The Jacksonville City Council’s finance committee last week signed off on a record $209 million payment toward the police and firefighters pension’s massive $3 billion debt, as the fund’s financial health has deteriorated to one of its worst-ever states. 

That payment, in addition to Mayor Donna Deegan’s proposed billion-dollar police and fire budget, means costs for police service, fire protection and public-safety retirement costs make up more than 63 percent of the city’s entire $2 billion general fund. With the threat of Amendment 3 looming – a proposed property tax cut on the November ballot that could gut the city’s general fund by $300 million the first year – the City Council’s finance committee has voiced the need to cut. 

But no committee members have suggested cutting the city’s massive public-safety expenses.

Each year, the city is obligated to make a contribution to the Jacksonville Police and Fire Pension Fund. Those costs skyrocketed in the aftermath of the Great Recession as the fund’s investment returns took a dive, leaving city officials scrambling to make higher pension payments while still funding quality-of-life services.

The previous mayor, Lenny Curry, won voter approval in 2016 for a plan to extend a half-cent sales tax that was set to expire in 2030. Starting in 2031, the proceeds of that tax will help defray the cost of the police and firefighter’s pension debt. In the interim, the city essentially refinanced its pension debt, allowing it to make lower payments in the short term. 

Even with that plan in place, however, the annual costs have continued to climb.

“Then, the city was able to do more infrastructure, able to give raises,” Chief Administrative Office Mike Weinstein, one of the architects of Curry’s pension changes, said. “When the actuary looks at where we are today, we’re still way low, but by statute and referendum, it’ll be filled up once the half-penny starts.”

With that tax revenue not coming for five more years, the general fund is bearing the full and escalating costs. 

While the city’s pension closed in 2017 to new employees, the yearly payments are just going up – nearly $8 million more than last year’s record contribution — and the unfunded liability is now more than $3.36 billion. 

In this year’s budget hearings, the city routinely approved the minimum, obligated payment of $209,381,806, as recommended by an annual actuarial report. The pension’s funded ratio is just 43 percent, generally seen by actuaries as unhealthy. (The Florida Retirement Fund, soon open to new police recruits, is more than 80 percent funded.)

The half-penny tax will help alleviate all of the city’s unfunded pension plans, Weinstein said, until 2060 or the funding ratio is 100 percent. Most of the revenue, which the city assumed will increase by 4.25 percent each year until 2060, will go to the police and fire pension fund, including $76 million the first year, according to the report.

Even when that tax kicks in, however, the pension debt will continue to require huge payouts from the general fund for years. In 2031, for example, even as the fund’s actuarial report estimates that the sales tax will cover about $76 million in costs, the city will still have to shell out another $180 million on top of that.

The pension fund’s actuarial firm has for years recommended paying more than the minimum contribution, due to both the fund’s poor financial health and the five-year delay of the half-penny tax revenue.

“It’s a question of priorities, and we’d rather use it for the people that we’re servicing than put more money into that,” Weinstein said. “The pot is just so big, and it’s already 10 percent of our budget.”

With a $300 million budget shortfall predicted to decimate Jacksonville’s discretionary funds if Amendment 3 passes, the city’s huge public safety budget, including the pension fund’s obligated payment, will likely not be an area where the city is willing to cut back.

“You’re talking about an unknown, an uncertainty. That’s why I think if you were somewhat fiscally prudent, you’d probably look at some ways that you could continue to make additional contributions if that was possible,” former City Council President Bill Gulliford said. “Now, if this referendum passes, all bets are off.”

Molly Farrar is a Report for America corps member and The Florida Trib’s Jacksonville municipal watchdog reporter. She can be reached at molly.farrar@floridatrib.org.