Senate Bill 246: A step forward?

Potential pension relief from Florida Legislature for city taxpayers could come at a great time for Boca Raton.

The city’s fire and police contracts are up this year. In last month’s elections, Susan Haynie decisively defeated Palm Beach County Fire-Rescue staffer and fellow city council member Anthony Majhess for mayor. Haynie correctly called the result a vote for pension reform. Numerous studies have called fire and police pension obligations the top financial problem for “full-service” cities that have their own public safety departments.

During the real estate boom, cities helped to create the problem by fattening pensions with ever-increasing property tax revenues. Fire and police union support can be crucial to campaigns. But the Legislature started the problem in 1999.

In Florida, a small share of insurance premiums goes to cities’ fire and police pensions. The money comes only from policyholders who live within the city. The state directed this money—in 1939 and 1953—to entice cities to create their own pension plans, so fire and police employees would not have to be part of the state retirement system. By accepting the money, however, cities agree to whatever terms the Legislature sets for use of the money.

Fifteen years ago, in return for the state fire and police unions’ endorsement of Jeb Bush, Republicans forced cities to use “insurance premium tax revenues” (IPTR) only for added benefits. Cities could not use the money to strengthen the pension funds. It was the first bill Bush signed as governor. The cities had opposed it.

When the real estate bubble burst, property tax revenue dropped. When the stock market crashed in 2008, pension funds lost much of their value. As a result, cities had to spend more from the general budget to keep the funds sound. Tax revenues and market returns are up, but most funds—including Boca Raton’s police and fire pensions—remain below the accepted standard—80 percent of obligations funded—for financial soundness.

That’s the history. The new development is legislation (Senate Bill 246) that would undo the 1999 law by removing the requirement to provide an “extra benefit”— such as an earlier retirement age—and to require that cities use the insurance money to pay that added benefit. Instead, a city and a union would have to reach “mutual consent” on such issues. If they didn’t, a system for parceling out the insurance money would kick in. As a Florida League of Cities advisory points out, that system would be complicated, and potentially harmful to cities, thus encouraging the parties to reach a deal.

Why, though, would the unions support the new legislation? In 2012, the Florida Department of Management Services issued a new interpretation of the 1999. The department found that cities might not always have to provide new benefits with the insurance money. The new finding, though, has not been tested in court.

Even if Senate Bill 246 becomes law, pension reform can’t end. Unions, for example, should not be able to use overtime when calculating pension benefits. Cities should end cost-of-living adjustments for public safety pensions and raise the minimum age for collecting benefits. But changing the 1999 law is a key part of pension reform. Taxpayers in Boca Raton and Delray Beach should hope that the 2014 Legislature thinks differently on pensions than the 1999 Legislature.

Testas get testy

For nearly a century, the family-run Testa’s has been serving diners on Royal Poinciana Way in Palm Beach. Last week, however, the family submitted petitions with the town to demolish the restaurant and everything on the family’s properties next to the restaurant.

The family and the town have been at odds over redevelopment rules for that iconic street. Since it can take months for owners of historic homes in Palm Beach to replace a brick, the fight over Royal Poinciana Way has become a town issue, with the Testas as leading players.

A gas station on family land next to Testa’s has been closed for several years. Will the restaurant now come down? Perhaps not soon. The family did not submit a development petition with the demolition petition. The move may be designed to force action on a plan for the street. The family’s action came just two weeks after town voters killed a proposed rezoning.

For some, the Testas’ long ties to Palm Beach don’t count for much. The Palm Beach Daily News quoted William Cooley, who served on the town’s landmarks commission and opposed the rezoning, as calling Testa’s a “junky old restaurant.” For all its wealth, Palm Beach remains in some ways just another small town.

(Full disclosure: My son and daughter-in-law’s wedding rehearsal dinner was held at that “junky old restaurant” in January 2006, and we had a great time.)

Gambling with the future

In this Passover- and Easter-shortened week in the Legislature, we will note that no major gambling bill is likely to pass this year.

That means another year, at least, to determine what effect one or more major casinos in Broward and/or Miami-Dade counties might have on places like the Boca Raton Resort & Club. The state’s leading tourism spots, led by Disney World, consistently have opposed the casino push, saying the gambling palaces would just siphon business from existing theme parks, attractions and restaurants. The resort would seem to aim at a different market than Genting (Malaysia) and Las Vegas Sands (Sheldon Adelson), the companies pushing hardest for the state to allow multi-billion-dollar casinos. 

Still, expect the casino push to continue. Florida—given its size, growth and proximity to the Caribbean—will remain a tempting market. Assume that all those in the Florida tourism industry will keep paying attention.

More trash talk

Tonight’s meeting of the Delray Beach City Commission will include the next decision regarding the city’s trash-hauling contract.

Last year, the commission challenged the 2012, eight-year extension of the contract that a previous commission approved without bidding. A judge just upheld the city’s challenge, without even seeing the need for a trial. On tonight’s agenda is an item to approve a “continuity of service agreement” with Waste Management, to keep trash pickup going while the city seeks bids.

While the company could appeal, strategic retreat might be better. City Commissioner Shelly Petrolia wonders if this no-bid practice is not limited to just Delray Beach. A trial could make public anything that has been private, such as the politics behind the commission’s vote in 2012.

You can email Randy Schultz at randy@bocamag.com

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About the Author

Randy Schultz was born in Hartford, Conn., and graduated from the University of Tennessee in 1974. He has lived in South Florida since then, and in Boca Raton since 1985. Schultz spent nearly 40 years in daily journalism at the Miami Herald and Palm Beach Post, most recently as editorial page editor at the Post. His wife, Shelley, is director of The Learning Network at Pine Crest School. His son, an attorney, and daughter-in-law and three grandchildren also live in Boca Raton. His daughter is a veterinarian who lives in Baltimore.