Voters in Jacksonville, Fla., on Tuesday approved a referendum that creates a half-cent sales tax that will be used exclusively to fully fund the city's three pension funds.
By a margin of 65% to 35%, voters approved the half-cent tax, which will take effect once another half-cent sales tax used for infrastructure project expires, said Mike Weinstein, the city's chief financial officer, in a telephone interview.
The vote came as a result of a state law passed earlier this year that allowed for the referendum, with the requirement that all three pension funds become closed to new employees and the employee contribution rate is increased to at least 10%. The pension funds are the general employees and corrections officer pension funds that make up the $2 billion Jacksonville City Retirement System and the $1.8 billion Jacksonville Police & Fire Pension Fund.
Joey Greive, the city's treasurer and chief investment officer of the city retirement system, said the general employees fund is about 65% funded, and the corrections officer and police and fire pension funds are below 50% funding currently. The total unfunded liability for the three funds is between $2.8 billion and $3 billion, Mr. Greive said.
The current half-cent tax that is folded into Jacksonville's 7% sales tax to pay for specific infrastructure projects is set to expire either Dec. 31, 2030, or when the projects are completed, whichever comes first, Mr. Weinstein said. Upon the expiration of that half-cent tax, the new tax will replace it to be used exclusively for funding the pension plans with the intention of bringing them all up to a 100% funding ratio in 30 years or earlier.
As part of the legislation's requirement for the plans to be closed, negotiations will begin to close the plans and bring the employee contributions up to at least 10%. A specific timeline for those changes is dependent on negotiations. Once those changes are made, the state law requires that an actuary then make the new calculation for what is required for the 30-year payoff of liabilities.