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Sun-Sentinel: Address municipal pensions

Thursday, December 29, 2011

Earlier this year, Florida legislators started making state employees contribute to their pensions. That strengthened the state’s biggest public pension plan, and made it fairer for the taxpayers who subsidize pensions.

But there are hundreds of smaller pension plans run by Florida cities for their employees, and many aren’t as well funded as the state plan. And while legislators also took some steps to help cities shore up their plans, much more needs to be done.

This isn’t just an issue for city leaders and employees. Local taxpayers share the burden of bankrolling pensions through employer contributions to the plans.

Rising retirement costs can force tax hikes or siphon dollars from other needs, from public safety to parks. If not adequately funded, those costs theoretically could bankrupt a city.

A recent report from the LeRoy Collins Institute, a think tank associated with Florida State University, found that almost one in every three plans run by the state’s 100 largest cities were badly underfunded as of a couple of years ago, the most recent date for which figures could be analyzed.

The institute graded plans from “A” to “F” based on whether they have sufficient assets to cover their future costs.

The Collins Institute report cited another study by the Florida League of Cities which stated that retirement costs for municipalities as varied as Miami, Pembroke Pines, St.Petersburg and Hollywood now top 50 percent of their payrolls.

Holluwood voters smartly enacted pension reform this past year, but plenty of other city halls haven’t done enough to protect their taxpayers.

Many cities dug a hole for themselves by promising more in pension benefits than they could afford. State laws, passed under pressure from public employee unions, have made the plight of cities even worse by strictly limiting their authority to control their retirement costs.

The most notorious is a 1999 law governing a tax on property insurance premiums, a primary funding source for police and fire pensions. The law says that as the take from that insurance tax grows, the additional money must go to boost retirees’ benefits rather than to help pay what cities already owe. The law has forced cities to spend $460 million to sweeten benefits instead of saving plans from ruin.

Two area legislators, Sen. Alan Hays of Umatilla and Rep. Fred Costello of Ormond Beach, are sponsoring legislation to unshackle cities from the 1999 law and make other reforms to help them corral pension costs. Taxpayers deserve no less.

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