City voters easily renewed a three-fourths percent sales tax that likely will fully fund a pension system for some police officers and firefighters within five years. With all the precincts reporting, 76 percent of the voters said they wanted to keep the sales tax for another five years, if necessary.
Voters first approved the sales tax in 2009. It would have ended after five years if voters hadn't approved a renewal on Tuesday.
The city created its pension fund for firefighters and police officers in 1946. Those city employees don’t get Social Security retirement payments because they’re in the special pension program. By 2008, the fund only had about 35 percent of what would be needed to make the estimated payments to the firefighters and police officers who would depend on it after they retired.
With four years of sales tax receipts, the pension fund now has about 75 percent of what it needs to fully fund the retirement checks. Fund managers estimate the fund will be fully funded – or funded enough to generate enough earnings to fully fund itself – within five years. If the pension fund becomes fully funded before the next five years is up, the sales tax will end.
Because of a state law, the ballot language on Tuesday asked voters if they wanted to end the tax, not if they wanted to continue it. Police and firefighter unions and private supporters of the tax paid for an advertising campaign to ask voters to vote “no” on Tuesday, meaning they didn’t want the tax to end. The campaign worked.
City leaders warned of the dire consequences of not continuing the sales tax. They said, because of a state law, general city revenues would have to make up the difference until the pension fund was fully funded. That would again have meant layoffs in city departments and reductions of services to citizens, something the city experienced in the years before the special sales tax was approved in 2009.
The pension fund has been closed to new city employees for several years. In several decades, when all the present and retired firefighters and police officers who collect pensions from the fund, or their heirs, have died, the fund will end. New city employees now belong to a statewide pension system for local government employees called LAGERS.
Edited news release from City of Springfield:
The tax is projected to generate about $145 million over five years to help fund a shortfall in the Police-Fire Pension Plan. The tax will sunset in five years, or whenever the plan is 100 percent funded, whichever comes first. The City will continue to annually contribute 35 percent of payroll of those employees in the closed plan, and police officers and firefighters in the plan will continue to contribute. Their current contribution rate is 14 percent and is recalculated every three years. These contributions will continue until the plan (not the tax) ends.
“First and foremost, I’d like to thank our citizens who voted for this renewal. I’m hopeful this show of support reflects the City’s credibility . . . we said what we’d do and we’ve done what we said,” said City Manager Greg Burris. “The competitive advantage this will bring Springfield may not be realized for a few years, but it will be significant when we will be compared to cities who are not facing up to this debt.”
Fire Chief David Hall says the tax is critical to the Fire Department, in addition to the other City Departments. Without it, the City would have had to increase its annual contribution to the plan by $9 million, out of a $73 million General Fund budget, requiring the City to reduce public safety and many other public services.
“With its passage, we will be able to continue the level of service that the citizens expect from their city,” Hall said. “We are currently in the process of testing for future firefighters to begin the recruit academy later this year. With the continuance of this tax, we will be able to continue with filling those positions.”
Police Chief Paul Williams said the passage allows the Police Department to continue with crime prevention and other programs aimed at curbing the crime rate. He says, in many ways, the department has been “on hold” as it awaited the outcome of the vote on Tuesday.
“We can now move forward with the initiatives currently in place, as well as work to implement additional plans to positively impact crime and enhance the quality of life in Springfield,” he said.
“Thank you to the citizens of Springfield for acknowledging the efforts of their City leaders to keep the commitment made in 2009 and for once again expressing their confidence in us to diligently work to resolve this issue, while ensuring that the funds entrusted to us are used in the most efficient and effective manner possible,” Williams said.
Pension Board Chairman and citizen Charlie Cowherd expressed his gratitude on behalf of the board.
“We appreciate the confidence that the community has placed in the Board to be good stewards of the tax revenues this vote will provide. The Board is dedicated to protecting the assets of the Plan so that the promises to each participant in the Plan are kept."
Springfield Mayor Bob Stephens echoed a sense of gratitude.
“I want to thank the voters of Springfield for continuing to support our efforts in public safety. A vote such as this, shows that voters educated themselves on the issue and voted accordingly,” Stephens said.
Greene County voter turnout was about 9.4 percent, which is down from the 12 percent turnout in the last municipal election in April, 2013.