A bipartisan compromise on a measure changing how cities can spend the insurance premium tax money that funds police and firefighter pensions cleared its first committee Thursday, but the measure still faces resistance from cities and unions.
The legislation (SB 458) is part of a nearly 15-year fight between the two sides over a law that the unions say requires all increases in premium taxes to be devoted to new benefits for pension members. The Department of Management Services had long backed that interpretation, but reversed course last year in a ruling that gives the cities more leeway in how to use the money.
But unions have cried foul, and some lawmakers are worried that the agency’s new way of reading the law might not stand up in court.
Under the bill approved by the Senate Government Oversight and Accountability Committee, cities whose pension plans are underfunded for future benefits by more than 20 percent could use half of the increase in premium taxes over the amount they raised in 2012 to pay down that deficit. The rest of the money would be split between existing benefits and additional 401(k)-style packages, instead of “defined benefits” options.
Other cities would simply split the money between existing benefits and the 401(k)-style plans.
Committee Chairman Jeremy Ring, D-Margate, said the Legislature had a responsibility to help city pension funds, some of which are dangerously underfunded, for any of the problems caused by a bill then-Gov. Jeb Bush signed into law in 1999.
“We put that law into effect in the first place,” Ring said. “We created this monster, so to speak.”
But those involved in hammering out the legislation conceded it is unpopular with both sides.
“Nobody loves it, but I think everybody can live with it,” said Sen. Rob Bradley, R-Fleming Island, who worked with Ring to develop the measure.
As if to prove the point, lobbyists from opposite sides of the issue said the bill was moving in the right direction — but they didn’t currently support it.
Kraig Conn of the League of Cities said cities still wanted the ability to handle all pension issues through collective bargaining. And he pressed lawmakers to find some way to limit the damage on cities that have relied on the DMS ruling.
“That’s the current law in the state of Florida for the use of premium tax revenues,” he said. “And that fact should not be disregarded entirely by this committee.”
David Murrell, executive director of the Florida Police Benevolent Association, said the Legislature should make sure not to reward cities that were irresponsible while helping those that got into a bind.
“It’s like a mini-Wall Street bailout if you go ahead and give these people money when they really don’t deserve it and they have self-inflicted wounds,” he said.
Ring said after the meeting that the legislation might be tweaked to address some of the concerns raised Tuesday, but the framework would likely stand.
“Some of these issues may need to be just discussed, but the direction and the path is set,” he said.
by Brandon Larrabee
