores. Jax can get there too, but Jax's issues have just as much to do with revamping public policy as money for subsidizing development projects.

Overall, I agree with you. I guess the specific downtown project I was thinking of was the Trio and Barnett. That will require a significant public investment and if this doesn't pass then there isn't a snowball's chance in hell it'll get that funding. Which is sad because I see that as the most important project DT. Maybe this is naive because it probably doesn't have much of a shot at getting funding anyways but I just know I won't be able to stand 3 more years of Curry basically refusing to fund or even talk about any project because this pension plan didn't pass. I am no expert at pension issues by any means and I know there are much better was to tackle this problem but I guess I just wanted to hear how shooting this down will cost DT/Urban Core development.

Unfortunately, I'm not sure that project will get the amount of public money it needs regardless of the pension issue.