New Jersey’s Tax Gift to Florida
Originally published in the Wall Street Journal
July 1, 2018
The wizards of Trenton decide to drive more residents out of state.
Call it the consummate New Jersey compromise. Governor Phil Murphy and State Senate leader Steve Sweeney have been fighting over whether to raise tax rates on individuals or businesses, and over the weekend they decided to raise taxes on both.
Messrs. Murphy and Sweeney agreed to raise the state’s income tax on residents making more than $5 million to 10.75% from 8.97% and the corporate rate on companies with more than $1 million in income to 11.5% from 9%.
This will give New Jersey the fourth highest marginal income tax rate on individuals and the second highest corporate rate after Iowa. The corporate tax increase will supposedly last two years and then phase out over the next two years, but that’s what politicians always say.
Teachers’ Union Change Stripped from Education Bill
By Lloyd Dunkelberger, News4Jax
TALLAHASSEE, Fla. – The Senate Education Committee on Tuesday rejected a House proposal that could force teachers’ unions to disband if their membership falls below half of the employees they represent.
The decision came as the panel voted unanimously to advance a major education bill (HB 7055) that is important to House leaders and contains a new state-funded scholarship program to let bullied public-school students transfer to private schools.
The “hope scholarships” would be funded by letting Florida motorists voluntarily agree to contribute money to the program when they buy or register vehicles. The donation would act as a credit against the sales tax they would normally pay in a vehicle transaction. The Senate proposes a $20 credit, while the House wants a $105 credit.
Other provisions in the bill include strengthening state oversight for publicly funded private-school scholarship programs, including the Florida Tax Credit Scholarship Program, and making modifications in the “schools of hope” program, which passed last year and encourages the expansion of charter schools to help students in persistently low-performing schools.
Education Chairwoman Dorothy Hukill, R-Port Orange, offered the Senate version of the bill Tuesday in a wide-ranging amendment. It includes a Senate initiative that would dedicate more funding to mental-health services in the 67 school districts and a requirement that high school students take a financial literacy course to graduate.
But most of the debate was focused on a House proposal, which was included in Hukill’s amendment, that could result in teachers’ unions losing state certification if their membership falls below 50 percent of the employees they represent in the collective-bargaining process.
Sen. Perry Thurston, D-Fort Lauderdale, proposed removing that language from the bill. Noting his mother spent a 36-year career as a teacher, Thurston said the provision was “unreasonable” and part of a continued “attack” on teachers.
He said students from Marjory Stoneman Douglas High School in Parkland told him that one of the 17 victims of last week’s mass shooting at the school was a teacher who “jumped in front of the gunman” trying to save the students.
“These are the people we are targeting,” Thurston said.
Chris Emmanuel, representing the Florida Chamber of Commerce, testified against Thurston’s proposed change, saying unions that fall below the membership level would be able to seek recertification.
“What this measure does is ensure that the bargaining unit is represented by a union that has an adequate amount of their membership in it,” he said.
Florida Counties, Schools Face Higher State Pension Contributions
By Lloyd Dunkelberger, News Service of Florida
TALLAHASSEE — Florida counties will have to contribute an additional $66 million to the state pension fund in the new budget year, according to legislation that has started moving in the Senate.
As a result of a decrease in the assumed rate of investment return on the $160 billion pension fund, counties, school boards, state agencies, universities, state colleges and other government entities will have to increase their contributions in the 2018-2019 budget year to make sure there is enough money to pay retirement benefits in the long term.
The increased payments total $178.5 million, including $66.4 million for county governments, according to legislation (SB 7014) approved by the Senate Governmental Oversight and Accountability Committee last week.
School districts, whose employees represent about half of the 627,000 active pension participants, will have to contribute an additional $54.4 million.
State agencies will have to contribute another $31 million. Universities will have to contribute $11.8 million and state colleges an additional $4.8 million.
A handful of cities and special districts that participate in the state retirement system will face a $10 million contribution increase.
County governments, which face the largest contribution increase, will have to accommodate the added expense as they shape their 2018-2019 budgets.
Government Pension Liability Rises to $27.9 Billion
“State analysts agreed Thursday to lower the expected rate of return on Florida’s $154 billion pension fund, which will put more pressure on lawmakers as they craft a new state budget.
The decrease from a 7.6 percent return to 7.5 percent will require an additional $124 million in state funding in the 2018-2019 budget to keep the pension fund financially sound, according to the state’s long-range fiscal analysis.
It’s the fourth year in a row that analysts, meeting at the Florida Retirement System Actuarial Assumption Conference, have lowered the assumed rate of return on the pension fund, which was 7.75 percent in 2013.
. . . .
The unfunded liability rises to $27.9 billion with a 7.5 percent rate of return, with the ability to pay 84.4 percent of future obligations.”
Florida’s unfunded pension debt could lead to problems from credit downgrades to bankruptcy, just as it has in other states. Join the Florida Chamber’s pension reform efforts by emailing CEmmanuel@FLChamber.com.
Chicago Public Schools Takes Out $275 Million Loan
CHICAGO (AP) — Chicago Public Schools has turned to JPMorgan Chase for a $275 million loan to keep operating through June and make a contribution to teacher pensions.
JP Morgan purchased “grant anticipation notes,” a short-term loan meant to be repaid with state education aid.
Chicago schools have plans to borrow close to $400 million. In addition to the JPMorgan loan, the school district officials say they plan to pursue another $112 million loan.
The district said the $275 million “creates sufficient cash” for CPS to meet its obligations to the Chicago Teachers’ Pension Fund.
Originally published by CBS Chicago. Click here to read the entire article.
Florida’s Upcoming Special Session Offers Second Chance to Make Florida More Competitive
FOR IMMEDIATE RELEASE
CONTACT: Edie Ousley, 850-521-1231 or 850-251-6261
The Florida Legislature now has until July 1 to reconvene and pass a budget.
The session could include all, none, or some combination of
the items that were in play during the regular session.
TALLAHASSEE, FL. (May 1, 2015) – The Florida Chamber of Commerce today announced that, while disappointed the 2015 regular session did not produce the anticipated results, the upcoming special legislative session will offer a second chance to make Florida more competitive.
“A special session, or several sessions, brings the hope that legislators can hit the reset button and pick up the business of making Florida more competitive,” said Mark Wilson, President and CEO of the Florida Chamber.
As media has widely reported, the Florida House and Senate remained $4.2 billion apart on their proposed budgets – primarily due to differing views on approaches to expanding healthcare coverage. As a consequence, lawmakers did not achieve their one constitutional duty of passing a balanced budget during the 60-day regular legislative session.
As a result, lawmakers will have a second chance to pass a budget during a special legislative session – which is constitutionally required before July 1. During that time, the Florida Chamber is hopeful lawmakers will make Florida more competitive by passing a budget that includes:
- Smarter Healthcare Coverage in Florida,
- Secures Florida’s water future,
- Lowers the cost of living and cost of doing business through targeted tax reforms,
- Passes meaningful lawsuit abuse reforms,
- Maintains school choice,
- Begins phasing Florida out of the Florida-only sales tax on commercial lease,
- Targeted economic development incentives,
- Florida’s broken pension reform,
- Opportunities for children with unique abilities, and
- Invests in marketing Florida.
As Winston Churchill said: “A pessimist sees difficulty in every opportunity. An optimist sees the opportunity in every difficulty.”
“The Florida Chamber encourages our state’s leaders to rally around a common bipartisan cause – and that cause is stronger and sustainable economic growth in order to expand opportunities for all Floridians,” Wilson added.
The Florida Chamber’s 2015 Legislative Summary outlines priorities from the Florida Chamber’s 2015 Competitiveness Agenda that passed during the recently completed regular legislative session, including the Florida Chamber-backed education accountability bill (signed into law by Governor Scott), a smart infrastructure bill designating freight and logistics zones, a growth leadership measure and private property rights bill.
Florida Chamber’s 2015 Competitiveness Agenda was developed based on input from Florida Chamber members, local chambers of commerce, partner associations, research, and unfinished business. The chamber’s agenda serves as a blueprint of legislative priorities that help secure Florida’s future and lead Florida to a new and sustainable economy.
The Florida Chamber of Commerce is the voice of business and the state’s largest federation of employers, chambers of commerce and associations, aggressively representing small and large businesses from every industry and every region. The Florida Chamber works within all branches of government to affect those changes set forth in the annual Florida Business Agenda, and which are seen as critical to secure Florida’s future. The Florida Chamber works closely with its Political Operations and the Florida Chamber Foundation. Visit www.FloridaChamber.com for more information.
Rep. Caldwell Outlines Long-Term Pension Goals
For a more competitive Florida, the Florida Chamber of Commerce believes that creating fiscally stable governments through modern and sustainable retirement programs will secure public pensions and protect taxpayers. Creating fiscally stable state and local governments through modern and sustainable retirement systems will help avoid a bankrupt future that too many state and local governments currently face.
“I think the thing to really focus on…is the way these are funded,” said Rep. Caldwell. “It comes out of taxes on our insurance premiums. So everyone in the state pays for these municipal pension liabilities. The debate in the legislature is about how those monies are allocated.”
The Florida Chamber believes our state needs to take action to create a local pension system that is sustainable for the long-term, but in a way that doesn’t place additional burdens on taxpayers.
“Our goal between the house and senate, at the ten thousand foot level, is to gain greater flexibility in how those premium tax dollars are allocated and how they are able to be used to pay for base benefits,” explained Rep. Caldwell. “There’s been, over the years, a buildup of commitments for extra benefits that are frankly, very expensive and unsustainable long term. We need to be able to allow the cities and unions to negotiate to a more realistic level.”
At a state level, the Florida Chamber continues to fight to reform the Florida Retirement System (FRS) into a program that is more sustainable- not just for the taxpayers, but for those in the system that will rely on their retirement at some point. While it’s true that Florida’s FRS is one of the best retirement systems in the nation at 86.6 percent funded, that still leaves more than $21 billion in unfunded liability. As it stands, Florida families are on the hook for $500 million each year for the next 43 years- funds that could be used for other important state priorities.
“This $500 million a year is money we could be spending on other big priories- education, healthcare- both of which consume a great deal of our attention each year,” said Rep. Caldwell.
And like the Florida Chamber, Rep. Caldwell believes long-term solutions will keep Florida moving in the right direction.
“When you read about scenarios where pensions go bankrupt and the pensioners themselves, the terrible stories of folks that relied on that retirement, then have nothing,” said Rep. Caldwell. “It’s a commitment not only for the taxpayers but for those people who are banking on that for their retirement. They need to be sure that they are going to have something that’s solid and existent when they are ready to retire.”
Visit our Pension Reform page to learn how the Florida Chamber is fighting to reform unsustainable pension programs.
Current Pension System Not Sustainable for Employees and Taxpayers
Taxpayers deserve an efficient government that provides the highest return to taxpayers with the lowest burden on job creators. Yet when it comes to Florida’s state public pension system, there is one stubborn fact that remains: the system currently has $21.6 billion in unfunded liabilities, translating to an annual payment of $500 million for the next 43 years. The bottom line is that Florida’s state and many local pension systems are not sustainable. Listen to the below WNDB- Daytona Beach radio interview with Leticia Adams, Policy Director at the Florida Chamber of Commerce, and learn why Florida doesn’t need to end up like Detroit. The Florida Chamber has long-championed pension reform and continues to advocate for sustainable retirements that protect employees and taxpayers.