The Battle Lines Are Forming
Last week, during The Jacksonville Observer Radio Show, Randy Wyse, the president of the Jacksonville Association of Firefighters Local 122, told me he’d just come from a meeting at City Hall in which he said the union would not be negotiating on pensions.
“We feel like we’re in a position where we don’t have to,” he told me, and the WBOB audience.
It was a very interesting interview, and a point of view that I don’t think is heard very often.
The Administrator of the Police and Fire Pension Fund, John Keane, said the “bankrupting the city” argument would never hold with nearly 10 mils of headroom in the city’s taxing authority. Mr. Keane did not advocate raising taxes, but he also did not think the city was headed for bankruptcy without significant changes in the pension system.
About the two-tiered pension system, which has worked for the federal government for years, both Wyse and Keane said it was a basic fairness issue. People risking their lives in the same way deserve the same pension, was their contention. Very few people have been killed in the line of duty around the water cooler, Keane said.
Ok, fair enough.
But earlier this year, City Council President Richard Clark said at a Tiger Bay Club meeting that the police and fire unions don’t want the issue to go to impasse, because then it will be decided by the council. And the mood of the council right now is probably not tremendously favorable towards the pension funds not making some concessions for the good of the city budget.
From an historical perspective, the city has faced pension woes before. The opening paragraphs of the JCCI 2009 city budget study point out that in two previous studies of the city’s finances, pensions have been cited as a leading issue. In 1977 “The volunteers found Jacksonville’s financial position “to be basically sound, with the exception of the underfunding of its pension plans.” In 1992, “Pension underfunding was a problem, and the City was engaging in short-sighted financial planning without forecasting models to adequately plan for future needs.”
Now, pensions are an issue again, and it would seem that the battle lines are forming. On the one hand, the city is looking for every ounce that it can squeeze to avoid raising taxes in a recession. Next year’s budget process is already underway, and with the mayor’s race already taking shape as well, the financial health of the city is going to come under a great deal of scrutiny over the next 17 months.
On the other hand, the unions appear to be drawing a line in the sand. They seem to have very little interest in making any concessions, and don’t think the city’s financial health hinges on guaranteed payments to the police and fire pension fund. “The benefits are the same as they were two years ago, five years ago, 10 years ago,” Keane said during the show. “Nobody seemed to think they were too rich then.”
While the police and fire pensions are the most-often mentioned in this discussion, there are two other pension funds in play as well. The general employees fund and the corrections officers fund. All are underfunded at the current time, but the unfunded liabilities for the general employees fund and the corrections officers fund combined slightly less than the unfunded liability for the police and fire pension fund. It is also important to note that the unfunded liability for the general employees fund is about 5 times the liability for the corrections officers fund, according to the JCCI Report.
This pension issue is likely to be at the forefront of the upcoming Mayor’s and City Council races, along with the rest of the city’s finances. If, as Mr. Wyse said, the Firefighters Association “will not negotiate on pension benefits,” and the city insists, then an impasse seems likely, and no one is quite sure what the ultimate outcome of such a scenario might be.
No one is suggesting that those who put their lives on the line every day should be shortchanged. As was pointed out on Wednesday’s show, when everyone else is running out of the burning building, the firefighters run in. And when the shooting starts, and everyone is running away from the shooter, the police run towards him or her. We owe them more than just a huge debt of gratitude. But for better or worse, this is all going to play out in a very public arena against a backdrop of a long political campaign and an economy that has 10 percent of the nation’s population looking for a job and another likely 7-10% under- or self- employed. It’s unlikely very many of them are worrying about a pension.
Something tells me it’s not going to be pretty.