Editor’s Note: This piece is an ongoing investigative series in partnership with Watchdog.org’s state-level journalists. Pension budget woes beset nearly every state in the union and cities and municipalities are also being hit with unprecedented pension debt. Baby boomers are retiring. Some state and local budgets allocate more funds for pensions for retirees than they use for actual services and current worker pay. Once again, the younger generation is saddled with debt from a previous profligate era.
Jacksonville’s unfunded pension obligations have blown a hole in the city’s finances and straddled residents of Florida’s most populous city with billions of dollars in debt and no ready way to pay it.
Two years ago, Jacksonville city officials reported no pension debt on the city’s annual financial statements. A year later, the Governmental Accounting Standards Board required cities and states to report the bulk of their pension obligations on their balance sheets.
With no material change in Jacksonville’s retirement system, $2.5 billion of debt appeared on its new list of liabilities.
A new analysis by Truth in Accounting, a Chicago-based think tank that specializes in analyzing government financial reports, estimates the city is still hiding about $90 million in unfunded retiree health care benefits.
When added to $7.8 billion in municipal bond obligations and $1.7 billion in other liabilities, the city doesn’t have enough money to pay its bills, the report states.
According to Jacksonville’s comprehensive annual financial statements, the city has $14 billion in assets. However, more than two-thirds are capital assets, such as roads, buildings and land, leaving only $3.5 billion available to pay $5 billion in total obligations.
“The 1.6 billion shortfall represents compensation and other costs incurred in prior years that should have been paid in those years. Instead these costs have been shifted to future taxpayers,” the report said.
The total debt burden is estimated at $6,100 per city taxpayer.
“Jacksonville has used accounting tricks to conceal its pension debt from taxpayers,” said Sheila Weinberg, founder and CEO of the accounting group.
But Jacksonville’s 868,000 residents are far from alone with their pension problem.
Statewide, Florida ranks 12th in the Truth in Accounting rankings of state pensions, with each resident responsible for $1,100 in unfunded debt. That puts it among the 40 “sinkhole” states that don’t have enough assets to cover their pension obligations.
Among the 20 most populous cities in the country, the financial watchdog ranks Jacksonville tenth in its Financial State of Cities report in terms of overall unfunded liabilities.
New York City has the highest taxpayer burden at $61,000 per resident. Chicago is next with $44,000 of debt per taxpayer, and Philadelphia is third with about $27,500 in debt per taxpayer.
Charlotte, North Carolina, is the only major city in the country to have a surplus, amounting to $3,300 per city resident, according to the analysis.
Jacksonville’s unfunded public employee benefits represent about 52 percent of the city’s bills.
Truth in Accounting says that unless the benefits are re-negotiated, future taxpayers will be burdened with paying for them without receiving any corresponding government services.
Jacksonville Mayor Lenny Curry already has proposed ending guaranteed pensions for new city general-employment hires. He called the “legacy pensions” unsustainable last week.
“If Mayor Lenny Curry and his administration want to address the city’s financial situation, the first thing they should do is publish accurate and transparent accounting data,” said Weinberg.
“The citizens of Jacksonville deserve an honest report on the city’s finances,” she said.
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