Tuesday, November 25, 2008

1¢ Sales Tax

1¢ Sales Tax
for Police and Fire Pension System

February 3, 2009

On February 3, 2009 citizens of Springfield will consider a new, one-cent sales tax for the sole purpose of funding the Police and Firefighters Pension System. The official language that will appear on the ballot is:

Official Ballot Language

"Shall the City of Springfield impose a sales tax at a rate of one percent solely for the purpose of providing revenues for the Springfield Police and Firefighters Pension System with said tax to sunset upon the earlier of A) Five (5) years from the date of the commencement of collection of this tax or B) the Pension System fund reaching a fully-funded (100%) status as determined by an independent actuarial study conducted for the Pension System Board of Trustees?"

Instructions to voters: If you are in favor of the question, place an "X" in the box opposite "yes." If you are opposed to the question, place an "X" in the box opposite "No."

Additional Elements Proposed to Fund Plan

  • The measure is supported by the Police Officer’s & Firefighter’s Retirement System Board of Trustees, the Springfield Police Officers Association and Springfield Firefighters Local 152.
Tax payer be damn we want our pension system funded, no matter what we told you at those earlier meetings. I guess if I were one of them I might feel the same way.
  • Latest audit and actuarial information, through October 2008, shows that the Police and Fire Pension System is underfunded by $194 million for its future liability of $295 million.
  • The proposed 1-cent sales tax would generate about $40 million a year and would be dedicated exclusively to funding the pension system until it sunsets or the system reaches fully funded status.
  • The City of Springfield would increase its annual contribution rate by 1 percent while the tax is in effect, which would account for an additional $240,000 a year from the City’s General Fund. This would be achieved by additional budget reductions.
And hence here is the problem, NO guarantee that this 1% or the 28.88% is going to go into the fund, only the word of city manager Greg Burris. This money has been used for other purposes before so it wouldn't be a first for city to spend it in other areas.
  • The City would pledge at least $10 million in revenue from settlements anticipated with telecommunications companies that lost their lawsuit over back taxes owed to the City. This revenue would replace $10 million (in today's dollars) in underfunding by the City during four fiscal years to bring the City’s total contribution commitment up to date according to actuarial recommendations.
Let's see an ordinance voted on and approved for this before the determination is made. I believe council needs to "man up" NOW just in case a settlement is reached prior to the new council being seated.
  • Current Police and Fire employees who are part of the original system (active employees hired before July 1, 2006) would increase their pension contribution by an amount to be recommended by the plan’s actuary for 2010 and beyond.
  • A recommendation is forthcoming on whether new Police and Fire employees should be placed into the statewide LAGERS pension system that covers all other City employees. If that were to occur, the City could close the locally self-funded pension plan to new employees and eventually negate any further future liability for the pension plan.
Except we could be dealing with the same problems in the LAGERS system as well. Wait till the people find out this pension system is funded 100% by the people.

City Manager Greg Burris offers an invitation to community and civic groups to make the sales tax presentation and answer their questions. Any group interested in scheduling a presentation can call 417-864-1006 or e-mail: city@springfieldmo.gov.

For more information, contact: City Manager Greg Burris, 864-1001; Deputy City Manager and Pension Board Chair Evelyn Honea, 864-1001; David Hall, Assistant Fire Chief and Pension Board member, 864-1530; Police Chief Lynn Rowe, 864-1782; or Louise Whall, Director of Public Information, 864-1010.

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