[UPDATE] Local Pension Reform Passes House Committee

By: Brandon Larrabee, The News Service of Florida
By: Brandon Larrabee, The News Service of Florida

[UPDATE] THE CAPITAL, TALLAHASSEE, April 22, 2011 --

A new version a House pension package seems to have brought local governments and unions closer together, with opponents of the measure saying Thursday the new outline was approaching something both sides could support.

“I don’t really think we’ve reached that Hallelujah moment yet,” said Rep. Dwayne Taylor, D-Daytona Beach, “but it’s really better than it was before.”

The new version of the bill (HB 7241), which passed the State Affairs Committee on a 12-5 vote, substantially overhauls the chamber’s last attempt to reform local pensions for firefighters and police officers. The old version would have allowed local governments to use additional proceeds from insurance premium taxes to pay for unfunded liabilities within their pensions plans.
The new proposal allows local officials to use up to half of the increase in premium tax revenues since 1997 to help cover unfunded liabilities. The remainder would go toward supplemental retirement plans.

Currently, all increases in premium tax revenues since 1997 have been devoted to providing new benefits to police officers and firefighters, but local officials have made a push to tap those dollars in what they describe as an effort to make their pension plans sustainable.

The revision also rolls back a provision opponents said would have given local governments greater control over the administrative budgets of the pension funds and another that would have affected how much overtime and unused sick and medical leave can be counted toward benefits.

Local officials hailed the agreement as a compromise that would still allow them to address pensions’ financial issues.

“It gives us a lot of freedom to fix our problems,” said Orange City Mayor Harley Strickland.

But some workers’ groups including the Police Benevolent Association said they’re still wary of the proposal, in part because the measure could affect the use of half of premium increases collected since 1997, about $30 million.

The measure is substantially different from a less sweeping Senate plan that would allow local governments with sizable unfunded liabilities to use some of the tax proceeds to fill the gap. House members said that approach was wrongheaded.

“The Senate plan, in essence, ... rewards cities who were poor stewards,” said Rep. Fred Costello, R-Ormond Beach.

The bill now heads to the House floor. The Senate version (SB 1128) is awaiting floor action in that chamber.

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THE CAPITAL, TALLAHASSEE, April 11, 2011 --

A pension measure unveiled Friday by the House Government Operations Subcommittee would give local governments a sought-after change in the funding of retirement plans for firefighters and police officers.

Under the new proposal (GVOPS 11-17), local governments would be able to use additional proceeds from insurance premium taxes to pay for unfunded liabilities within their pension plans.

Currently, any new revenues from the taxes are required to be funneled into new benefits.

The measure, which passed on a 10-5 party-line vote, differs from a less sweeping Senate plan that would allow local governments with substantial unfunded liabilities to use some of the tax proceeds to fill the gap.

Local officials told lawmakers Friday they need the change to try to replenish pension plans hammered by the economic downturn.

“The premium tax money has grown, but we can’t use it to pay for the new people,” said Bruce Haddock, city manager of Oldsmar.

But Dean Parkerson, a district vice president with Florida Professional Firefighters, told lawmakers that the local governments’ bind was largely based on the decisions they made with regard to pension plans and benefits in collective bargaining.

“They got there themselves . . . and now, they’re looking for a bailout,” Parkerson said.

The changes in local plans would be different from the pension changes lawmakers are seeking to make for state employees. Those measures, which cleared the House and Senate on Thursday, would require workers to contribute a portion of their income toward funding their own retirement accounts.

The bill unveiled Friday would also remove unused sick or annual leave time and any overtime over 300 hours after July 1 from the definition of compensation for retirement benefits. It wouldn’t affect benefits police officers or firefighters have already earned.

Rocco Salvatori, with Suncoast Professional Firefighters, said that ignores the fact that firefighters generally get three hours of overtime a week simply because of their schedules.
“It may just be showing up to work,” Salvatori said.

Others differed with provisions giving local governments more control over the administrative budgets of the pension plans. Rep. Dwayne Taylor, a Daytona Beach Democrat who has served on the board of local pensions, said that could prove unfair to board members who are held responsible for the financial health of the plans.

“You cannot allow a city or municipality to government one aspect of it without taking on the liabilities of it,” Taylor said.

The Senate version of the plan (SB 1128) is set to go before the Senate Budget Committee on Wednesday.


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