Council told sales tax increase needed

Aug. 6--A city work group that has been studying how to address the retention and recruitment of Joplin police officers and firefighters recommends that the City Council ask voters to increase the sales tax to bail out the city's underfunded pension plan.

Those covered by the Police and Firemen's Pension Fund are now voting on whether to approve a change to the plan that would allow a city sales tax to pay into the fund. The pension voting ends Friday. If the question is approved, it will then be up to the council to decide whether to ask voters to raise the sales tax by a half-cent.

The city's finance director, Leslie Haase, told the council that members of the work group concluded that "in the public sector, pensions remain a key component to public safety recruiting and retention."

She said the city would need about $72 million to cover the cost of paying out the benefits owed by the fund, to move some current employees currently covered to a state retirement plan if they chose to move, and to put newly hired employees into a state plan.

Currently, the fund has only enough value to cover about 63% of the benefits that will be owed to those covered. Next year, the city will have to pay in about $3 million for its annual contribution to the fund.

Those contribution costs are straining the city's general fund, Haase said.

Haase told the council the work group supports the proposal to use revenue from a half-cent sales tax that would provide a projected $6 million to $7 million to pay into the pension fund a year.

City officials have discussed proposing the sales tax increase for 12 years or until the pension is funded to 120% to assure there would be enough to pay all the benefits owed and to cover any losses in the value of the fund if investment values dipped.

Haase told the council that the meaning of closing out of the fund is that it would be frozen from accepting new police and fire employees. New hires would be covered by a state pension fund that Haase said would cost less.

Council member Phil Stinnett asked how the 120% level of funding was determined. Haase said is it based on a number of assumptions and was recommended by the pension fund's current actuary.

She said that it is difficult to project how many years the tax would be needed to reach that level because sales tax collections may not always meet projections.

Council members will vote at a later meeting on whether to propose the tax, though some members voiced support for it.

The fund covers 120 retirees, 60 current employees who were employed before 2009 and a number of employees hired since then, though that number was not given during the discussion.

Stinnett was skeptical of the actuarial estimates. "I know actuaries don't always hit the mark," he said.

Haase said the work group used the experience that the city of Springfield has had by imposing a sales tax to cover its underfunded police and fire pension. She said Springfield asked voters for a renewal of that tax and now is considering asking that it be continued again for another period of years.

Council member Diane Reid Adams asked what the main message would be to voters if the tax were put on a ballot.

"It's about recruiting and retention" of public safety workers, Haase said.

The police and fire departments earlier experienced a shortage of applicants and saw a number of employees resign to work elsewhere, causing union members to demand higher pay and other benefits.

Members

The city work group for police and fire retention includes Mayor Gary Shaw; Mayor Pro Tem Ryan Stanley; Dan Pekarek, interim city manager; Peter Edwards, city attorney; Leslie Haase, finance director; Lynn Onstot, public information officer; police Chief Matt Stewart; fire Chief Jim Furgerson; police and fire union leaders; and a representative of the city's other employees.

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