City Beat: Pension task force offers two tax options

Springfield's Police and Fire Pension Task Force has narrowed its options to two, but there is one constant: a sales tax.

Jerry Fenstermaker, chairman of the 16-member task force charged with repairing the fund's $200 million shortfall, presented two sets of recommendations at City Council's Aug. 10 meeting. One proposes a X-cent city sales tax, which would generate $24 million a year, while the other recommends a O-cent tax, which would generate $28 million a year. Either sales tax would last for five years with a voter-approved renewal option for another five years.

Both plans assume a 7.5 percent rate of return on pension investments. In fiscal 2008, the city saw a 4.8 percent loss on its investments. Both proposals also include the city contributing an amount equivalent to 35 percent of employee payroll to the plan. That's compared to 52 percent contributed last fiscal year.

Additionally, Police and Fire employees would be asked to contribute more of their pay to the fund. Employees hired before June 2006 currently contribute 11.35 percent of their pay, and employees hired after that date contribute 8.5 percent. The task force is recommending a contribution increase of between 0.75 percent and 2 percent.

The sales tax recommendation comes after a 1-cent tax proposal failed at the polls in February.

Fenstermaker said the group spent more than 2,000 hours considering a variety of options, from halting or moving the city's capital improvements tax to getting payments from City Utilities.

"What you have is a plan to raise money short-term for eight to 10 years, while not allowing the plan to deteriorate or the problems to reoccur," he told council. "With these four items together, you have the chance to define the program for the future."

Not all task force members are on board with the recommendations, however. Voting member Carl Herd said he thought the recommendations "deliberately ignored" the underlying problems that caused the pension fund to approach insolvency.

"You can vote this tax in, but if you haven't solved the problem, in a few years you'll be back for another solution," he said.

Council scheduled a special meeting Aug. 13 to discuss the proposals and introduce a bill to put the sales tax issue on the Nov. 3 ballot. Officials expect the bill's second reading at council's Aug. 24 meeting, one day before the county ballot deadline. The final sales tax proposal would appear on the Nov. 3 ballot and, if approved, would take effect in April 2010.

City manager's report

In his regular report, City Manager Greg Burris presented the August sales tax check, covering citywide purchases citizens made in May and June. The check was up 0.62 percent compared to August 2008, improving the year-to-date totals to a decline of 9.3 percent from a 15.1 percent drop.

"That's why I urge everyone to keep an eye on the year-to-date revenue and not focus so much on the monthly fluctuations," Burris said.

He added that the September check will include companies that pay sales tax quarterly, so the total should be larger. At that point, the city will update its revenue projections for the fiscal year.

Burris also said the city has prepared a list of 64 properties that can be sold as a source of additional revenue. He noted, however, that most of the properties were not purchased using general revenue fund money, so sale proceeds from those properties cannot go into the general revenue fund.

"It won't be a panacea for the pension fund ... but we will go through this process," he said.

A map of the properties is available on the city Web site, www.springfieldmo.gov.[[In-content Ad]]