Dominic CalabroWith only three months before the legislative session starts, lawmakers are gearing up to help frustrated cities whose pension obligations are eating up larger portions of their municipal budgets.
Last month, Sen. Robert Bradley and Sen. Jeremy Ring filed the first 2014 bill addressing local pension legislation, at the behest of many Florida cities that have been asking for help for years. While the bill is a Band-Aid solution, taxpayers should be encouraged that the Legislature is trying to find a compromise.
Local pension reform has always been a heated subject, but most everyone agrees that some changes are needed, as many municipal plans are significantly underfunded and pension costs are taking their toll on city budgets. As unfunded liabilities grow, taxpayers and the services they depend on are increasingly at risk. Cities are struggling to fill the ever-deepening pension hole.
However, leaders so far agree on only one thing: reform is politically difficult. Attempts at compromise become particularly challenging when considering the extra benefits given to special-risk employees, like police officers and firefighters.
Powerful political influencers who represent the interests of these employees have goals that don’t align with protecting taxpayers. Most citizens would agree that special-risk employees should be fairly compensated and given benefits they deserve, but the benefits, which are paid by local taxpayers, must be reasonable. Sensible changes are needed to make sure public pensions are secure and sustainable, while protecting the interests of current and future taxpayers.
To make necessary changes and give cities budget relief, policymakers first have to agree on the problem that has caused massive pension underfunding. While many factors have contributed to the crisis facing many Florida cities, legislative mandates are causing a big strain. Since 1999, the Legislature has required cities to bump up their pension benefits twice. The minimum benefit levels in Florida statues were created to protect public employees, but a closer look at the public pension mandates reveals that the Legislature is up to its elbows in matters pertaining to city hall.
It’s critically important that cities reward employees and offer attractive benefit packages to retain their highest performers, but the Legislature needs to provide the flexibility for local governments to get pension costs under control. Compensation and benefit levels should be left up to cities to determine, based on what they can afford.
Unaffordable pension costs impair the ability of local governments to pay for core services and can harm public safety by choking off public investments in needed programs.
There is no simple solution to such a complex problem. Reforming pension plans will never be easy, but there are options to keeping pension plans affordable. Failing to address the problem could lead to a fiscal catastrophe. For example, excessive and underfunded local pension costs contributed immensely to Detroit’s pending bankruptcy.
This session, the Legislature can help by revisiting the mandates that got our cities into financial stress in the first place. Many cities and their taxpayers hope that help comes in 2014.
