Financial sector reassured by Jacksonville resolving pension problem

Now that County Referendum 1 is in the books and secured financing for the city’s unfunded pension liability assured after collective bargaining, there is a reason for optimism on the Jacksonville City Hall fourth floor.

A review of city emails shows that those outside the St. James Building feel the same way.

A hallmark of the administration of Mayor Lenny Curry has been to make moves to get the fiscal house in order.

There was the reordering of the JEA Board — a controversial move at the time — that was vindicated with an almost immediate improvement in the public utility’s bond rating.

There was the so-called 90-day audit, which showed that Jacksonville, while in relatively good shape in the short-term, faced long-term pressures “given rising labor costs, anticipated incremental contributions to the retirement systems and anticipated capital expenditures.”

Those increased pension costs spurred Curry to commence on a political odyssey of sorts.

The mayor introduced the concept of extending the half-cent infrastructure sales tax past its 2030 sunset date to the city council in January. From there, he took it to Tallahassee, where it received significant conceptual tweaks, such as a removing a mandated defined contribution plan for new hires as well as a referendum requirement.

They became part of the final package that was signed into law.

From there, energy moved to selling the referendum. About $2.1 million was raised and spent, and Curry spent months answering variations on the same questions in town hall events.

Slings and arrows came in, as they do. Media reports questioned the mechanics of the plan. Diffused political opposition arose. People asked whether the measure would even pass.

And then, it did.

Curry had told media two audacious things. One was that, if the referendum passed, other cities would be looking at Jacksonville as a model. Another was that companies, and the financial sector in general, would see passing the referendum and securing a dedicated revenue stream to the city’s unfunded pension liability as a huge positive.

Proof of that second assertion has already popped up in city email boxes.

Henry Reyes, an executive with J.P. Morgan, sent an email to city officials lauding the city for getting this through on Tuesday.

“What another Amazing Accomplishment – successful passage of a referendum to extend sales tax to fund pension needs,” Reyes said, calling the referendum passage “incredible & precedent setting.”

“We will collect thoughts from our research group re potential rating and investor feedback plus the many positive implications from this significant development for Jacksonville’s future,” Reyes added.

The city’s CFO Mike Weinstein, the godfather of this plan, noted in the email chain that Reyes’ assertions are “are consistent with what the ratings agencies have been telling us as we work toward solving our [unfunded pension] liability.”

For years, Jacksonville has been hamstrung by pension costs. This solution may have been controversial with some voters. But for the financial sector, which clearly sees peril in unfunded liabilities, Jacksonville’s referendum represented a necessary step, one that may confer benefits beyond relief for the city’s general fund.