Council sends pension sales tax to November ballot

For the second time this year, Springfield City Council voted to send a sales tax proposal to voters as a potential fix to the Police and Fire Pension Fund shortfall.

At its Aug. 24 meeting, council voted 8-1 to send a 3/4-cent tax to voters on Nov. 3. The proposal was one of two recommendations from the Police and Fire Pension Task Force, which also said council could go with a 5/8-cent tax.

The 3/4-cent tax is expected to raise $28 million a year for five years, though council members expect that a renewal after five years would be required to meet the pension's $200 million shortfall. Based on the city's projected five-year payment schedule, the pension would be 60 percent funded.

Mayor Jim O'Neal said the ballot item is a necessary evil in the current environment. He said the choices are either to pass a tax to fund the plan or face court-mandated payments and potential municipal bankruptcy.

"Nobody wants that. You will not recognize Springfield if that happens," O'Neal said before the vote. "And I don't wish to preside over the dismantling of the city's finances and the financial bankruptcy of the city. That's what we face."

The tax, if approved, would last either five years or until the plan is fully funded, with a possible renewal - if approved by voters - after five years.

Councilman Nick Ibarra cast the lone "no" vote on the 3/4-cent tax - he had voted in favor of the 5/8-cent tax, which failed by a 7-2 vote. Despite Ibarra's aversion to adding any kind of tax burden to citizens already suffering from a down economy, he said Springfield's infrastructure, health programs and community safety are at risk.

Council members have said it is considering other task force recommendations in addition to a tax, including closing the plan to new hires, who would instead go into the state Local Government Employees Retirement System, and increasing the city's contribution level to the fund.

The sales tax issue had to be passed before the Greene County clerk's Aug. 25 deadline for November ballot items.

At its Aug. 25 luncheon, council heard the initial draft of a resolution that would address several other steps to bolster the underfunded pension.

Among the items in the resolution, pending approval of the sales tax:

• Increase the city's contribution level 2 percent from the current 28.88 percent; council could raise the rate to as much as 35 percent, though;

• Pension plan Tier I employees - those hired before June 1, 2006 - would increase their contributions from the current 11.35 percent of payroll to an amount yet to be negotiated with the Police and Fire unions;

• New hires would become part of the state LAGERS plan;

• Proceeds from ongoing lawsuits with telecommunications companies over back taxes would go into the pension fund, if the fund is at an 80 percent or lower funding ratio; and

• Staff would market and sell unused city-owned property and invest the net general fund proceeds into the pension fund.

A first reading on the resolution has yet to be scheduled.

At the council meeting the night before, Fred Ellison - an alternate on the pension task force - said those additional steps are a must if the city hopes to pass a new tax.

"Costs for maintaining an adequate police and fire force must be paid from current year expenditures rather than being passed to future generations," Ellison told council. "Without these actions, I feel there will be no possibility that the voters will support any sales tax proposal."

Real estate sale

Council finalized the sale of five downtown properties to Missouri State University for use in expanding the Jordan Valley Innovation Center and the IDEA Commons.

The city purchased the five parcels between 2003 and 2005 as part of the plan for the Jordan Valley Park Central Green concept, but the city and MSU reached a cooperative agreement in late 2004 for JVIC.

The city initially spent nearly $680,000 on the property, and the $450,000 from the sale will go back to the federal grants and level property tax funds the city used to purchase the property, on a pro rata basis - 72 percent to federal funds and 28 percent to the city's level property tax fund.