Some Calling Formation Of Coalition Pushing For Local Pension Reform 'Disingenuous'

Aug 15, 2014

After the issue died during the 2014 session, should Florida lawmakers revisit a push to make changes to municipal pensions largely affecting police and firefighter unions? A coalition made up of mainly business-backed groups say yes. But, some say while they agree, the recent formation of the coalition pushing for local pension reform is disingenuous.

Bill To Be Filed In 2015

"I feel like they are being a little disingenuous...I just find it to be a bogus coalition."

What everyone does agree on is there’s trouble within the local pension system. And, this year, two Florida Senators, Rob Bradley (R-Fleming Island) and Jeremy Ring (D-Margate), brought forward a compromise that also had universal agreement. But, the bipartisan bill got tied to a controversial effort to overhaul the Florida Retirement System. That killed both bills.

“…ultimately got caught up in sort of the pension politics in the FRS [Florida Retirement System] issue, and negotiations between the House and the Senate fell apart, and we weren’t able to pass a local pension bill. We’re going to try again next year,” said Bradley.

Bradley says he’s looking forward to working with Senator Ring on this issue. It’ll be their third time working on this together, and Ring hopes the third time’s the charm. He says they’re close to filing the exact same bill as last time before it was tied to the state pension effort—a priority of House Speaker Will Weatherford.

“…because the bill last year was in negotiations between the cities and the unions. As far as we were concerned, it was done. The only reason it didn’t pass was because the [House] Speaker got it caught in two larger bills. But, it’s ripe! It’s ready to go,” said Ring.

Why The Need For Local Pension Reform?

Florida League of Cities’ Legislative Director Scott Dudley says it all started with a 1999 law that required local governments to pay for extra benefits for police and firefighter pensions.

“I think that the ’99 law basically provided extra benefits to police and firefighters—at a time when, perhaps, the economy allowed for such a thing. We were in a better economic situation, etc. I don’t think that it looked long enough down the road to see what the potential problems are later. And, we’ve come to realize now what those problems are.”

Local governments use insurance premium tax revenues, or the excise tax levied by the city upon property and casualty insurance companies, to help fund the pension plans as well as the extra benefits. But, Dudley says over the course of more than a decade, that mandate by the Florida Legislature not only tied the hands of local governments—costing them hundreds of millions of dollars—it also left the plans unsustainable.

According to Florida TaxWatch, one third of all municipal pension plans are less than 70 percent funded and have amassed close to an $11 billion deficit because of the extra benefits.

While cities blame the ’99 law, the unions say a change in the interpretation of the law under the leadership of Governor Rick Scott caused part of the current problems with the local system. And, the bill’s staff analysis appears to confirm that story.

'Taxpayers For Sustainable Pensions' Coalition

Still, in the past, the cities and the unions have not been able to agree on what to do, and the bipartisan bill aimed to change that—essentially repealing the restrictions on how the tax revenues must be spent.

It was a proposal widely supported by both sides during this year’s 60-day Legislative Session, but League of Cities’ Dudley appears to have changed his tune.

“There was general agreement—yes, I think that’s a good way to put it, general agreement….there was some problems with the bill, some issues that both sides agreed needed to be cleaned up. And, now as we’re not in that kind of 60-day window, we’re recognizing that there were other issues that weren’t addressed at all. And, the unions are looking at that same issue, and they’re saying there’s some concerns we had too, so we’re going to have to reopen the dialogue,’” added Dudley.

Dudley spoke at a recent press conference, announcing the formation of a coalition urging local pension reform next year called "Taxpayers for Sustainable Pensions." It includes the Florida League of Cities, Florida TaxWatch, and many business-backed groups, like Associated Industries of Florida and Americans for Prosperity.

And, AFP’s Deputy State Director Abigail MacIver says the time for reform is now.

“We’ve seen over the last few years is a number of our cities have had to raise taxes or talk about decreasing services,” said MacIver. We have many cities throughout the state that are facing millions, if not billions, of dollars in unfunded liabilities. And, it’s not even an issue that’s going to come due in ten years or 20 years, it’s coming due today. So, we are just really excited that this group has come together, and really look forward to seeing how together, we can help propose some really great reforms, and hopefully see some success at the local government level…”

But, some are skeptical as to the formation of this coalition, including Florida Police Benevolent Association’s Matt Puckett.  

“I find that an interesting statement that they form a coalition. We weren’t even included in this formation of this coalition. Yet, they are speaking as if we’ve talked. I find that curious at best. I’d be interested to hear what they think we would like to be changed in the bill. And, I’d certainly be open to hearing what they think should be changed in the bill,” said Puckett.

Representing thousands of police officers, Puckett’s union was also one of those who negotiated with cities over the proposal.

“It was a compromise, but it was universally supported. Some of the coalition members—the Florida Chamber, in particular—stood up at every meeting once that compromised was reached and supported it,” added Puckett. 

“Not once, did I see any of the groups, besides the representatives from the League of Cities, show up to any of the negotiations that we had on that legislation. Not one time did they offer an opinion, did they show up to a single meeting, or offer any suggestions on how this can be improved. And, now, here we are in the middle of an election, they say it’s time to fix this thing…I feel like they’re being a little disingenuous...I just find it to be a bogus coalition…”

State Pension Reform's Status

As for the overhaul of the State pension issue...when I last talked with the head of this year’s effort in the Senate in May, Sen. Wilton Simpson (R-Trilby) said he didn’t anticipate bringing the issue back up in 2015. And, when I spoke to him recently on the last day of the Special Session, he says his answer was pretty much the same.

“At this time no…we need to get the new information before we realize where the unfunded liability is: when has it went up? Has it gone down perhaps? So, we’re going to wait for the fresh numbers before we make any decisions,” said Simpson.

Currently, the state’s pension system is about 87 percent funded, which is seen as one of the strongest in the country. Still, over the past several years, that number has decreased. The state’s chief economist expects to have the latest funding level for the Florida Retirement System in the fall. 

For more news updates, follow Sascha Cordner on Twitter: @SaschaCordner.