JACKSONVILLE, Fla. — Jacksonville’s state lawmakers and local leaders are worried pension reform approved by voters in 2016 could be at risk, and potentially expose the city to massive budget shortfalls.
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It’s all due to a 15-word change in the Florida House’s tax package and it could cost the city as much as $10 billion over the next three decades.
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Before former Mayor Lenny Curry managed to get pension reform through the Florida Legislature and approved by Jacksonville voters in 2016, Jacksonville’s budget was in crisis, with pensions making up 20 percent of annual spending.
A key piece of that plan was levying a half-cent sales tax to shore up pensions for police, firefighters and city employees in order to free up other city revenues for needs like infrastructure.
State Representative Wyman Duggan (R-Jacksonville) explained the tax was intended to stay in place as late as 2060.
“The Curry administration hit a grand slam home run in getting this funding solution put in place because otherwise, the impact on city finances was going to be catastrophic,” said Duggan.
RELATED: Tax package in the Florida House could put Jacksonville city budget back in pre-pension reform chaos
But a provision tucked away in a tax package full of back to school and other sales tax holidays would require any sales tax levied to pay for municipal retirement plans to sunset ten years after initial voter approval.
That would mean to keep the funding, Jacksonville voters would have to reapprove the pension sales tax again in 2026 and every ten years thereafter to ensure the city doesn’t end up with a massive hole in its budget.
“And there’s always an element of risk and unknown and uncertainty in any kind of election,” said Duggan.
Council President Ron Salem (R-Group 2 At-Large) noted if a future referendum failed to pass, the city would be in serious financial trouble.
“Losing that pension tax would be devastating to the city budget,” said Salem.
According to the council auditor, without the tax the city would have been on the hook for an additional $113 million this year alone, equating to roughly 6.5% of the current $1.75 billion budget.
RELATED: City leaders support Mayor Lenny Curry’s pension tax plan
The provision popped up in the House bill just days after Mayor Donna Deegan and her chief negotiator on the Jags stadium deal floated the idea of financing the project with funds from the city pension.
Duggan noted the tax originally had to be approved by the state legislature, which according to Duggan has had a strict policy against spending taxpayer dollars on stadiums deals for more than a decade.
“Nobody who voted for it back then would have voted for it, to allow it, if they thought it was going to be diverted at some point for stadium improvements,” said Duggan.
While Duggan said he doesn’t believe there’s a direct connection between the provision in the tax bill and the idea of using pension dollars for the stadium, Salem does.
“My guess is, when they heard us talking about manipulating the tax in some way to pay for the stadium, some state legislators over there got a little upset and put this in to get our attention over here. I think they have,” said Salem.
Action News Jax reached out the mayor’s office and asked whether the threat of losing the half-cent pension sales tax would take the possibility of financing the stadium with pension funds off the table.
“Since voters approved the sales tax referendum in 2016, every budget and financial decision has been made with its impact in mind. The loss of this revenue would have a substantial negative impact going forward. We are actively educating legislators on the unintended consequences this legislation will have for Jacksonville,” said Deegan’s office in an emailed statement.
RELATED: Jacksonville mayor continues to push sales-tax extension to pay down pension debt
Salem argued the city could easily fund the stadium through traditional bonds and considering the potential risk of using the pension fund, city leaders should reconsider their options.
“Keep in mind, this could come up next year in the state legislature. So, I think we need to take a hard look at whether using these pension dollars is really what we want to do,” said Salem.
The tax bill is currently ready for a vote on the House floor.
Duggan said it’s his hope to have the language removed or fixed before it’s too late.
“One way or the other, we’ll get it right,” said Duggan.
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Whether that’s contingent on the city abandoning the idea of financing the stadium with pension funds remains to be seen.
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