By John Kennedy Eds: For immediate release. c.2012 Cox Newspapers
TALLAHASSEE (Cox Newspapers) — Florida municipal leaders say they expect state lawmakers will soon give them authority to rein in police and fire pension funds, which they say have mushroomed into a burden on taxpayers and drain cash from other needed services.
But union officials and even the lawmaker serving as point-man on the issue acknowledge that tackling pensions will require hard-nosed negotiations in coming months.
State Sen. Jeremy Ring, D-Margate, chairman of a Senate panel poised to take up the issue, likened the Legislature’s attempts to revamp pensions to Congress’ frustratingly contentious debates over Social Security and Medicare.
“It’s a complicated political issue with a lot of competing interest groups,” Ring said. “But there’s also plenty of blame to go around when you look at how we got here.”
Matt Puckett, a lobbyist for the Florida Police Benevolent Association, said that while his union has been open to making changes, city administrations have warred among themselves over what kind of fixes are needed.
Still, John Thomas, a lobbyist for the Florida League of Cities, said he is encouraged that after several years of failure, the political stars are aligned for change.
With 2013 a non-election year in Florida, the emotional rivalry that usually pits unions against Republicans may ease, he said.
“We just feel that there’s a real good chance of something getting resolved next spring,” Thomas said, looking ahead to the legislative session, which begins in March.
The target for cities is a 1999 law signed by then-Gov. Jeb Bush, who had been endorsed by the Florida PBA and firefighter unions in his campaign the previous fall against Democrat Buddy MacKay.
The measure requires that the growth since then of dollars flowing to cities from state taxes on property insurance premiums pay for additional benefits for police officers and firefighters. Under the law, city commissions have enacted a variety of pension sweeteners for police and firefighters, such as cost-of-living adjustments, lower retirement age, and increased “multipliers” for determining pensions based on years of service.
Thomas and municipal leaders say cities have spent hundreds of millions of dollars more on pension costs since 1999. The law also has created imbalances, critics say.
A report by the non-partisan Leroy Collins Institute in fall 2011 gave mixed reviews on the financial health of pension plans in 100 Florida cities, with one-third drawing D or F grades for being underfunded.
A follow-up study by the Collins Institute this year bolstered Ring’s analogy to Social Security and Medicare, concluding that some of the root causes of the pensions’ financial woes rested in shifting demographics.
David Matkin, the Florida State University public administration expert who studied Florida’s funds, said many have too few workers supporting a growing number of retirees.
Municipal budget cuts and the accompanying layoffs of personnel have contributed to the troubles, he said.
City commissioners in many locales now must earmark a larger share of their budgets for pension benefits, meaning that citizen services decline, Matkin said.
“They take up a space that is demanded by other services,” he said. “You have to have some budgeting trade-offs.”
Puckett of the PBA said that union officials two years ago were willing to agree to legislation that would have changed the way cities can use a portion of the tax they collect on insurance premiums tax dollars. Instead of having to finance upgrades in police and firefighters’ benefits, cities would have been able to maintain a pension funds’ viability with the tax money.
But lawmakers wound up agreeing only on relatively modest changes, including capping pensionable overtime at 300 hours per year and eliminating unused sick and vacation time from retirement calculations.
This year, however, a ruling by the state’s Division of Retirement in a case involving the city of Naples cuts municipal governments some slack. It would allow cities to scale back on pensions paid police and firefighters if governments can make a case that there are insufficient tax dollars to fund extra benefits.
Most involved in the pension fight say the rule is likely to be challenged in court -- and may not survive. But its appearance is fortifying attempts to readdress the 1999 state law.
Legislators, though, know they have to tread carefully with anything related to pensions.
While municipal pensions underwent slight changes two years ago, lawmakers at the time approved major changes to the Florida Retirement System. Over union opposition, they ordered the more than 600,000 teachers and other government workers in the fund to pay 3 percent of their paychecks to its financing.
Unions challenged the constitutionality of the 3 percent requirement and won a round in Leon County Circuit Court. The case is now before the Florida Supreme Court.
If lawmakers lose, analysts have said the state would owe $1.1 billion in back pay to public employees in the state retirement system. Without the employees’ contribution, the Legislature also would have to find an additional $861.2 million to finance the pension fund next year.
Ring, the Margate Democrat, said such a ruling would likely halt any work on municipal pensions.
“A ruling like that would consume everything next year,” Ring said.