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Pension reform task force looking at options, including tax hike

5:36 PM, Jan 8, 2014   |    comments
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JACKSONVILLE, Fla. -- The Retirement Reform task force met again Wednesday morning to try and hammer out a new plan to pay down existing pension debt and reform the city's pension plan.

The city owes the pension fund some $1.7 billion in unfunded liability. One idea being discussed is the city paying $90 million extra to the pension fund each year to pay off the debt.

Chairman Bill Scheu was asked if  that means a possible tax hike is on the table. 

"Absolutely," said Scheu. "There is no revenue side of it that we have taken off the table. But that does not mean that is where we are going to end up. All matters are on the table but that means other revenue matters are on the table too."

Mayor Alvin Brown said again that the problem must be solved. But he is against any new taxes.

"I am opposed to any taxes, I have said that all along,  I don't think we can afford taxes, I am against any tax increase in this city."

The task force said that if nothing is done, pension costs will be over $400 million by 2036. They are looking at new pension plans for new employees to reduce costs, including retirement at 30 years rather than 20 years as it is now. The plan would call for increased employee contributions and lower cost of living raises.

The task force is recommending that a financial advisory committee be appointed to advise the pension fund on how to best invest. The task force is also recommending that a return of 5.4 percent a year be used to calculate costs, not 7 percent as it is currently. That would increase costs to the city, but a safe way to go they say. But if the return is 7 percent or better, then the city would pay off the debt sooner.

The task force has another meeting in January and one on February 12, where they are to give their final recommendations to fix this pension funding crisis.

Their goal is to come up with a plan to pay down the existing debt without threatening key government services, forcing unsustainable tax increases or breaking the promise to workers and retirees.

"We have to fix the problem," said Mayor Brown. "I will look at all the options I am given. I am confident a new plan will be ready in time for the next budge process."

Pension executive director John Keane told First Coast News that "the task force is making some small steps in a long journey."

First Coast News

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