Jacksonville received 'D' for fiscal health

[jaxlongtimer]

I know a number of financial guru's that have looked closely at the City's finances over the years and who have warned that they are not good.  This is the elephant in the room that many don't want to talk about.  So, if the below report is accurate, it is not a surprise.

Before we talk about a new jail, stadium, convention center, septic tanks, better roads, developer tax incentives, autonomous vehicles, hiring more police, etc. it would be wise to address the foundation for funding our City.  Poor finances are likely related to low taxes and fees and that the proverbial fiscal can has been kicked down the road through multiple mayoral and City Council cycles.

I don't see how the City can responsibly contribute $1 billion toward the stadium or tackle other major projects based on this report.  And, if the City pulls a rabbit out of the hat for stadium, how much will they be mortgaging the City's financial future?

Jacksonville received 'D' for fiscal health

A new report on the financial condition of America’s 75 largest cities ranked Jacksonville no. 65 of 75 for its fiscal health in fiscal year 2022. The report found that the majority of the cities did not have enough money to pay their bills, despite increased tax revenues and COVID relief funds.

The analysis by Truth in Accounting, a non-profit government finance watchdog group, found Jacksonville needed $3.5 billion to pay its bills. This means that each Jacksonville taxpayer would have to pay $11,200 to get the city out of debt, which is why it received a "D" grade for its fiscal health.

It is important to note that continued market fluctuations, changing investment values, decreased COVID relief funds, and a stabilizing economy that may slow tax collections, could worsen Jacksonville’s financial health further.

https://patch.com/florida/jacksonville/jacksonville-received-d-fiscal-health

https://www.truthinaccounting.org/news/detail/financial-state-of-the-cities-2024

[Ken_FSU]

Yet another reason that it’s unfortunate that the well has been so badly poisoned regarding any discussions about the privatization of JEA. There would be a lot of potential drawbacks, obviously, but at $7 billion, we could pay off the city’s debts in one fell swoop, get out from under $250 million in annual debt service, put the remaining balance in an interest-bearing lockbox, and really push the city forward without raising taxes. In theory, shedding the debt service payments and adding the annual interest should offset losing JEA’s contributions to the general fund by over $100 million a year. Not advocating for it, but definitely think it’s one option that some very, very smart expert (without bias or incentive) should investigate and lay out the pros and cons for.

[Steve]

Yet another reason that it’s unfortunate that the well has been so badly poisoned regarding any discussions about the privatization of JEA. There would be a lot of potential drawbacks, obviously, but at $7 billion, we could pay off the city’s debts in one fell swoop, get out from under $250 million in annual debt service, put the remaining balance in an interest-bearing lockbox, and really push the city forward without raising taxes. In theory, shedding the debt service payments and adding the annual interest should offset losing JEA’s contributions to the general fund by over $100 million a year. Not advocating for it, but definitely think it’s one option that some very, very smart expert (without bias or incentive) should investigate and lay out the pros and cons for.

I agree. I was open to hearing legit arguments on JEA privatization. Then when it began to look like what it ended up being it ended up ruining any positive argument.

It was amazing to see the JEA conversation be the most bipartisan issue on earth during the mayor’s race.

[Tacachale]

I obviously wasn’t at the city in 2022, but this report is nothing like what I know of the city’s finances today. Unless they’re talking about paying off all bond issues or something, I don’t even see where that could come from. Certainly not a problem big enough to sell JEA off to a vampire like FP&L over.

[jaxlongtimer]

My #1 concern with selling JEA was within 5 or 10 years, if that long, the City would find itself right back where it was and the taxpayers would be wondering where all the money went plus we would lose the annual contributions of $150 +/- million dollars a year, as I recall, going to the City budget.

Jax's issues with debt are no different than many people and the Feds who continuously spend for today and don't worry about the effects on tomorrow as that will be someone else's problem.  Politicians brag all the time about what they did in office and rarely refer to the mess left for future officials. 

The Pension Fund is exhibit A.  Curry didn't fix it, he implemented a scheme to leave the problem for someone else 20 or 30 years down the road at great additional expense to the taxpayers but took credit for today's impact.

Another flavor of fiscal irresponsibility is with the autonomous vehicle/U2C project.   Officials seem to have no concern for its fiscal impact over the coming years.  Just kids in a candy store with a few hundred million dollars to blow.

Yep, give today's officials a few billion dollars and watch it disappear in a nanosecond on pet projects of the day with no plan for what will be sustainable for the long term.

[Ken_FSU]

Good breakdown here of how things are tracking from a debt perspective.

https://www.jacksonville.com/story/news/columns/nate-monroe/2023/10/20/billions-mount-as-stadium-talks-rising-sea-challenge-city-nate-monroe/71252859007/

[Jax_Developer]

Although I disagree with Field/Monroe on many things, our city needs more investigate journalist like him. Way too much funny business going on locally. JEA (buy out & septic), JTA, Stadium, Trio, OZ's... the list goes on.

[CityLife]

Yet another reason that it’s unfortunate that the well has been so badly poisoned regarding any discussions about the privatization of JEA. There would be a lot of potential drawbacks, obviously, but at $7 billion, we could pay off the city’s debts in one fell swoop, get out from under $250 million in annual debt service, put the remaining balance in an interest-bearing lockbox, and really push the city forward without raising taxes. In theory, shedding the debt service payments and adding the annual interest should offset losing JEA’s contributions to the general fund by over $100 million a year. Not advocating for it, but definitely think it’s one option that some very, very smart expert (without bias or incentive) should investigate and lay out the pros and cons for.

Glad you brought this up. I was pro privatization, as I think FPL delivers a better service than JEA, is far better in the clean energy business, and is years beyond JEA in implementing cutting edge technologies (NextEra/FPL is pushing to be the leader in hydrogen, for example). I also think it was an absolutely transformational amount of money that could have done more to change the trajectory of the City than anything else that could ever happen.

$7 billion basically enables the City to pay down any debts, create a truly world-class urban park system (and quickly), fund Jags stadium improvements, fund MOSH relocation and bridge any funding gaps, improve DCPS, improve transit/transportation, create healthy reserves, fund a few major corporate relocations, and so on.

It begs the question. Was COJ operating for years under the financial assumptions that it would be cash rich post JEA sale? And if so, should the City do a grand re-set based on the current state of affairs?