The City Council Auditor has recently released the results of their audit of the Jacksonville Economic Development Commission.

The audit reinforces what we have been saying all along.  The promises made by the advocates of corporate welfare in the form of the Jacksonville Economic Development Commission are often not delivered.  With over a decade long track record of corporate giveaways, handouts and bailouts, taxpayers have little to nothing to show for millions of dollars that have been “invested” .

We applaud the new mayoral administration’s proposed elimination of the JEDC but are skeptical of the dubious effort to re-brand corporate welfare as “public private partnerships” or P3s or PPPs.  Unfortunately the P3s being touted bear no resemblance to the Navy aircraft flying over the city.  Instead, P3s are just another euphemism for corporate welfare schemes where taxpayers bear all the risk of capital financing for a project and private individuals benefit when there (rarely) is a profit.

Now Mayor Brown has promised to reform the concept and focus on Downtown.   Haven’t we heard the broken promises before? Lavilla Redevelopment?  ? Lavilla BistroRiver City Renaissance?  Courthouse?  Genovar Hall?  Shipyards?  Skyway People Mover? Our own John Winkler has performed his own investigation to summarize the just a few of the failed promises of the sages at city hall.  The investigation is featured on our November show.

We do not doubt the sincerity of those who would like to see the urban core thrive.  In fact, we would like to see downtown turn into a prosperous area where people actually enjoy going.   Unfortunately, taxpayers can not afford to lose any more money on risky giveaways disguised as “investments” for some unquantifiable and intangible public good.

We urge Mayor Brown to reconsider the public dollar giveaway to the aspiring robber barons camouflaged as philanthropists.

FOR IMMEDIATE RELEASE

The Concerned Taxpayers of Duval Co. (CTDC) and Curtis Lee, one of its directors and Chair of the Public Employee Compensation Committee, filed an amended complaint on August 23, against the City of Jacksonville, and the Jacksonville Police & Fire Pension Fund (PFPF).

The lawsuit and amended complaint, among other things, allege that all existing agreements between the City and the PFPF, as well as proposed legislation that was presented by former Mayor Peyton and which is still pending before City Council, were negotiated in violation of state labor law, and state Sunshine Law, and are therefore void. The Lawsuit also seeks to enjoin future violations. The agreements at issue provide generous pension benefits to persons employed and formerly employed by the Jacksonville Sheriffs’ Office and the Jacksonville Fire & Rescue Department. These pension benefits have been in the news in recent years, as they are very costly to taxpayers, and because the PFPF has approximately a $1 billion funding deficit.

Mr. Lee stated as follows: “The City and PFPF are badly mismanaging the public pensions resulting in huge costs to City taxpayers. Currently, public pensions cost each Jacksonville resident more than $150 per year, and this cost keeps escalating. It is our goal that this lawsuit will assist in causing a fundamental reconsideration of a broken pension system.”

Joe Andrews, Vice President of CTDC adds, “For years the PFPF and City engaged in clandestine negotiations in violation of State Sunshine and Labor laws. The consequence of these illegal agreements is an unsustainable liability to Taxpayers. Had these negotiations been conducted in accordance to the law, it is doubtless that the results would have been more favorable to Taxpayers.”

More information is available from Curtis Lee (594 – 6192) or Robert Dees (357-3660). Additional information is also available on the CTDC website at www.jaxtaxpayers.org

The Concerned Taxpayers of Duval County, Inc. is a not for profit corporation dedicated to serving the community as a watchdog group, to oppose corruption, waste, and tomfoolery in government.

Paid for by the Concerned Taxpayers of Duval County, Inc., P. O. Box 2307, Jacksonville, FL 32202

904-351-8126

www.jaxtaxpayers.org

Concerned Taxpayers of Duval County, Inc.,

P. O. Box 2307, Jacksonville, FL 32202

-XXX-

THE CONCERNED TAXPAYERS OF DUVAL COUNTY

904-351-8126
www.jaxtaxpayers.org
Concerned Taxpayers of Duval County, Inc.,
P. O. Box 2307, Jacksonville, FL 32202
FOR IMMEDIATE RELEASE

The Concerned Taxpayers of Duval County Inc. (CTDC) filed a lawsuit against the City of Jacksonville and the Jacksonville Police and Fire Pension Fund (PFPF) on June 3rd 2011.  The lawsuit was filed in Circuit Court, Duval County and is docketed at 2011-CA-004348.   For a copy of the complaint, please go here.

Curtis Lee, Chairman of the Public Employees Compensation Committee (PECC) and Director of CTDC, is also a plaintiff in the lawsuit, which seeks declaratory judgment and injunctive relief concerning contract negotiations conducted in violation of state labor laws and the Florida Sunshine Law.

Mr. Lee says that “for more than 10 years, the PFPF and the City have collectively bargained retirement benefits on behalf of PFPF members and future members, in violation of Florida labor law.  Additionally, these negotiations were conducted in secret without public notice or opportunity for the public to observe, as required by the Sunshine Law.  The City’s pension system is broken.  Unless serious pension reform occurs, where pension benefits are negotiated in a transparent fashion as required by state law, the pension crisis will only cost taxpayers more in the future.”

Victor Wilhelm Jr., President of CTDC, adds: “Mr. Lee and CTDC have been attempting to educate the mayor, the administration and the City Council about the unsustainable nature of the public pension status quo, how this harms taxpayers, and what can be done to reduce costs.  Unfortunately, we have what appears to be a pattern and practice of violations of the Sunshine and labor laws, all for the benefit of insiders.”

Mr. Lee and CTDC have retained the services of Robert Dees, Esq., of Milam Howard Nicandri Dees and Gillam to pursue this lawsuit.  Mr. Dees has more than 25 years of experience in Sunshine Law litigation.

Additional information about the suit is available from Mr. Lee at 904-594-6192 or Mr. Dees at 904-357-3660, or at www.jaxtaxpayers.org

The Concerned Taxpayers of Duval County, Inc. is a not for profit corporation dedicated to serving the community as a watchdog group, to oppose corruption, waste, and tomfoolery in government.

-XXX

The following is a longer version of articles that have appeared recently in the Folio Weekly and Florida Times Union.

I am a retired attorney, and first started working on private sector pension matters 30 years ago. I have researched Jacksonville’s three public employee pension plans, and am dismayed about the mistakes and fiscal irresponsibility that occurred. Jacksonville is now in the midst of a pension crisis. For example, these public employee pension plans have unfunded liabilities (deficits) totaling about $1.7 billion – about $2,000 per resident. And, in fiscal 2012, more than $140 million will be paid into these plans (over $150 per resident – more than a tripling of costs in about 6 years). About 90% of this payment will come from taxes. The rest will be paid by City residents via JEA bills.

Public pension costs will represent about 14% of Jacksonville’s General Fund budget.

How did things get so bad? There are many reasons, which boil down to the usual suspects – politics, greed, and mediocre investment returns. Let’s now delve deeper.

We’ll start in 1935. The Social Security Act of 1935 (SSA), which has been amended many times, has permitted state and local governments not to pay Social Security (FICA) taxes, and not to have their employees pay FICA taxes or be covered by Social Security. However, many state and local governments then instituted defined benefit pension plans, i.e., traditional pension plans, for their employees. My understanding is that Jacksonville first adopted such a plan in 1937. Jacksonville thus opted out of Social Security and instead provided pension benefits for public employees.

A defined benefit pension plan (DBP) provides benefits that are normally payable under this type of formula: multiply years of credited employment times a stated percentage times final average salary. For long-service employees, DBP plans provide retirement benefits that replace percentages of salary. In Jacksonville, the maximum salary replacement for public employees is 80%, and many public employees retiring in their early to mid 50s get this 80%. Some Jacksonville employees (police, fire and corrections) can and do retire in their 40s at 60% or greater salary replacement levels. Plus, Jacksonville’s retired employees receive what are called cost-of-living adjustments (COLAs). These are, in reality, 3% annual increases, regardless of actual inflation.

And so, in broad brush, this is what Jacksonville’s more than 8,000 public employees get in lieu of Social Security. I will now briefly explain how they greatly benefited because Jacksonville long ago opted out of Social Security.
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DBP = defined benefit plan
DCP = defined contribution plan
UAAL = unfunded actuarial accrued liability
PFPF = Jacksonville Police & Fire Pension Fund
GEPP = General Employees’ Pension Plan
COPP = Corrections Officers Pension Plan
COLA = cost of living adjustment

11/4/10

Dear Members of the TRUE Commission,

Thank you for this opportunity to speak to you concerning the problems associated with Jacksonville’s public employee pension plans. Some of you know me or have heard me speak on similar topics before. I am a retired attorney who worked in the private sector since 1980 and spent a great deal of time working on many aspects of corporate pension plans – legal work, administrative work, and investment work. When I worked in the private sector, I managed for many years a corporate pension plan.

I first started getting involved with Jacksonville’s pension problems more than a year ago and since then have done a great deal of research and have attempted to help publicize and hopefully help fix the city’s horrendous pension plan related problems. As part of my efforts, I have spoken to the City Council, its committees, and on television and have had several articles and letters published in the Florida Times Union and several smaller newspapers.

Let’s start with definitions and an overview. There are two broad types of pension plans – defined benefit plans (DBP) and defined contribution plans (DCP). DBPs are traditional pension plans. An employee earns a benefit expressed as an annual benefit, and that benefit is based on years of credited service times final average salary times a formula. There are many varieties of DBPs, but they all have a big problem – they are hard to budget for. Costs to employers bounce around, but usually increase. Employer costs especially are prone to increase when the assets that they invest to back their promises – the pension plan’s assets – perform poorly as they have done for most of the last decade.

DCPs include 401 (K) plans and are fundamentally different. The employer contributes a known amount or rate to an employee’s account and therefore the employer’s costs are much more stable and much easier to budget. The contributions are invested and the benefit to the employee depends on what his or her account is worth at a later date. There are numerous other differences between DBPs and DCPs that I will not discuss now.

Because of the high and highly variable costs of DBPs, the private sector has largely stopped using them. The public sector, however, still overwhelmingly uses DBPs. In recent years, these public sector DBPs have caused many problems for taxpayers – costs have zoomed due to mediocre investment returns, politicians and public employees have resisted reform (benefit formula reductions), and scandals periodically emerge – you may have read about “pay to play” scandals where public pension plan managers get gifts or campaign contributions from investment firms that they hire to manage public pension plan assets.
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Using tax incentives to bring in job creating businesses is popular with Jacksonville city government.  From September 1998 to August 2009, the Jacksonville Economic Development Commission (JEDC) claims that it created 6,444 new jobs according to a list of JEDC “job generating projects” provided to the Concerned Taxpayers of Duval County.  Well, that sounds impressive, right?  Sure, you could point out that it is not clear whether these jobs would have been generated anyway without  incentives.   But if the JEDC had anything to do with the new jobs, then tax incentives for job creation sounds like a great deal!

Not so fast! A recent study appearing in the Harvard Business Review suggests that the secret to job growth is not in doling out tax breaks to big employers in an attempt to entice them to move to your city. If anything, cities with a lot of smaller firms tend to have higher job growth than cities with only a few large firms. Having a business environment that promotes entrepreneurship by reducing business startup and other small business costs imposed by the government is a far better way to improve the job situation in a city than tax incentives to larger established firms.

The benefits are not only in job creation, but also in product innovation. In the book From Poverty to Prosperity written by Arnold Kling and Nick Shulz, the authors argue that innovation does not tend to originate from established firms, but from entrepreneurs risking everything on a novel idea.  Established firms tend to be more conservative in their risk taking than entrepreneurs, but risk taking is essential for innovation.  So lots of entrepreneurs with big dreams lead to a lot more great ideas for goods and services that improve our lives.

I am sure that some government official is reading this and saying to himself “Maybe, we should increase the corporate welfare that is going to small businesses and entrepreneurs!”.  And he would be missing the point!  The best thing that the government can do is to provide the essential government services that cannot be provided by the free market and then get out of the way!

Here is one way for government to get out of the way of entrepreneurs.  When monks tried to sell simple coffins in Louisiana, the State Board of Embalmers and Funeral Directors threatened them with fines and jail time.  Their crime?  Not being part of the funeral parlor cartel that uses the government to protect itself from competition.  The free market does not need government help to weed out the entrepreneurs who do not provide anything of value to their customers that they cannot already find cheaper and better elsewhere.

The Concerned Taxpayers of Duval County, Inc. (CTDC) and a group of individual citizens announced today that they have filed new counts in their ongoing lawsuit challenging the right of the Jacksonville government to enter into a 19 to 25 year, multi-hundred million dollar, no-bid contract extension with Waste Management to operate the City’s Trail Ridge landfill and future waste disposal technology.

Specifically, they have amended the complaint filed last year against the City of Jacksonville and the City Council to request that the Court declare the passage of Ordinance 2010-217 to be both illegal and void. The several grounds asserted include multiple City and Council violations of Florida’s open government meeting (“Sunshine”) law.

The lawsuit further seeks to protect the public interest by asking the Court to force the City to correct violations of the public records law, which require government and officials to make records available to every citizen for review and copying. The City has failed to create and provide minutes of a public meeting (related to Trail Ridge), and refused to make a Council member’s records of the official business use of his cell phone available to the public.

A press conference will be held at 12:00 noon on Thursday, June 3, 2010, in front of the Jacksonville City Hall, 117 West Duval Street, Jacksonville, Florida, by Victor Wilhelm, President of the CTDC, and John Winkler, lead attorney for the Plaintiffs.

The Concerned Taxpayers of Duval County, Inc. is a not for profit corporation and nonpartisan political committee dedicated to serving the community as a watchdog group, using public information to oppose corruption, waste, and “Sunshine Law” violations in government. Additional information is available from the author of this press release, immediate past president John Winkler, who can be reached at 904-384-9918.
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We have reached round two of the dogfight between the city of Jacksonville and Waste Management.  The Jacksonville City Council held a committee-as-a-whole meeting on April 19th and narrowly voted down the proposed settlement of the Waste Management lawsuit against the city of Jacksonville by a vote of 9-8. We are not completely out of the woods yet. This vote has to be confirmed by the full City Council on April 27th. A change of heart by a member of the City Council and the April 19th vote could be reversed.

Here are some interesting news items concerning the landfill contract controversy. Clay County is doing what Jacksonville should do – bidding the landfill contract!  I guess that Waste Management did not have previous contracts with Clay County government that it could twist to its advantage and keep its competitors at bay.

The Florida Times Union editorial board complained that the committee-as-a-whole meeting mentioned above did not provide adequate time for discussion concerning the proposed settlement. We could hardly disagree with the Florida Times Union’s assertion that a contract worth more than $400 million over 26 years merits more than two hours of discussion. Let’s hope that Council President Richard Clark listens to this wise advice.

Finally, Concerned Taxpayers of Duval County (CTDC) President Victor Wilhelm had a letter to the editor concerning the landfill contract controversy published in the Florida Times Union. The CTDC has never wavered from its initial position that the contract must be bid and Wilhelm’s letter reflects this position.

What can you do? Let your City Councilperson know that competitive bidding of this contract not only makes good economic sense but assures an open and transparent process free of corruption.

Due to court ordered mediation, a proposed new deal between Waste Management Inc. and the city of Jacksonville provides Mayor Peyton another opportunity to settle the dispute over the Trail Ridge landfill. The legislation implementing this tentative agreement has been introduced as City Council bill 2010-0217. The Concerned Taxpayers of Duval County continues to oppose any agreement between the two parties that circumvents competitive bidding and there is nothing in this new agreement that indicates that the Mayor’s Office is any more committed to competitively bidding the garbage landfill contract than it was when its first negotiated agreement with Waste Management was rejected by Jacksonville City Council.

See below past President John Winkler’s commentary on the landfill question.

It doesn’t take knowledge of rocket science to operate a landfill. Whatever Waste Management (WM), Republic/Southland, or anyone else in the garbage disposal industry may want the people of Jacksonville and their City Council to believe, spreading out household trash and covering it with dirt really is something that anyone able to operate a dump truck and bulldozer can do. While it may or may not be the kind of civic duty Jacksonville cares to perform using its own employees, there is nothing so special about the creation of a thousand-layer trash pile that it can only be done by giving exclusive rights to do so to one outfit, without competitive bidding, for the next thirty-five years.

Wait, you say, is this a rerun column? The whole “bid the landfill” vs. “Waste Management Forever” debate was fought out last year, you remember, and won by the forces of light when City Council rejected the Mayor’s no-bid, 35 year, $750 million contract extension on running the Trail Ridge dump, right? Didn’t the City then leap at the chance to litigate with Waste Management if need be in order to establish our right to either build our own trash mound or have the low bidder do it? Yes, that happened, but suddenly there’s a new deal proposed by the Jacksonville General Counsel that is a whole lot like the Mayor’s old deal. Call it landfill redux, deja vu all over again, or lipstick on a pig – no matter how you slice the new proposed landfill contract, it’s still (at best) last year’s baloney. Unlike last year, however, there is no time for a deliberative process at City Council. The new proposed contract (Ordinance 2010-217) demands City Council accept it by April 30, 2010, as presented, with no changes allowed.

When a group of us at the Concerned Taxpayers of Duval County (www.jaxtaxpayers.org) sued the City last year to get a ruling that Jacksonville had to either bid out a contract this huge or do the work themselves, we pointed out several legal problems in the Mayor’s tentative agreement. One provision of that proposal (still available for review at www.coj.net under Ordinance 2008-538) was an illegal clause which could have, under certain circumstances, forced the sale of the entire thousand acre Trail Ridge landfill site, and an adjacent “borrow pit” (dirt mine) site, from the City to Waste Management without any competition. Another illegal aspect of the earlier version of the no-bid contract under state law was that it could have gone on for an indefinite period of years, since it defined WM’s right to spread garbage in terms of tons (42 million) rather than time. Interestingly, the proposed contract now thrown in front of City Council avoids these two problems by leaving out the bargain land sale provision and defining a maximum number of years that Waste Management will have the exclusive right to run the City’s landfill(s). The new proposal essentially allows no more than ten years as the period WM would have been running the existing landfill before it would have been full, another 19 years for WM to operate any expansions or new landfill, with another possible six year extension “upon mutual agreement.” Not, in my opinion, coincidentally, this potentially 35 year agreement is the same length of time as the estimates on how long the Mayor’s earlier proposal would have run.
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At the January 11th board meeting, the Concerned Taxpayers of Duval County adopted the following resolution:

A RESOLUTION OF THE CONCERNED TAXPAYERS OF DUVAL COUNTY IN OPPOSITION TO CITY COUNCIL BILL 2009-0940

Whereas City Council Bill 2009-0940 exempts the Gerdau Ameristeel steel plant located near Baldwin from paying the public service tax on electricity for five years; and

Whereas the Concerned Taxpayers of Duval County supports low taxes but only when they are applied equally to all businesses and individuals subject to the tax; and

Whereas the Concerned Taxpayers of Duval County opposes City Council legislation that is clearly tailored to providing a benefit to an individual business thereby ensuring city government a role in determining the winners and losers in the local economy;

Now therefore be it resolved that the Concerned Taxpayers of Duval County opposes City Council Bill 2009-0940.

The resolution was read to City Council members at their January 12th meeting.