Commission works on proposal to replace pension fund tax

Cora Scott: Springfield residents support the beautification of public spaces.

David Holtmann: City is committed to all beneficiaries receiving the full pensions they are entitled to.

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A group working on a plan to replace a city tax is zeroing in on eight priorities for some $45 million in annual funding.

The Citizens’ Commission on Community Investment is charged by Springfield Mayor Ken McClure with determining the city’s next move regarding a three-quarter cent sales tax that is set to expire March 31, 2025. The body held the fourth of its six scheduled meetings on May 28.

Cora Scott, Springfield’s director of public information and civic engagement, presented a summary of the commission’s leading categories for funding, based on previous discussions. 

The categories are as follows:

• Remaining police officers’ and firefighters’ retirement system obligations
• Police/fire public safety initiatives
• Safe and healthy neighborhoods
• Roads, bridges, sidewalks, stormwater and capital improvement projects
• Jobs and economic vitality
• Parks, recreation and trails
• Beautification of public spaces
• Facilities, vehicles, equipment and maintenance

Scott noted the categories on the list were chosen by city staff, including City Manager Jason Gage and Deputy City Managers Collin Quigley and Maurice Jones, as well as City Clerk Anita Cotter and Scott herself, with co-chairs Phyllis Ferguson and Tom Prater leading the discussion. 

The existing tax, first approved by voters in 2009 and renewed in 2014 and 2019, was exclusively to fund the city’s Police and Fire Pension Fund. When voters first OK’d the measure, the pension was underfunded by some $200 million and was funded at only 35.5%, according to city Finance Director David Holtmann. That was significantly lower than the state law requirement of a funding ratio of 60% or higher.

As of October 2023, the pension was 90.7% actuarially funded, Holtmann noted in the commission’s first meeting on April 16. He estimated that within 5-7 years, all active employees who are members of the plan will have retired. He said with a contribution of $3.5 million-$6 million per year, within a decade the fund will be at 100% or over to account for any market fluctuations that occur.

The 30-member commission is looking to replace the tax with one that continues to pay for the Police and Fire Pension Fund but also pays for other city initiatives.

Consensus with commission members appears to point to a preference for another three-quarter cent tax for a defined period, rather than a permanent tax. An informal head count at the meeting showed a preference among most for a period of 10-20 years.

The commission’s recommendation is a work in progress. Two more meetings are scheduled – June 11 and June 25, with meetings open to the public at 9:30 a.m. in the Councilman Denny Whayne Conference Room at the Busch Building – and the mayor’s charge sets a deadline of June 30 for its formal recommendation, including ballot language.

Proposed categories
Scott noted the commission’s funding categories align with the priorities in Forward SGF, the city’s current 20-year comprehensive plan.

“This doesn’t break it down into individual projects with individual price tags, because the goal would be to keep it broad enough to allow the flexibility but specific enough that citizens would know what it is and how it fits the needs of the community,” she said.

Scott offered insight on each item from a history of public input synthesized from various surveys.

The last time the three-quarter cent sales tax to fund the Police and Fire Pension Fund was put before voters, it garnered 78% voter support, she noted.

Police and fire public safety initiatives might include offering competitive public safety salaries, she said. In one recent survey, 61% of respondents rated public safety as a top priority.

Safe and healthy neighborhoods could include housing and revitalization initiatives but may also include mending potholes in neighborhood streets. Scott said one survey found 54% of respondents supported infrastructure improvements in neighborhoods.

“That’s just a hand-picked note out of one of the surveys, just to give you an idea,” she said, noting all surveys have been provided to commission members for their further examination.

She noted 66% of respondents in a recent survey ranked road, bridge, sidewalk, stormwater and capital improvement projects as a top priority. 

Scott said 88% of respondents to a recent long-term planning survey ranked the category of jobs and economic vitality as important or very important. The commission has been talking about transformational projects, and she said these would fall under this category.

“I’m a little concerned about how the general citizenry would respond to the word transformational,” she said. “I don’t know what that means; I don’t know that they know what it means. From what you all are describing, it’s very capital improvement in nature, and it’s projects that would serve as catalysts or economic vitality development and job growth.”

Scott said 89% rank parks, recreation and trails as important or very important on almost any survey given, and beautification of public spaces also ranks high, at 73% on a recent long-term survey.

“There were several questions in that long-term survey that showed that people want our community to look better,” she said.

“I thought it may come across as superficial, but there is a lot of support for beautification of public spaces.”

She noted that in the final category, facilities, vehicles, equipment and maintenance, and pavement maintenance are top concerns.

Scott said the list probably has too many categories, but she described it as a conversation starter. She added that the ballot language would be shorter than the educational campaign.

Commission member Rusty Worley said eight priorities is a lot.

“When I looked at this, I grouped it in three areas – safety, arts and rec, and catalyst,” he said. “And if you put that together, one acronym of that is SPARK.”

The final category, facilities, vehicles, equipment and maintenance, does not fit neatly, he conceded.

“I think there’s a way that Cora and her team and others could wrap some branding around this to give people insight and have it where it’s easier to digest and get excited about,” he said.

Pension fund progress
At the April 16 meeting of the commission, Holtmann said the city’s pension fund was basically bankrupt 15 years ago – a period that coincided with the Great Recession.

“We had to act,” he said. “we had to do something significant to change our course.”

The community came together to honor its commitment to police and firefighters and pass the first pension sales tax, he said.

“We’re going to make sure that every last beneficiary gets every last dime they are entitled to,” he said.

He said Springfield has a sales tax of 8.1%, which includes 4.225% state, 1.75% county and 2.125% city taxes. Springfield has four taxes: a 1% general sales tax with no sunset, a quarter-cent sales tax for capital improvements with a 20-year sunset, an eighth-cent transportation sales tax with a 20-year sunset and the three-quarter-cent tax for the pension fund.

By comparison, Joplin has an 8.575% tax; Ozark, 8.35%; Republic, 8.35%; and Nixa, 7.475%.

If Springfield does not replace the quarter-cent tax, $45 million in annual funding will be lost, Holtmann said.

“When we receive our last remittance in May of 2025, we will have paid in over half a billion dollars in sales tax,” he said.

If the pension fund tax were not replaced, the city would still have to pay its remaining pension fund obligation out of the general fund, Holtmann said.