We are trying to get Jacksonville Mayor Lenny Curry to call (or visit) our radio show to discuss his pension-funding plan, and as you might imagine, he is a busy guy. We hope it works out soon. His staff has indicated his interest, due to the nature of our request. We hope to hear from him soon, and to get him on the air. After all, this affects your money, and will for a long time.
It should come as no surprise to our audience that Adam and I are conservatives, and fundamentally we are against senseless high taxes. Many of you heard us rail against the sales tax increase in St. Johns County, which was passed last year (I guess you could say I was not that successful at stopping it?). Yet, we agree with the Mayor’s plan to extend the “temporary” sales tax passed years ago (when I publically proclaimed that it would somehow become permanent). Under Curry’s plan, taxes would not be increased from their current level.
So perhaps the Mayor was surprised when we invited him onto the show to make his case, because we agree with him that this has to be done. Does that make me a hypocrite? I don’t think so, and I’m going to explain why.
Pension obligations, whether public or private, are contracts between employers and the employees. Contracts are legally binding agreements, and can only be violated due to the most severe situations, such as bankruptcies. Taxing authorities, like the City of Jacksonville, rarely face those circumstances. When pension benefits are accrued, it is at the expense of wages and salaries that were not higher during the person’s working years. Today, that is uncommon, as workers are usually paid more, and then required to fund their own retirements through 401(k) and similar personal plans. Today’s retired workers did not have that opportunity.
What does a pension-covered employee do when faced with retirement with a pension that is not properly funded?
At age 24 I went to work in my father-in-law’s consulting firm in Racine, Wisconsin. It just happened to coincide with the passing of ERISA, the Employee Retirement Income Security Act of 1974. My first job was to learn it and apply it to our business clients. While learning, I was exposed to some real-life situations.
The most egregious example of pension failure I ever witnessed was the George Gorton Machine Company in Racine, Wisconsin, which went out of business very suddenly in the 1970’s. The company had a traditional pension plan, and it was, like most plans in that era, dramatically underfunded. When the company went belly-up, the money soon ran out. Craftsman who spent 30 or even 40 years with the company were just plain out of luck. I’m sure that many office workers suffered a similar fate.
ERISA was passed to tighten the standards for pension funding, hopefully to prevent these tragedies in the future. It has certainly helped. ERISA created the Pension Benefit Guarantee Corporation (PBGC) to protect benefits in the event of a business failure. Passage of the later Pension Protection Act further enhanced funding standards. However, in my life and career, I have also met many other affected people. For instance, airline pilots who were promised 6-digit pensions, only to receive a fraction of that after the company went under. And, perhaps soon, the public servants of Jacksonville, FL, whose pension funding has for decades remained under-funded, would meet the same fate.
Think about the families in Jacksonville who may well be affected. Many are your friends and neighbors. Do you want them to suffer? I categorically state that I DON”T!
Many people want to deal with an issue by assigning blame and pointing fingers. There is much blame to go around, believe me. Your political affiliation is not important. Many successive mayors, from both sides of the political aisle, had ignored this problem for decades. It has to stop. And this mayor has a plan – a good one.
We urge you to support this mayor and his plan to save the pensions for public employees who dedicated their lives to keeping us safe. And we hope to hear from the mayor on this subject very soon.