Pension task force proposes sales taxes

At its Monday night meeting, Springfield City Council heard the city's Police and Fire Pension Task Force's recommendations for fixing the fund's $200 million shortfall.

Jerry Fenstermaker, the chairman of the 16-member task force, presented two sets of recommendations. The main difference in the two is the size of a proposed sales tax; one proposes a 5/8-cent tax, which would generate $24 million a year, while the other recommends a 3/4-cent tax, which would generate $28 million a year. Either sales tax would last for five years with renewal 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 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 is similar to a 1-percent tax proposed by the city earlier this year; that ballot proposal failed 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, but in the end decided on the reduced sales tax.

"What you have is a plan to raise money short-term for eight to ten 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."

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. That special meeting allows council to schedule the bill's second reading at its regular Aug. 24 meeting, one day before the county ballot deadline.[[In-content Ad]]