Bill Reining in Local Pension Plans Heads to House Floor
Around the State
A bill designed to help local governments rebalance their pension plans for workers moved through its last committee stop Thursday in the House State Affairs Committee.
An amendment allowing municipalities to use 50 percent of insurance premium tax dollars on 401(k)-style defined contribution plans was tacked onto HB 7241, getting a buy-in from local leaders, but police and fire unions were reluctant to accept the change.
“I feel that government governs best locally and that’s what this bill does, it puts it back into the local hands,” said Rep. Debbie Mayfield, R-Vero Beach, sponsor of HB 7241.
Local officials agreed, and welcomed the greater flexibility in arranging and negotiating their pension plans for workers.
Current law holds that increases in revenue from insurance premium taxes must go toward increases in pension benefits. Cities and counties want more flexibility in securing the financial strength of the overall pension plan.
“This eliminates the requirement to provide new pension benefits in perpetuity even when the plan is underfunded, as ours is right now,” said Kim Adams, the chief financial officer of the City of Largo. “The bill helps make our pension fund fiscally sustainable,” he added.
But unions' representatives balked at portions of the bill that call on them to pay more into their plans, but receive the same benefits. The bill sets the minimum premium tax revenues that must be put toward local pension plans at 1997 levels. Union representatives think the bar should be set at 2009 levels.
“The improvements are dramatically more favorable to the officers on the street, but we do have some problems with some of the provisions that are still in there,” said Jeff McAdams, representative of the Gainesville chapter of the Fraternal Order of Police.
State lawmakers say the changes are needed since many large cities throughout the state have unfunded pensions that increase the burden on taxpayers. Local officials want to put the money toward paying down the shortfalls of their pension plans.
Republicans in the Senate, like Jim Norman of Tampa, have shied away from measures they consider a “bailout” of municipalities that signed on to fiscally irresponsible pension deals with their police and fire unions.
Democrats followed the tack of unions, applauding the changes to the bill, but stopped short of voting for it in committee, saying they hoped to see yet more alterations before it heads to the floor.
“I don’t think we’ve reached that 'alleluia' moment yet, but it’s getting better,” said Rep. Dwayne Taylor, D-Daytona Beach.
But one legislator who doesn’t serve on the State Affairs Committee, Rep. Fred Costello, R-Ormond Beach, urged the panel to resist further changes and favor the House bill instead of a similar Senate version that allows cities to use more of the premium tax revenues to pay down their pension plan shortfalls.
“I want to encourage you to not to adopt the Senate plan. The Senate plan, in essence, rewards the cities who were poor stewards,” Costello said.
The bill passed in a partisan vote and next heads to the full House.
Reach Gray Rohrer at email@example.com or at (850) 727-0859.