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Posted on July 15, 2013
The City Commission has avoided raising property taxes this year and instead has relied on an increase in the gas tax and one time transfers from reserve funds to reach a balanced budget.
The recent workshops on the City’s budget have revealed that one of the major dynamics driving the $5 million general deficit this year and the projected shortfalls over the next few years revolves around Star Metro. The discussion by City Commissioners indicate that changes have to be made to Star Metro so that the general fund subsidy does not continue to increase.
However, one area that received no discussion during this budget cycle – despite a major increase over the previous year spending – is employee pensions. Budget documents show that the City contributions to employee pension funds in 2014 increased a whopping 28%, or $2.2 million, over the 2013 budget.
Tallahassee Reports contacted City budget staff about the increase and was told that a new state law required that the City increase the funding for their pension plans. This requirement resulted in an increase in the employer contribution from 10.0% to 13.4%. The employee contribution remained at 3.75%. This makes the City’s contribution over 3.5 times greater than the employee’s contribution. How does this compare to the private sector and to other local governments?
In the private sector, for most businesses, the employee’s pension program is Social Security. In that program, the employer and employee contribution is split 50%/50%. Tallahassee Reports was able to verify that the City of Jacksonville requires their employees to contribute 7% and the City of Gainesville requires their employees to contribute 5%.
More than one City source has indicated that the City has punted on the employee pension issue, but that it will have to be addressed soon to break the projected cycle of general fund budget deficits. “Just keep an eye on the current negotiations with police union, this could be an indicator of how the general employee pension fund will be addressed next year” said the source.