The mayor of Jacksonville and other city leaders are preparing for conflict with police and firefighter unions over reforms to their pension plans. The pension plans are underfunded by $1.2 billion and are projected to cost the city $110 million next year, or 10% of the general fund budget. The mayor wants to reduce pension benefits to address the growing costs, but the unions strongly oppose any cuts to benefits and say the city is responsible for properly funding the plans. Negotiations over changes are expected to be difficult with the unions having political influence through campaign support of candidates who back their positions.

1. Mayor, other leaders brace for conflict
over police-fire pension
Source URL: http://jacksonville.com/news/metro/2009-05-31/story
/mayor_other_leaders_brace_for_conflict_over_police-fire_pension
By David Hunt
They were once a muscular ally, the brotherhood of police and firefighters who decided
John Peyton, a virtually unknown businessman, should be the city's next mayor.
That was six years ago. Peyton won the unions' support, then the election - against a
popular former sheriff.
Now, those unions' retirement plans are in the mayor's crosshairs.
While the mayor hasn't pulled the trigger, he said it's either that or leave taxpayers
throwing cash at a broken pension plan snowballing into a projected $110 million expense
next year.
It's an ugly reality that's plagued cities from San Diego to Philadelphia as officials
nationwide consider everything from deferring benefits to taking out loans to cover
retirement checks.
In Jacksonville, it's an issue at the top of the Peyton agenda for his final two years in
office. It's also a potential balancing act for a handful of City Council members who may try
to succeed him.
Reducing benefits would mean reducing the future retirement payout of well-organized,
tight-knit groups that can help mean the difference between victory and defeat at the polls.
Both firefighters union President Randy Wyse and police union President Nelson Cuba
say they'll be watching how mayoral hopefuls handle the pension issue. The general
message: Mess with our retirement, lose our support.
That's a definite threat, said University of North Florida political science professor Henry
Thomas. He said union backing means campaign-boosting word-of-mouth, feet on the
street - and votes.
"Candidates go out of their way to get their support," he said. "We have a more
conservative voter base with more people who are pro-fire and pro-police."
With power comes privilege. Thomas pointed to Peyton's 2003 election. Shortly after
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2. taking office, the mayor replaced an unpopular fire chief before increasing public safety
funding by $43 million.
But in recent weeks, Peyton has given speeches to civic leaders and elected officials
about the need to restructure pensions.
"It's a tough issue because you're talking about the benefits of people you care about. And
the groups have a lot of political clout," Peyton said. "But if you look at the numbers,
they're staggering."
Budget planners expect to put $110 million toward the retirement plans for police officers,
firefighters, corrections officers and general City Hall workers next year. That would eat up
roughly 10 percent of the general fund.
Just six years ago, the pension contribution was $33.8 million; this year, it's $76 million.
City's contributions eyed
The police and fire union received $54 million this year, the bulk of the contribution.
Cost has skyrocketed, but that's not the unions' fault, Wyse said.
He looks critically at the 1990s, when the city relied so much on a strong stock market that
it kept contributions to a minimum.
When the stock market tumbled over the past year, the pensions were hit hard. A May 19
city Finance Department report showed the retirement funds are nearly $1.2 billion under-
funded.
While that number is often scoffed at - it represents what the city would be out if every
employee retired at once - Wyse said reducing it is the city's problem.
"We want no changes to our benefits," Wyse said. "Why does this have to fall on the
backs of the workers? There's a way to fix it. Make the pension contribution you were
supposed to make - but didn't."
Police and fire pension fund administrator John Keane backed that thought on Friday by
putting out a written statement saying the city should step up the funding.
Wyse said Councilman Stephen Joost earned union respect several months ago when he
spearheaded legislation preventing the city from taking a funding break - commonly called
a "pension holiday" - in the future.
Former Mayor John Delaney's budget planners became notorious for this in retrospect as
a strong stock market went limp, leaving Peyton with the problem. Joost said he expects
compromise on the pension issue, but sees a rocky horizon.
"I wouldn't be surprised if the unions play hardball," Joost said. "That's what they're
supposed to do."
Lengthy process expected
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3. Councilman Kevin Hyde, who is considering a mayoral run, said a tight rope rolls out as he
tries to explain to the unions that pension restructure is for their own good.
The problem with the plan: By the time some employees need it, the money might not be
there.
Hyde said he expects pension restructuring to take several years, with the unions
negotiating for new agreements.
"I think we can get to a fair, appropriate level of benefits that will get people to come work
for the city and stay at the city. Absolutely," Hyde said. "Will everybody be happy?
Probably not."
Hyde said he's against breaking promises in current contracts, but said payouts will have
to be reduced over time.
Cuba opposes the notion of phasing in lower benefits as new employees are hired.
"You can't tell two people doing the same job that one won't retire as well as the other.
How do you recruit like that?" he said.
Council President Ronnie Fussell said he's leaning against a mayoral run, but expects the
unions to be watching the pension issue closely for whoever campaigns.
"Talk about an emotional issue," he said.
Fussell appointed a pension task force in March. During a recent meeting, Chief Financial
Officer Mickey Miller told the task force it would take several additional tax mills and about
12 years to cover the pensions' projected debts.
"Nobody jumped to make a motion that we pass that," said Councilman Michael Corrigan.
Mayor feels the heat
Peyton said cutting the pension cost - now at $275,000 a day - means cutting benefits.
Council President-elect Richard Clark said the problem might best be solved by adopting a
private-sector model, where more responsibility is placed on the employee to save than
the employer to pay out.
"It used to be back in the day that city employees and government employees got more to
retire because they were paid less," Clark said. "We now hire good people because
salaries are competitive. There's no reason that backside cost shouldn't fall on the
employee."
Cuba has long maintained that his troops could stand to earn better salaries, but says it's
a sacrifice many in public service are willing to make when they know they're guaranteed
a working-class retirement.
The mayor's office takes the lead in negotiating contracts with the unions. At this point,
Peyton's plan is loose. At the top of the list: a controversial deferred retirement option that
begins paying out before an employee has worked their final day. The option guarantees
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4. an 8.4 percent return on investment no matter what the stock market does.
That's an option separating Jacksonville's plan from many others, but Cuba and Wyse
maintain the benefits are average.
Cuba has been critical of the mayor's recent speaking tour. Peyton has been describing
the pension problem to elected officials and business people while also saying the city
needs better parks - but can't afford them.
"It's like he's throwing us under the bus," Cuba said. "If you didn't have public safety, you
wouldn't have anything for the citizens because you'd have a Detroit. Everybody would be
leaving."
Peyton disagreed, saying he was trying to give a broad overview of city priorities.
Union negotiations, where pension talks will begin, are expected in the coming months,
but no immediate savings are expected for the 2009-10 budget.
david.hunt@jacksonville.com,
(904) 359-4025
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