“As mayor, I hold an unwavering respect for the effort behind every tax dollar the city receives,” Mayor Lenny Curry wrote in his June 22 letter of transmittal to the public accompanying the Comprehensive Annual Finance Report for the past fiscal year.
The accompanying letter from the auditors said: “Responsibility for both the accuracy of the data and the completeness and fairness of its presentation, including all disclosures, rests with the City. Management believes the data, as presented, is accurate in all material respects. It is presented in a manner designed to set forth the financial position and the results of operations of the City on a government-wide and fund basis. Disclosures necessary to enable the reader to gain an understanding of the City’s financial activities are included.”
That’s boilerplate, but the audit was delivered much later than usual this year, apparently because the auditors needed more time to grasp the city’s fiscal gyrations.
The mayor’s vaunted pension plan fix is to reduce the unfunded liability — the major driver of the rapidly growing cost that has been eating the city budget — by extending a ½-cent sales tax for the Better Jacksonville Plan past 2030.
The trick Curry is using is to apply the future revenue from that tax to reduce on paper the unfunded liability now, based on its discounted present value.
The tax was authorized in a referendum authorized by the legislature. What escaped much notice was that the legislation also allowed the city to use the pre-funding trick to make the pension plan fix appear to be working well.
But now the audited city accounting gets even more interesting. By using the future revenue to reduce costs now, the city is saving (on paper but not in cash) about $80 million in pension fund contributions.
For a year.
The following year, that cost will be ADDED to the unfunded liability – because it was not actual money. The real cost has to be shown somewhere. Added each year, it will be many millions before the money to pay for it actually is collected.
Therefore, the cost being avoided now will come due then, with interest.
Meanwhile, the problem is worsening. The 2017 audit shows the unfunded liability in the pension grew from $2.45 billion to $2.54 billion. This was during a year when the city’s main pension fund saw 15 percent returns. What will happen in a bad year for the market?
The audit also shows tax revenues increasing $73 million last year, which is good. But city government spending went up $162 million, which is not good.
Meanwhile, the mayor and City Council seem determined to spend the money being “saved” by the accounting legerdemain. They have plans galore for capital improvements and increased services.
If the mayor has an unwavering respect for the effort it takes to produce tax dollars, why not reduce taxes now, since the citizens will begin paying a new tax in 2030 that will last for up to 30 years to a problem that continues to grow during the interim?
Preparation of the mayor’s budget wraps up next week and it will be presented to the council this month.
[author] [author_image timthumb=’on’]https://eyeonjacksonville.com/wp-content/uploads/2018/04/Lloyd-Brown.jpg[/author_image] [author_info]Lloyd was born in Jacksonville. Graduated from the University of North Florida. He spent nearly 50 years of his life in the newspaper business …beginning as a copy boy and retiring as editorial page editor for Florida Times Union. He has also been published in a number of national newspapers and magazines, as well as Internet sites. Married with children. Military Vet. Retired. Man of few words but the words are researched well, deeply considered and thoughtfully written. [/author_info] [/author]