EDITORIAL: Florida Lawmakers Should Respect Local Towns and Taxpayers
In a few short weeks, Florida lawmakers will gather in Tallahassee for the Sunshine State’s 2015 legislative session. With big issues like taxes and pension reform sure to dominate the debate, legislators should stick to the simple principle that “government closest to the people tends to govern best.”
Here’s our take on the top four issues facing local towns and taxpayers in 2015:
BACKGROUND: MUNICIPAL POLICE AND FIREFIGHTER PENSION PLANS
Prior to 1999, cities were largely free to bargain with local police and fire unions, or provide for non-unionized police and firefighters, pension benefits that best fit the priorities and needs of the city and its police and firefighters. In 1999, the Legislature amended Chapters 175 and 185, Florida Statutes, requiring that additional insurance premium tax revenues (IPTR) over a base amount be used to provide only extra pension benefits to police officers and firefighters. Since enacted, this mandate has required cities to provide more than $520 million in new, extra pension benefits to police officers and firefighters. This mandate is not sustainable. Rather, cities need the flexibility to use IPTR for the current or a decreased level of police/fire pension benefits to meet city budget constraints.
Beginning in August 2012, the Florida Department of Management Services (DMS) issued a letter to the City of Naples that reflects a fundamental change in the DMS’s interpretation on the use of IPTR. Prior to this letter, the DMS had taken the position that if a city reduced any pension benefit below the statutory minimum benefits or below the plan benefit levels in effect in 1999, the city would be ineligible for future premium tax revenues. In the Naples letter, the DMS acknowledges that its prior interpretation “appears inaccurate.” Since that point, more than 33 municipalities have received similar letters from the DMS.
In Florida, there is a disability presumption for firefighters, law enforcement officers and correctional officers relating to health conditions from heart disease, hypertension or tuberculosis. This means that disability claims under workers’ compensation and disability pension for these health conditions are presumed to be job related.
FLORIDA RETIREMENT SYSTEM
Municipal participation in the Florida Retirement System (FRS) has been voluntary since 1970.
Approximately 150 municipalities participate in various membership classes, but they make up less than 5 percent of the members of the FRS. FRS membership classes include: Special Risk (Police and Fire), General Employees, Elected Officials and Senior Management. After opting-in, current and future employees are compulsory members of the FRS. The last “opt-out” for municipalities occurred in 1996 and was authorized for new employees only. Approximately 50 municipalities and independent special districts opted-out during this window.
Florida’s municipal Home Rule authority should be restored by removing the unfunded mandate requiring municipalities to provide “extra benefits” to the police and firefighter pension plans. Negotiations between the city and the bargaining unit, not the Legislature, should decide pension benefit levels and the flexibility to fund those retirement benefits. Municipalities in Florida are diverse. It should be up to each city to determine what retirement benefits are sustainable and are affordable to its citizens.
Counties primarily provide public safety, fire, emergency medical services, public record- keeping, jails, parks, libraries, health care, economic development, comprehensive planning, and roads, just to name a few. Each year, unlike the state and federal government, counties are required to establish the property tax rate needed to provide services for their community. County governments have the opportunity to determine the costs of services mandated by law and those associated with the health, safety and welfare of their communities. Counties then set the tax rate that will ensure these demands are met.
Three major factors have impacted property taxes in Florida since 2007: the recession and resulting decline in property values, the implementation of the roll back rates (2007) and Amendment 1 (2008).
At the peak of the recession reductions in property tax revenue totaled approximately $3 Billion or 25.8%. These reductions resulted in major workforce cuts as well as cuts to all levels of service.
Since 2007, counties have cut close to $2 billion as a result of changes in our tax structure and the economic downturn. While every county has made reductions, each has done so in a manner that serves the unique community they represent.
Even as the economy begins to rebound and property values increase in 2014, taxable revenue is still below 2006 levels.
More importantly, the economic recovery is not yet being realized in 67 counties. Last year more than 23 counties saw a decrease where this year 9 counties will see a revenue decrease.
Florida’s economic recovery is only just beginning and for the majority of our communities it will be slow. Only targeted and deliberative changes to revenue structures can ensure that economic and job growth continues and that local governments have the revenues to support necessary services and infrastructure for our communities.
It’s time for tax reform measures that simplify administration and provide an economic boost to Florida’s taxpayers while at the same time considering and minimizing the collective and cumulative negative impact on local revenues, including state shared and local discretionary revenue sources that are critical to local governments in providing community services.
Florida is dealing with multiple water challenges. South Florida faces water quality problems in the form of massive water releases of nutrient- enriched waters. Those releases, which are controlled by the U.S. Army Corps of Engineers, pollute the estuaries and water systems that flow to the St. Lucie River on the east and the Caloosahatchee River on the west. North Florida faces an impending disaster in its oyster industry due to increased water usage by Alabama and Georgia. Meanwhile, all of Florida is struggling with how to efficiently conserve water and avoid devastation to the Floridan Aquifer. With the scope of Florida’s water challenges, local governments need additional tools from the state, such as a recurring source of funding, to protect our water resources and improve water quality.
Local governments work in coordination with the Florida Department of Environmental Protection (DEP), as well as the five water management districts (WMDs), to constantly assess the quality of the waters within municipal boundaries and the allocation of ground water. The state’s Water Resources Act of 1972 is the backbone of Florida water law and provides for regulatory actions to be taken when there are water quality issues. Once impaired water bodies are identified by the DEP, a Basin Management Action Plan (BMAP) is put into place. This action plan is used to help reduce the excess nutrients in the water that initially caused the impairment. Local governments must comply with the BMAP in order to have their waters meet state and federal water quality standards.
A healthy supply of clean water is an economic driver that most people do not realize. Our state produces a tremendous amount of agricultural products, and Florida is a national leader in tourism. Without access to a bountiful supply of clean water, the Sunshine State will be vulnerable to economic collapse.
In 2004, the Legislature mandated that counties share in the costs for juvenile secure detention, at which point non-fiscally constrained counties became the primary revenue source for the Department of Juvenile Justice’s (DJJ) juvenile detention facilities. In the beginning, the breakdown was relatively simple: counties paid for secure detention days prior to a juvenile’s final court disposition and the state paid for days after their case was resolved. However, beginning in FY08-09, DJJ significantly changed the relationship by billing counties for all secure detention days except for those incurred while a juvenile awaited “commitment” to a residential facility. This abrupt conversion shifted thousands of additional days to counties and was done despite there being no corresponding change in statute. Ultimately, this led several counties to file administrative actions against DJJ in which they contested the validity of DJJ’s rules, as well as annual cost reconciliations. In June 2013, the First District Court of Appeal in DJJ v. Okaloosa, et al. (Case No. 1D12-3929) affirmed a DOAH Final Order in Okaloosa, et al. v. DJJ (Case No. 12-0891RX) that invalidated DJJ’s rules and held that, for years, DJJ improperly shifted financial responsibility for detention days to the counties.
Billing disputes between the state and counties are the result of flawed Department of Juvenile Justice (DJJ) rules, which courts have found to be “internally inconsistent and not supported by facts or logic.”
In order to comply with the court’s ruling, DJJ revised its county cost estimates for FY13-14, which resulted in a reduction in the counties’ cost-share of almost $40 million. Since that time DJJ has receded from its original interpretation of the court’s ruling and drafted proposed rules that appear to shift $20 million in costs back to counties.
Counties should be billed for juvenile detention based on actual costs. Developing a more streamlined and accurate billing model will eliminate unnecessary bureaucracy that reduces juvenile detention allowing communities to focus on prevention, treatment and rehabilitation.