Senators are continuing to work towards a compromise on legislation that would shore up local pension funds.
But the chairman of the committee charged with the first draft of the overhaul seems to be at loggerheads with Florida cities, which want as much flexibility as possible in spending the insurance tax dollars that fund police and firefighters’ benefits.
The attempt to hammer out an agreement among members of the Senate Governmental Oversight and Accountability Committee happens in the wake of a ruling by the Division of Retirement over the summer that upended how insurance premium taxes are supposed to be spent.
State officials had previously said a law passed in 1999 requires cities to use the tax revenues above those collected in 1997 for “extra benefits,” or those beyond the minimum benefits required by state law and the city as of March 12, 1999. That meant any extra money couldn’t be used to cover the other expenses of the plan, even if the minimum benefits were proving too costly.
The “Naples letter” changed that. The division now says cities are only required to spend money on “extra benefits” after they’ve paid for legally required benefits.
Legislation by Sen. Jeremy Ring, the Margate Democrat who heads the Senate committee, would overhaul the 1999 law by allowing cities who most need help to use some of the extra money to shore up local pensions but some to create 401(k)-style plans with leftover funds. Ring contends that the Naples letter could be struck down if it were challenged in court.
Sen. Rob Bradley, R-Fleming Island, is working on a similar measure that would also allow cities to reduce the amount of money they pay for benefits using some of the premium benefits, but require the cities to maintain the benefits protected by the 1999 law.
But cities want nothing that might weaken the Division of Retirement’s ruling. They say it gives them the flexibility needed to manage their own affairs.
“Let these decisions properly occur at the local level, where they belong,” said Maitland Mayor Howard Schieferdecker.
Ring, though, told cities that he is unlikely to accept a full repeal of the 1999 law or one simply writing the division’s ruling into the law.
“I would be concerned that if essentially this is about the leverage that may come from the Naples ruling, which unlocks all of this, it seems to me that that’s a bit of a state bailout,” he said.
And unions have lashed out angrily at cities for seeking deeper changes, saying that cities have helped get themselves into the mess.
“If they want to see who’s at fault, they need took in a mirror, because they did it and now they want you to bail them out,” said David Murrell, executive director of the Florida Police Benevolent Association.
The cities argue that they can be trusted.
“These are our employees, our citizens, our neighbors, and in many cases, our friends,” said Titusville Mayor James Tulley, who said his city’s pension payments amounted to 79 percent of its property tax revenues. “But we must also be accountable to the citizens who ultimately pay the bills.”
Via Brandon Larrabee of the News Service of Florida.