Today the Senate Governmental Oversight and Accountability Committee will meet and discuss municipal pensions. Florida’s municipalities have $19 billion in unfunded pension obligations. This is largely due to years of local elected officials making financially unsustainable promises to politically influential public employee unions, especially the powerful police and firefighter unions that have successfully lobbied elected officials for increased benefits despite the economic depression we have been in for years.
The problem can be seen clearly with a quick review of municipal pension plans — they continue to grow while municipal revenues continue to shrink; they assume typically eight percent annual returns, but really earn about 4.5 percent; in many cities, annual pension contributions consume more than half of the city payroll; and on top of this, the Florida legislature passed a bill in 2000 that requires municipalities to use certain revenues to providee “extra benefits” for police and firefighters, rather than being able to use that money to fill their already established unfunded liabilities.
Today’s proposal will not help the current municipal pension problem and will only further solidify that extra benefits be provided to first responders. Our first responders perform a worthy duty, but that doesn’t justify a mandate passed on to local elected officials that ties their hands and keeps them from making fiscally responsible decisions. It’s time that the legislature repeal the mandate for extra benefits, and enact policies that will allow municipalities to reform their failed pension policies of the past and move towards more sustainable retirement plans that will protect the interest of both retirees and taxpayers.