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Lenny Curry political committee makes closing pension argument

If all goes as scheduled, the Jacksonville City Council will vote on whether to enact Mayor Lenny Curry‘s pension reform package later this month.

Curry’s political committee wants to ensure the affirmative case for Curry’s audacious pension reform is heard.

To that end, the first spots in what is expected to be a six-figure ad buy from “Build Something That Lasts” hit Jacksonville airwaves and digital space this Friday morning.

The timing is purposeful: with the Jacksonville City Council expected to hold a “committee of the whole” meeting Wednesday afternoon, locals are encouraged in the spot to call the council and voice their support for the deal.

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The 60 second commercial distills the complicated message of pension reform into digestible terms and concepts.

Curry notes that the resounding victory in the August sales tax referendum gave the city necessary “resources to eliminate nearly $3B in debt.”

“The final step is a vote by City Council,” Curry continues. “In addition to the half-penny, our reforms end the pension system that caused this crisis.”

The 401k styled pension plans, Curry adds, are just like those in the private sector.

“This ensures that we won’t have a pension crisis again,” Curry said.

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With the budget relief created by pension savings, Curry noted that “investments in the city, and raises for our police and firefighters who’ve gone a decade without” would be imminent.

Indeed, the collective bargaining agreements offer 20 percent raises over three years to public safety workers, a long-deferred bump in compensation that will bring Jacksonville closer to other major metros in the state.

“I promised bold solutions to problems. This pension reform package keeps that promise,” Curry noted.

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The City Council faces an untenable reality if the pension package is not voted through: a $360M pension related hit in next FY’s budget.

This year’s contribution was $290M.

Further escalations would come in time for the 2019 city elections, which would be a bloodbath for incumbents.

If reform does pass, the hit next year would be $218M — with the $290M number from this year not expected until the half-penny tax kicks in around 2031.

While there are council members who want deals for their districts, and specific promises in exchange for support, the reality is that if the pension reform does not pass, austerity budgets loom for years to come.

The Curry committee’s ad campaign is a reminder of that reality.

‘Slight adjustments’ drive City Council pushback to Jax pension reform projections

A Wednesday afternoon meeting of the Jacksonville City Council was intended to facilitate deeper inquiry into Jacksonville Mayor Lenny Curry‘s ambitious pension reform package.

However, the big news was the downward impact of adjustments to payroll growth projections and COLA calculations after Monday’s meeting of the Police and Fire Pension Fund.

“We still save a lot. But we save less,” was how the city’s CFO Mike Weinstein described the impacts of $13M of tweaks that would hit the process for FY 2018 — if the legislators approve the plan.

And that is still an if.

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Police and Fire Pension Fund actuaries thought the plan was too optimistic in assumptions regarding both payroll growth and sales tax revenue, speculating that even after the proposed sunset of Jacksonville’s half-penny tax in 2060, the $2.8B unfunded liability for the defined benefit pension plans that would be closed this year still would not be resolved.

The PFPF report, and a binding vote from the board, catalyzed changes in assumptions from the city.

City CAO Sam Mousa and CFO Mike Weinstein kicked off the event, noting that the mayor’s office has met with every single member of the City Council already, and is attempting to answer questions.

Mousa noted that the PFPF meeting, described above, necessitated “slight adjustments” in “program savings,” and promised detail about how those adjustments will be made.

Weinstein then went on to describe the “slight adjustments.”

“The goals were to try to create a revenue stream that would adequately fund the $3B” unfunded liability, to make sure the three funds were financially sound, and to offer budget relief to enhance services and provide raises.

“The work that our actuary had done … basically were a first cut,” Weinstein said, assuming that the PFPF actuarial analysis would jibe with the city’s.

However, the PFPF “did two things we didn’t do,” Weinstein said.

One such thing: a different payroll growth assumption — 1.5 percent per year from the city, versus 1.25 from PFPF.

The PFPF, said Weinstein, went with the “smaller payroll growth,” which led to a $2M increase in the city’s contribution next year.

“We lost $2M in next year’s savings,” Weinstein said. “They chose 1.25; we think it should be 1.5.”

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“A second thing that happened at PFPF was even a bigger surprise,” Weinstein said.

“The new actuary for PFPF determined,” said Weinstein, that COLA calculations had been done improperly.

This leads to an $11M increase in next year’s payment … and is an issue that the Curry administration had attempted to message months ago.

“We still save a lot. But we save less,” Weinstein said.

“If we don’t get this done and back from Tallahassee,” Weinstein said, the collective bargaining agreements fall through.

“They’ve made their decisions,” Weinstein said.

“There’s a long history with the PFPF and the city,” Weinstein said. “We asked for 1.5 … the Division of Retirement asked for 1.5 … they made the decision and we didn’t have the time to really deal with it.”

Though the $2M is “painful,” it “didn’t merit a blowup,” Weinstein said.

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The adjustments lead to the following changes:

If reform happens, the city would have to pay $221M in pension costs; if not, $360M.

The difference would still be $139M, as the original numbers were $208M and $349M respectively.

Weinstein also discussed what savings would look like: $69M compared to $82M in the original projections, comparing FY18 reform to FY17 contribution.

Weinstein also outlined calculations showing savings over four years instead of three, noting that “for the first 14 years, we will have a savings” from the $290M this year.

The anticipated savings: $69M in FY 18; $72M in FY 19; $65M in FY 20; and $55M in FY 21.

JEA savings in the plan has been reduced, said Weinstein, who noted that $60M in PFPF Reserve Funds would be part of the city contribution.

The impact of raises: also revised, with a $120M hit anticipated in FY20 and FY 21.

Weinstein also offered projections based on a 3 percent revenue growth and a 2.5 percent revenue growth in the general fund, including discussing a so-called savings bank.

“If we take the $10M and use it for growth, we still have $40M in savings,” Weinstein said of the four year projections, which see the “savings bank” bolstered in the first two years, then used to offset raises in years three and four.

Weinstein extolled potential general fund growth, with expectations that after four years, general fund growth will be up anywhere from $73M to $98M after costs.

“This does provide some relief,” Weinstein said, noting a $37M hole in next year’s budget — without reform.

“It’s not perfect. There may be pieces in it you don’t like. But the piece you don’t like may provide four pieces you do like,” Weinstein said, noting collaboration with Tallahassee and 22 bargaining units over a year and a half.

Mousa referred to this as a “sound financial program.”

“We know the issues. We know the positives. We know the negatives. And I believe we found a balance,” Mousa said.

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Questions came from the council.

“We have all of these experts, actuaries … my problem with this whole situation,” said Councilwoman Katrina Brown, is a lack of a “defined number” of how much money is in the General Fund.

Weinstein noted that budget is released in July, which provides clarity.

“If you want it to have an impact on next year’s budget,” Weinstein said, the City Council needs to vote “now,” or the work will be undone.

“If you want to do this the way it’s laid out — good and bad — you need to do it in a reasonable time,” Weinstein said.

“The mayor proposes and the City Council disposes,” Mousa chimed in, regarding the budget.

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Councilman Aaron Bowman noted projections don’t account for growth of expenses.

“The level of growth,” said Weinstein, depends on “variables” in future budgets.

“All those will be basically decided by you … our budget doesn’t have to go up … there are many years that our budget has gone down,” Weinstein said.

Bowman deemed this a “weak answer,” and wanted historic details on growth.

Weinstein noted that staff is down 1,000 bodies since 2009, indicating that growth is not a requisite.

“We know we’re paying a lot more … we know that expenses are going up … what I’d like to see is a better definition” than “$98M in our budget,” Bowman noted.

“We got rid of 1,100 people because costs went up,” Mousa noted. “Decisions are made to counterbalance [increased] costs by reductions.”

“I’m not sure that I want to take you to Vegas with me,” Bowman deadpanned.

One positive: an expected $40M YOY increase in property tax collections.

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Council VP John Crescimbeni noted that, “if we don’t do pension reform, we’re going to be looking at cutting.”

Mousa described the potential of “terrible, terrible budget cuts.” Layoffs would be “very possible.” And Mayor Curry would not “support any millage increase.”

This is “concerning” to Crescimbeni, who noted that millage cuts in the past led to today’s degradation of services.

Mousa said the budget being developed is at current levels — as if reform does not happen.

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Councilman Tommy Hazouri, a former mayor, wondered if there would be more surprises to come.

Mousa asserts that “all has been buttoned up now,” with the PFPF impact statement “outlier” now factored in.

Weinstein added that the Florida Division of Retirement approved the mechanism.

That said, Mousa added that the city is not “married” to these statistics, especially with yearly actuarial review and adjustment factored in.

“We feel very comfortable with the information presented here,” Mousa said, noting that unlike the Better Jacksonville Plan, which was predicated on borrowing with a 5 percent annual sales tax revenue growth rate, the pension reform plan does not involve borrowing.

“We’re not borrowing any money here. We’re not hoping that 4.25% will stay forever and ever,” Mousa added, noting — again — the yearly review function relative to sales tax projections.

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Councilman Garrett Dennis warned against “booby traps” that might await the mayor in 2031.

Weinstein believes that contributions will accelerate, and “the real cash starts rolling in in 2031,” with the impact blunted by the declining value of the dollar (the “present value calculation”).

Other booby traps?

“Don’t do DBs. There’s too much unknown,” Weinstein said.

“Make sure you hire the right folks,” Mousa added.

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Not all the feedback was bad.

Councilman Jim Love lauded the flexibility of the plan.

Councilman Bill Gulliford said that “savings down the road” will be a “big, big number,” noting that a “previous administration” provided unbalanced budgets that required a millage rate increase.

Pension reform, Gulliford added, is a “big topic” with bond rating agencies, which have seen pension as the “#1 focal point” of the yearly meetings.

“There are no absolutes. You want guarantees,” Gulliford said. “All of this is based on … a projection. We don’t know or control the things that can happen like an economic downturn.”

“What are our options? For years, we have looked at this thing … your options are pretty clear,” said Gulliford.

Those options: accept this or cut services and hike the millage rate.

“This is the best chance that I think we’ve got,” Gulliford said. “You don’t want to go where we’re headed right now.”

Councilman Matt Schellenberg noted that “we’ve been working on this for the last six years,” and “we’re on the right track.”

“The Council can always raise the millage rate one or two mills,” Schellenberg noted, though it would take 13 votes to get it through Mayor Curry.

And Councilman Al Ferraro endorsed the plan as a way to “stop the bleeding.”

“We’ve inherited a lot of things that we have to deal with,” Ferraro said. “If we don’t do this, I can see a huge problem in my area and the whole city.”

Councilman Tommy Hazouri endorsed the credibility of the plan in his comments as well.

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Despite Gulliford’s endorsement, the questions kept coming.

Councilman Reggie Brown questioned why millage hikes weren’t coming.

Councilwoman Joyce Morgan wanted assurances that the plan was “recession proof,” but the administration wouldn’t offer them, but “we can’t guarantee anything.”

“The only thing guaranteed is that you’ll die one day,” Mousa said.

“The majority of the contribution,” said Weinstein, “will be handled by the half-penny as much as possible.”

Morgan kept pushing back.

“We don’t talk about how we’re going to have more for our communities. We’re going to have the savings. Can you address that?”

Mousa noted that “if you don’t vote on this, services in the community are going to get worse.”

Morgan encouraged that parlance be used as part of the sales pitch.

Florida Division of Retirement gives green light to Lenny Curry pension reform

An important milestone for proposed pension reforms by Jacksonville Mayor Lenny Curry was given the green light by the state of Florida this week.

State retirement system actuarial experts signed off on the reform package, saying that the financials are clear and consistent with law, for all three plans: General Employees, Corrections, and Police and Fire

The letters sent from the Florida Division of Retirement to the city of Jacksonville validate the pension reform, including the use of present value calculations — a key component of the Curry plan.

“A share of the present value as of 10/1/2016 of the total projected proceeds of the sales surtax is amortized over 30 years and applied as a credit to the annual required contribution,” reads the letter from Douglas Beckendorf, plan actuary.

Beckendorf discussed payroll growth assumptions also, and is on board with Curry’s projections of growth to 1.5 percent per annum, writing that “the methods and assumptions used to calculate the annual required contribution” from the city jibe with statute.

Beckendorf offered no opinion on the “reasonableness of the estimates of the financial status of the plan,” however, as the review was limited to financial impact statements.

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This was a timely communique, with the Jacksonville City Council weighing pension reform, via

2017-257 creates a new ordinance section:  Chapter 776 (Pension Liability Surtax).

Bill 2017-258 affects the general employees and correctional worker plans, closing the extant defined benefit plans to those hired after Oct. 1, 2017, and committing the city to a 12 percent contribution for those general employees and a 25 percent contribution for correctional officers hired after October.

Bill 2017-259 implements revisions to the Police and Fire & Rescue plans.

258 and 259 both offer fixed costs via a defined contribution plan for new hires, while offering 25 percent contributions from the city to those hires.

As well, there will be raises across the board: 20 percent over the next three years for all current police, fire, and corrections employees, and 14 percent for general employees.

Jax PFPF questions payroll growth assumptions in city pension plan

Prologue: A Monday meeting of the Jacksonville Police and Fire Pension Fund centered around the ultimate actuarial impact of Lenny Curry‘s pension reform package, with presented actuarial analysis from the board proving to be more pessimistic than that of the city about rates of tax revenue growth, payroll growth, and amortization schedule.

Ultimately, not much of that mattered in the trustees’ decision making.

The Jacksonville City Council currently is considering legislation that would close the current defined benefit plans to all new hires, open up defined contribution plans for new hires, and pay off the city’s $2.8B unfunded pension liability with a sales tax extension starting in 2031.

The unfunded liability will be re-amortized, with a longer payment term and higher overall costs on the pre-2017 pension debt, which would be paid off in full by approximately 2051, asserts the city.

While the PFPF doesn’t get to approve the deal, they do get to weigh in via an impact statement.

The PFPF trustees were encouraged by the city to use the city’s anticipated rates of growth for tax proceeds (4.25 percent per annum) and payroll growth rate (1.5 percent).

Yet the board’s actuarial projections (3.34 percent for tax, and 1.25 percent for payroll) are less optimistic — by far.

In a meeting that sprawled over four hours, PFPF actuaries threw some cold water on the mayor’s push toward pension reformsuggesting that the city of Jacksonville’s assumptions could put the underfunded police and fire pension fund in danger of not meeting liquidity targets, and that more conservative benchmarks are recommended to protect the fund in the decades to come.

The crux of the fund’s decision, however, was simple: to accept the city’s 1.5 percent payroll growth rate, or the more conservative 1.25 percent that plan actuaries believe is appropriate.

The 1.25 percent was accepted. Along with the 4.25 percent expected growth in anticipated tax revenue increase annually, which was the city’s projection — one that was less conservative than that by the pension fund’s own actuary.

Also accepted: the 30-year amortization agreement of the deal.

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Board attorney urges skepticism on Curry plan: Fund attorney Bob Sugarman noted that state law required the trustees to offer an actuarial impact statement to the city council.

“They’re not bound by it,” Sugarman noted, adding that the Board of Trustees would offer comment on the ordinance at a later point, as part of a “two-step procedure.”

As well, committee members should not be “guided by the impact on the city … the unions … collective bargaining agreement.”

Focal points of board analysis: the amortization schedule; rate of payroll growth; growth of surtax revenue.

On all of these issues, Sugarman posited that the city and the fund would have different interpretations of efficacy.

On surtax revenue, Sugarman posited the PFPF can define that, based on independent actuarial opinion.

“The law doesn’t say who values the surtax. I believe it’s the board,” Sugarman noted.

And Sugarman added that the city has an “irreconcilable conflict” in setting this up, and, moreover, there are conflicts with statute in doing so — a move he framed as a way of shirking contribution burden.

With all that said, there was some wiggle room for those on hand.

“Are you protected by relying on the opinion of the General Counsel’s office? The answer is yes,” Sugarman said.

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Sales tax revenue estimates diverge: John Pertner of GA Public Solutions offered the fund’s actuarial statement.

He posited that there may be economic recessions between now and 2060, when the tax is slated to sunset. As since 1974, over a decade was spent in economic recovery — including a seven year decline and recovery period between 2006 and 2013, a period which saw sharp decline followed by gradual recovery.

That indicated what the report called a “significant impact” from recessions.

“You’re going to run into negative performances,” Pertner said, with the question being how long recovery takes.

Pertner projects a 3.34 percent YOY increase in sales tax revenue, compared to a more optimistic 4.25 percent per annum increase from the city.

Jacksonville CFO Mike Weinstein cautioned that whatever number is used “will be reviewed every year,” as per ordinance.

“The four and a quarter will be reviewed every year. This is a reasonable expectation of where we are today,” Weinstein said.

“It’s not like Better Jacksonville where we borrowed a billion and a half at 5 percent and the money went to debt service,” Weinstein said.

All told, the PFPF projects that $6.637B could be brought in by the surtax by 2060.

But the recommendation is to use the lower growth rate assumption, rather than the city’s, as a starting point.

Similar pessimism was to be found in payroll growth revenue.

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Negative amortization qualms: The board offered an experience study from Pete Strong, the board’s internal actuary, to analyze payroll growth.

The city posits 1.5 percent growth per annum. Strong was not so bullish on that, saying the historical average was .67 percent.

Strong notes that in a closed pension fund, a payroll growth rate historically is factored in. But current state law requires a reflection of “open group payroll.”

Strong also indicated the possibility of negative amortization, where payroll growth doesn’t cover the interest on the unfunded liability, presenting a “risk to the health of the plan.”

In that context, a 1.25 percent payroll growth rate — half of that of the city’s projection — is Strong’s advice.

Also discussed: whether DROP assets can be invested separately. That may be a heavy lift, given the anticipated 8.4 percent return. Strong continued to outline issues created by the ordinance, including the use of chapter funds and issues deviating from “reasonably sound actuarial analysis.”

Among those: using the future revenue stream as a present asset, which Strong said was unprecedented.

The “unique structure capitalizes an unknown future revenue stream as present dollars,” Strong said.

Meanwhile, discussions ensued of the potential for a constitutional challenge of the legislation, in that it passes on present costs to future generations.

Strong noted increased costs: $176M in benefit payments from salary increases, $64M in benefits from the new ordinance.

City contributions would go down, and so would the fund’s funded ratio — from 45 to 43 percent. And, because of the asset provided by tax revenue, the UAAL for the police and fire pension fund would go down $580M, to $1.42B.

“However, this is not the revised funded ratio for the fund,” Strong noted.

Strong discussed the difference between 4.25 and 3.34 percent for tax revenue growth as meaning a potential shortfall of $10M for the city’s contribution.

 That, coupled with the 30 year amortization, means the “funded status could deteriorate in the short term.”

As well, “it is our opinion that current costs will be transferred to future taxpayers under this arrangement.”

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30 year projections: Strong presented a number of possibilities.

One such had no changes. Another was a “stress test” with a -15 percent yearly return (with a recession in mind). Still another was under the city’s plan, with a built in stress test. And yet another dealt with the more pessimistic projections from PFPF actuaries.

Under the current scenario, the plan would be fully funded by 2033; with the negative return year built in, that would be 2036, assuming the city applied $460M of payments required by the 2015 agreement.

Board Chair Richard Tuten noted these payoff dates are around the time money kicks in from the Curry plan.

Under the city’s assumed rates of payroll and sales tax increases, the plan will be 51.85 percent funded by 2047 — though that doesn’t factor in the sales tax.

The “stress test” would strain the plan, putting the 5 to 1 liquidity ratio mandated by the ordinance in jeopardy for a full decade, according to the PFPF actuary projection.

“This only happens when we assume a stress test,” Strong noted.

With a 3.34 percent anticipated tax revenue increase and a 1.25 percent payroll growth increase, the fund would be more able to withstand the stress test, Strong added.

No matter which projections are accepted, Strong said, the unfunded liability grows, peaking right as the surtax begins to come in.

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Weinstein strikes back: It was inevitable that CFO Mike Weinstein would have his say.

He noted the 4.25 percent projection for tax revenue growth is conservative, and “each year it doesn’t go down gets us closer to the present value.”

As well, Weinstein said the distribution of funds would be adjusted yearly based on the needs of the discrete pension funds.

“The payroll growth piece — we’ve had numerous calls and visits to Tallahassee,” Weinstein said, and the state is “comfortable” with the city’s projections.

The projections can’t change from the city’s, said Weinstein, given the two-year process “getting us where we are today.”

“We stand by the 1.5. And we stand rigid on the 4 and a quarter,” Weinstein said.

The city feels good about the projections, especially in terms of Jacksonville’s permits “skyrocketing.”

As well, Weinstein expressed comfort with the liquidity floor.

“You can’t pay off a $2.86B debt without an impact,” Weinstein said.

General Counsel Jason Gabriel chimed in his periodic reminder that his office holds authority over the city’s independent authorities — including this board.

Gabriel noted that the city sits on firm legal ground, and that the city controls these pension reform deals relative to the discretionary sales tax, with the board having limited powers.

Board Chair Tuten fired back, saying “no matter what we recommend to you, you’re going to do 4.25 and 1.5.”

Gabriel denied that assertion, but did say the city determines the use of the surtax.

The difference between the projections helped carry those in the room into the fourth hour of the meeting.

Weinstein stressed that, if things go south, the city will have to pay up in lean years — and that the City Council would be charged with yearly review of the plan, including the rate of surtax growth, to determine the city’s contribution.

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Deliberation: A motion was issued and seconded by the Financial Advisory committee to accept the 1.25 percent yearly payroll growth increase from the PFPF actuary, and was quickly seconded, as a “more conservative, more rational” approach.

That motion carried.

From there, the question of tax revenue growth.

Questions emerged about a lack of robustness of the analysis, which only goes back historically to 2000.

Before that, of course, the 1/2 cent tax was not in play.

A desire for conservative estimates colored the discussion; however, the Financial Advisory committee — with cavils and caveats — accepted the 4.25 percent yearly projection of tax revenue increase — the city selected rate.

With committee recommendations, the full board of trustees accepted the terms.

The fund will provide more fleshed out opinions next week to the Jacksonville City Council.

Critics ‘chirp’, while Lenny Curry surges to the end zone

Thursday saw FloridaPolitics.com offer up three stories on discussions of Jacksonville’s pension reform pitch to the Jacksonville City Council.

If you are looking to read reportage of Mayor Lenny Curry‘s remarks, long-form presentation of Curry’s chief lieutenants, reaction of the Jacksonville City Council, use the helpful hypertext links below.

However, if you’re looking to read analysis of the early part of the last marketing push for the deal, read on.

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What you will notice about this push, if you’re paying attention: a sense of shared urgency from those with a serious interest in near-term policy and political animals also.

The General Fund, should pension reform not go through, should the “dinosaur” defined benefit plans not close and the sales tax extension not be guaranteed, will take a $349M bath next year.

If the reform package does go through, that’s a $208M hit.

In a city with some horrible problems, most of them related to being starved for capital in local government, that $141M budget relief is necessary.

Necessary for the costs we see. And for the costs we don’t. A proposed homestead exemption hike could take $36M out of city coffers, should it become law. And, sooner or later, the housing bubble will burst — and millage collections will tank, as they did a decade ago.

The urgent need and what they see as a convergence of reliable mechanisms (ending new defined benefit plans, creating a dedicated revenue stream) has created a sense of universal buy-in from the Mayor’s Office.

Resistance is not something that will be rewarded. Whether from the donor class or from elected politicians, any push back will be seen as provocation.

“Let the critics chirp,” in this context, does not mean said critics are encouraged to “keep it 100” and “join the conversation.”

In football terms: it is 4th and goal, with time enough for one play. Either you are blocking for the ball carrier, or you’re on the other side of the line.

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 Most of those watching inside of Council Chambers would have deemed Thursday’s effort to be a success in terms of driving the ball closer to the goal.

Curry offered an energetic opening statement, loaded with the kind of affirmational language the mayor has offered since his “One City, One Jacksonville” themed inauguration.

“We are poised to solve one of our city’s biggest challenges … a challenge that my predecessor handed off to a task force .. with a solution that would barely make a dent,” Curry said, also calling out critics of the current plan, whose plans would “make things worse.”

Those critics have emerged from disparate quarters since last year’s run up to the referendum approving the extension of the city’s half-penny sales tax (contingent on unions negotiating new deals, and council approval). And the mayor has personalized that criticism. But in a room where some of the sharpest critics sat, Curry’s by now well-rehearsed jab at them made for good theater.

Curry’s time on the microphone was short, as he handed off to the city’s chief administrative officer, Sam Mousa, and chief financial officer, Mike Weinstein.

They worked a tag team approach. Mousa, for the most part, limited his remarks to the front and the back of the pitch. Weinstein, meanwhile, took the council through the paces in a 35 page presentation — one where slides were distributed, to the press and the council, one at a time — with the effect being that of worksheets passed out in a classroom, but 35 individual times.

Media members may have groused. But the administration got away with it.

Council members did ask questions — and others had questions they intended to save for meetings outside public view — but the pitch was clean.

And why wouldn’t it have been? Getting walked through a full actuarial report required people to hold their questions until the end, blunting any urgency in the questions, especially when waiting through a break between presentation and questions, and then through a queue full of many council members.

The plan, as sold, was like a second mortgage for the ~$3B unfunded actuarial liability. Relief in the short and medium term, which would allow investments in infrastructure, replenishment of the city’s workforce, and raises for current employees ranging from 14 percent for general employees to 20 percent for police, fire, and corrections.

But, as Curry said, retiring an inherited debt of that size would have costs associated with it. And part of those costs is reversing trends that became ingrained habits after a decade of austerity (outside of dealings with the local NFL franchise) in city government.

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Friday saw the mayor on a media blitz, with television stations allowing a distillation of the message: reform, in the grand tradition of the strong mayor form of government.

Hence, the “most important decision since Consolidation” rhetoric.

Curry’s operation, consciously or not, has branded around the idea of a unified city, one with a shared sense of narrative.

“One City, One Jacksonville” was a reversion to internal branding, closer to “Bold New City of the South” than the tapioca, pleading “Where Florida Begins.”

To make that case, it’s imperative for Mayor Curry to take his case to the people, using television as a way to paint the picture with bold, broad strokes … ,much as he did Friday, when he did a TV loop.

The caveats end up in the endnotes. That was the bet made when marketing the Yes! For Jacksonville referendum in 2016 and, at least until the Jacksonville City Council votes,  expect more bold, broad strokes.

Curry’s political committee, likewise, could be a vessel to sell the plan.

With $303,000 on hand, radio, television, and mailers are all at its disposal — allowing the mayor’s political team to frame the narrative … if they need to, that is.

Critics may chirp. But the mayor is driven to will the ball over the goal line.

Meanwhile, the mayor’s team has decided to aggressively frame the narrative — one that has been percolating since Curry took office.

Pension votes have gone sideways before. But this won’t be the issue the Jacksonville City Council bucks the mayor’s office on. Not with two years of budgets to work through, and 11 people looking to be re-elected.

Lenny Curry political committee hauls in $68K in March; Shad Khan among donors

As Jacksonville Mayor Lenny Curry prepares to sell his package of pension-reform bills to the City Council, his political committee has been busy fundraising in case it is needed to help close the deal.

March saw Curry’s “Build Something That Lasts” raise $68,000, a figure spurred by $25,000 donations from Shad Khan and Florida Blue.

Curry’s committee spent $29,729 in March, with three interesting recipients of $5,000 donations.

“Let’s Get to Work” (the PAC of Gov. Rick Scott) got its $5,000 on Mar. 1 — helping just a little bit with the statewide ad buy in favor of corporate incentives.

Days later, the FRSCC and the Florida Republican Party each got $5,000 each.

The committee has just over $303,000 cash on hand.

Jacksonville Civic Council urges passage of Lenny Curry pension plan

In an unsurprising move, the influential Jacksonville Civic Council gave its seal of approval to Mayor Lenny Curry‘s pension reform package on Friday.

The Jacksonville City Council spent much of Thursday in a workshop, where they had the bills explained to them.

The bills — fourteen in all — would implement collective bargaining agreements, establish defined contribution plans for new city employees while giving raises to all of them, and would allow access to a 1/2 cent sales tax that will extend from the sunset of Better Jacksonville Plan debt payoff to 2060.

All of that is necessary, Curry argues, to close the current defined benefits plans to new hires and to put the city on the road to fiscal stability.

And Civic Council chairman Ed Burr, a Curry backer, concurs.

“Mayor Curry’s defined contribution plan is a crucial step toward addressing Jacksonville’s enormous unfunded pension liability,” said Burr, “and we urge our City Council members to support it. The Mayor’s plan will unlock the sales tax revenue approved by a wide margin by voters last August and provide both immediate and long-term benefits to new employees, including portability and greater control of their retirement assets.”

“Since our initial engagement with this issue,” Burr continued, “the Civic Council has consistently advocated for a solution that addresses the city’s unmanageable pension deficit while providing fair and competitive compensation to our valued first responders.”

“Mayor Curry’s pension reform proposals meet those conditions and we congratulate the Mayor and his team and ask City Council members to support the proposals and put our city on the road to financial sustainability at last,” Burr added.

Jacksonville Bold for 4.7.17 — See you at the crossroads

You may notice a running theme with this issue of Bold: much of it deals with crossroads situations (to borrow a phrase from 90s rappers Bone Thugs-N-Harmony).

Will the city dredge JAXPORT? Or will years of deliberation and consternation lead — as they so often do — to nothing?

Will Corrine Brown beat the rap on the One Door charges? Or will we see her in orange — delighting those outside the process, who see her as a caricature, much more than those who got to know and have worked with her over the years?

Will Lenny Curry sell his pension reform deal? If so, what will victory look like? And what happens to the mayor’s messaging, as the Alvin Brown era recedes further into the memory hole with each passing news cycle?

Will the city’s budgets stabilize?

Moving beyond the current issue, questions linger about what happens with Jacksonville in D.C.

Our local lobby presence is strong — but are both members of congress getting in appropriations requests for long-deferred infrastructural upgrades?

Does Curry manage to cash in on stumping for Trump?

Never mind other questions — like who the next city council president will be.

So many questions, and time will resolve them all.

Corrine delivers

Former U.S. Rep. Brown will spend a couple of weeks at the Jacksonville federal courthouse, the last live defendant in the One Door for Education case.

Wednesday’s status conference revealed the contours of the case. Both the state and Brown’s defense team will need about a week each to make their case in the trial starting April 24.

After a two-day jury selection process, the actual trial will start April 26.

Expect a couple of sitting members of Congress to testify on Brown’s behalf.

However, once the trial starts, don’t expect her to talk to the press.

“The one thing she respects is authority,” her lawyer said after the hearing.

An enterprising story

If Jacksonville had a statewide stroke, the fate of Enterprise Florida would not be an issue.

Yet another week saw city leaders preaching the gospel of incentives; this time, at a roundtable event at Florida State College Jacksonville.

Being Scott’s fourth visit to Jacksonville in a month (with a trip to Orange Park thrown in, making five for Northeast Florida), nothing really new was to be said.

Wednesday saw a Jacksonville City Council committee unanimously approve a resolution in support of Enterprise Florida.

While city leaders aren’t always pragmatic, most know full well Jacksonville needs incentives more acutely than other major cities in the state.

Hogan knows best

In 2015, Mike Hogan defeated current Jacksonville State Rep. Tracie Davis to become Duval County Supervisor of Elections. And two years later, Hogan is still throwing salt in Davis’ game.

Exhibit A from Tia Mitchell: Hogan lobbying Sen. Aaron Bean to water down a voting access bill.

In a Senate committee this week, a Bean amendment neatly eviscerated the intent of the bill, by allowing SOEs to opt out.

“Early voting being a project that I literally made my own while I was there, I’m very disappointed that Duval County was the only county today making a request to opt out,” Davis (a former deputy SOE) said.

The House version lacks an opt-out clause.

The waiting game

Jacksonville City Council Rules Chair Garrett Dennis is a Democrat on a majority GOP council. Faced with a loss on a controversial commission appointee, Mike Anania, Dennis had a novel solution Tuesday in Rules.

He ran out the clock.

The vote appeared to be headed toward a 4-3 party line split in favor of moving the abrasive Anania through the committee — his third vote by the body.

However, there is a rule this year by the committee: a 3:15 “hard stop,” to facilitate the special committee.

Anania’s appointment was the last item requiring a vote, and a meandering procedural discussion about whether there could be a truncated, quasi-probationary three-year term ate up some time.

Though the Republicans on council groused, wanting a vote, Dennis noticed the clock — and adjourned the committee, with Anania and the chair of the local GOP in the crowd.

The next day, Dennis was ready to outline his case to the Finance Committee — however, Anania withdrew his nomination, in a stunner of a move that, because it happened in committees, won’t go any farther than chatter among the city’s political junkies.

Jacksonville, Liberty Counsel spar over HRO judge

The Liberty Counsel wants Jacksonville’s Human Rights Ordinance expansion (the city has LGBT rights now) thrown out.

They filed a case — and the judge’s mother is a prominent anti-HRO activist, one who was on a corporate board with Roger Gannam, the Liberty Counsel’s lawyer.

For the Office of General Counsel, that’s problematic — impeaching the credibility of Judge Adrian Soud.

The Liberty Counsel, meanwhile, asserts that there is no conflict of interest that would require the judge to be disqualified — and that the city’s claim is specious, desperate and untimely.

The city, meanwhile, thought the judge would recuse himself. But that didn’t happen, and the beat goes on.

Local preacher takes wedding on the road

Tough break for Rev. John Allen Newman. He wanted to marry reality show star/presidential aide Omarosa Manigault in his Jacksonville church — yet threats raised “security concerns.”

So Newman and Manigault are slated to get married in DC this weekend.

There are upsides to that, the Florida Times-Union reports.

For one, a White House rehearsal dinner.

And for another, a special surprise guest walking Manigault down the aisle.

Newman, arguably one of the most professorial Jacksonville pastors, likely never expected a wedding in the White House of the most bombastic occupant since Lyndon Johnson.

But politics makes strange bedfellows. And, by all accounts, the soon-to-be-newlyweds are headed for connubial bliss — with a yuuuge wedding ceremony in the nation’s capital.

Fanatics gets Majestic

Another audacious acquisition this week for sports merchandising colossus Fanatics.

Fanatics bought VF Corp.’s Licensed Sports Group — which includes the Tampa-based Majestic Athletics, the official Major League Baseball uniform provider until 2020.

Fanatics’ model involves acquiring licensing, often in collaboration with major sports leagues and collegiate conferences, and then aggressively promoting the product by dominating SEO and PPC.

Not bad for a company started in the 1990s as a retail store selling “Jagwire” gear in the Orange Park Mall.

JU professor finishes Jeopardy! run after two wins

Jacksonville University English professor Julie Brannon came up short on Final Jeopardy! Thursday, but she said she has no regrets about the way things turned out.

Brannon was the victor in two episodes of the show, with winnings totaling $47,000, but opponents out-wagered her Thursday, even though she had the right answer to the final question.

“I just threw down a number when I should have bet everything, but then I started second-guessing myself and that’s all she wrote,” Brannon said.

Brannon’s had to keep quiet about how her stint on the show went down, but now that her final episode has aired, Brannon is expecting a big check to arrive.

“They send them out after the final air date, so I’m not sure when I’m going to get them. I can’t spend it just yet,” she said.

JAXPORT gets new liquefied natural gas tanks

JAXPORT is now home to a pair of 260-ton cryogenic LNG tanks, thanks to the Crowley Maritime Corporation’s new shore-side fueling facility.

The massive tanks made it to Jacksonville on a vessel from Hamburg, Germany, and it took a special 26-axle trailer to get them to their permanent spot at the Talleyrand Marine Terminal.

The tanks will be used to provide a greener way to fuel up Crowley’s “Commitment Class” ships under construction for the Puerto Rico trade lane.

United Airlines chief talks global aviation at JU

United Airlines CEO Oscar Munoz will stop by the Jacksonville University business school next week to give a talk on the “Changing Global Dynamic Commercial Aviation.”

Munoz, the former president and chief operating officer of CSX Corp., has served in various financial and strategic positions at major brands such as Coca-Cola and AT&T. The talk is April 13 at noon at the Davis College of Business. It is open to the public.

Jumbo Shrimp look to make a big splash at Home Opener

When team owner Ken Babby decided to explore a new name for Northeast Florida’s Jacksonville Suns minor league baseball franchise, he knew there would be pushback. The decades-old Suns brand was well-known in the community, but Babby’s arrival in Jacksonville and acquisition of the team coincided with a renewed effort to rework and re-energize the city’s Class-AA ball team.

“This is a way for s to differentiate itself,” Babby told Channel 4 News. “We are not trying to be the NFL team in town or any other sports team. We are about affordable family entertainment. And that is what the Jumbo Shrimp are here to do and we are excited about it.”

Now several months beyond the new name — Jacksonville Jumbo Shrimp — the energy is expanding far beyond Jacksonville. The team has sold merchandise in all 50 states and internationally to customers in Australia, Belgium, Canada, England, France, Germany, Puerto Rico and the Virgin Islands.

Babby and fans across the city are eagerly awaiting the Shrimp’s debut April 12 at the Baseball Grounds of Jacksonville. Tickets are available at the Jumbo Shrimp website.

Jacksonville Zoo Conservation Speaker Series

Jacksonville Zoo & Gardens presents its Conservation Speaker Series with Save the Frogs! — a discussion about the amphibian extinction crisis, and current threats facing amphibian populations, and what individuals can do to help. Event is May 11, from 5:30-7:30 p.m. with Michael Starkey, International Campaigns Coordinator and Ecologist, Save the Frogs! Ticket prices: Members, $30; Non-Members, $35; Children, $10. Ticket includes dinner, 1 drink, the presentation and a zoo experience with amphibians.

Jacksonville Zoo Garden and Art Festival

The Zoo’s Annual Garden and Art Festival will be April 22-23 from 10 a.m. — 4 p.m. The two-day event centers around the botanical gardens with a plant, tree, flower and art sale on the Great Lawn. The event is free with Zoo admission and features over 20 garden and art-themed vendors selling their products, plants and consultations. Enjoy live music, and sip on beer and sangria for sale while you shop. The First Coast Plain Art Society artists will also have booths spread out throughout the festival to enjoy. Garden Encounter workshops will occur throughout the day Saturday, and Garden tours will occur throughout the day Sunday.

On Saturday, April 22, Dr. Craig van der Heiden from the Institute for Regional Conservation will be speaking on the importance of native plants and the benefits of restoring gardens with exotics back to native fauna. The program is at 11 a.m. and free with Zoo admission.

Kartik Krishnaiyer’s Armada recap

Coming off a tumultuous offseason where founder Mark Frisch sold the club to the league with the intention of finding a new long-term owner, the Jacksonville Armada opened its 2017 campaign Sunday afternoon. UNF Hodges Stadium is the club’s new home, with a more soccer-friendly atmosphere, albeit one removed from the center of town, compared to the Armada’s former home of the Baseball Grounds.

A crowd of 3,472 fans saw the Armada won its season opener 1-0 against FC Edmonton. J.C. Banks scored the lone goal which gave the club who has finished near the bottom of the table in each of its first two NASL seasons an important victory to open the 2017 NASL campaign. Banks goal which came in the 78th minute was the perfect tonic for the home crowd that was seeing a squad largely made up of new players on a strict budget as the club is being managed by the league.

“I think everybody that got here is pretty hungry,” Banks said. “All the things in the offseason, we know you have to perform to stay in the business.” Neither side had recorded a shot on frame in the first 70 minutes but Banks says that inspired the team and coaching staff to push forward late on. ” Winning games and championships in this league is not always pretty,” Banks said. “With about 30 minutes to go, I turned to our staff and said, ‘There’s three points here. We can win this game.’”

Jacksonville is competing in a largely new-look NASL. Historic rivals Fort Lauderdale and Tampa Bay will not be competing in the league this season with the former taking a year off to reorganize its ownership and the later having shifted to the competing second division USL amid a push to join Orlando City SC in MLS. The Armada, led by Mark Lowery, who is entering his first full season as manager, has had to put together a playing squad in rapid fashion and in an economically efficient manner. The club’s future was uncertain until NASL stepped up and kept the club alive by buying the Armada in January. Lowery and his staff had to put together a squad in a short period — under two months, but the early returns are promising.

The team aspect that Lowery has emphasized was on display late on as repeated Edmonton attacks tested the defensive solidity of the Armada — but Jacksonville held and ran out worthy 1-0 winners.

The Armada play Edmonton again this weekend, in Alberta Saturday. Game time is 9 p.m. ET.

 

Jacksonville progressives plan Friday protest of Syrian military action

Thursday evening saw cable news broadcasts offering Strange New Respect for President Donald Trump after the bombing of a Syrian military base.

The bombing, a response to the Syrian regime’s alleged use this week of Sarin gas in its ongoing civil war, was framed as a humanitarian measure by President Trump.

“Assad choked out the lives of helpless men, women and children,” Trump said Thursday evening from Mar-A-Lago.

Despite his words, there are some who question the motives of President Trump in taking this action.

And a group of them will converge on Jacksonville’s Hemming Park Friday evening at 6:00 p.m.

Jacksonville Against the War in Syria and the Jacksonville Progressive Coalition framed Thursday evening’s bombing as launching a “war on Syria” on their Facebook invite.

“Just like the war in Iraq, Afghanistan, Libya and countless other countries, this will not bring freedom or peace to the Syrian people, or anyone else. It will only bring more destruction, death, and suffering,” the group asserts.

“The only people who benefit from this war on Syria are the 1% class of billionaires that Donald Trump and his Secretary of State Rex Tillerson, former CEO of Exxon Mobil, represents. We need to fight their agenda, not fight another rich man’s war,” the group adds.

Some of the same people protesting the military incursion into Syria (one that could be augmented with ground troops) have already memorably protested Trump (and his political ally, Jacksonville Mayor Lenny Curry) in Hemming Park in recent weeks.

The issue then: the executive order banning travel from seven majority-Muslim countries.

Lenny Curry’s team sells big pension savings to Jacksonville City Council

Mayor Lenny Curry offered his presentation of pension legislation on Thursday afternoon, leaving it to the Jacksonville City Council to hash out.

They were helped along by CFO Mike Weinstein and Chief Administrative Officer Sam Mousa, who helped to explain the pension situation to the legislators.

The short version: if pension reform passes, the city could see big savings: $1.4B in the next 14 years.

That will offer budget relief, even with raises factored in.

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Mousa noted, vis a vis the half-penny tax, that revenue has grown 4.49 percent per annum over the last seven years. Since the inception, revenue has grown 3.2 percent — including the recession.

Weinstein, meanwhile, discussed recent declines in payroll growth — under 1 percent for all classes of employees.

“We’re putting in fewer and fewer people, and giving fewer and fewer raises,” Weinstein said, with 1,000 fewer employees now compared to 2009.

Weinstein also outlined sales tax growth through 2060, with a 4.25 percent anticipated growth rate per annum.

While a “fluid process,” projections are for that revenue to top $500M by 2060 — with revenue in 2031 adding up to $155M.

“The statute allows it to go to 30 years or 100 percent funded, whichever comes first,” Weinstein noted.

Actuarial assumptions, Weinstein said, include 1.5 percent for general employees, police and fire, and 1.25 percent for corrections. Investment returns, meanwhile, are pegged at 7 percent growth per annum for police and fire, and 7.4 percent for corrections and general employees.

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Weinstein also offered a distribution of the tax money to pay for unfunded liability costs of $2.861B.

The lion’s share –$1.8B — goes to the police and fire pension fund. The other 37 percent goes to general employees ($900M) and correctional workers ($159M).

Weinstein also outlined the hard costs of pension.

Right now, without reform, city pension costs are 119.6 percent of payroll. That number would go up to 149.7 percent without reform, and 88.2 percent with it.

“With DB programs,” Weinstein said, costs are “unknown.”

“It would be great if we were paying normal costs. But we’re not,” Weinstein said.

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Weinstein then went on to outline the savings via the previous plans.

With general employees, $25M of savings could be realized next FY.

In FY 31, Weinstein said, “we make a contribution and the cash comes in,” referring to tax proceeds.

Because of the money coming in, the city is insulated from the kind of crippling costs that effect current budgets.

Weinstein showed similar trending for corrections throughout the span of the amortization, before describing the PFPF relief.

“It’s a $250M difference for PFPF,” Weinstein said. “When you compare reform to not doing anything, it’s huge.”

How huge?

The city could save $82M in FY 18 .. pending reform. “A true savings in cash.”

“The difference in cash payout is $1.4B in 14 years,” Weinstein said, with the half-penny helping to absorb costs increases in the 2030s and 2040s.

Savings fluctuate over the years: $82M in FY18, $83M in FY 19, $74M in FY 20.

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Pay raises — the factor that sold the deal to the unions — will be substantial, adding up to $120M in costs by FY20.

That includes defined contribution increases.

All told, the city will still save $53M in FY18, $67M in FY 19, but then will come out $29M behind in FY 20.

The three years of raises will be covered with $29M left over, Weinstein said.

Meanwhile, the anticipated city contribution as a part of general fund revenue declines over the term of the scheme.

GF growth has been consumed by pension; with this plan, Weinstein said, reserves could be bolstered and new spending could be justified, via “payroll growth manageable throughout” the term of the plan.

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From there, Weinstein went to liquidity ratios: offering instant content for the TV reporters on hand.

Weinstein assured that, even if the impossible happened and no one was in the pension fund, the city would have five years of capital to pay off pension obligations.

“It’s a safeguard to lessen the concern people have that the funds won’t be financially sound,” the CFO asserted.

While neither the general employees or corrections funds are in danger of skirting the liquidity floor, the police and fire pension fund may require more capital — which the city would provide.

The city is committed to $180M of contributions no matter what, with $110M of that going to police and fire pensions.

“This minimum is just for the defined benefit plan,” Weinstein noted.

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