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City of Tampa pensions chew widening budget hole

TAMPA — The year Pam Iorio became Tampa's mayor, the city paid $57.6-million to retirees.

That was in 2003. Property taxes were rolling in, fed by a fat real estate market. Iorio pledged to share the wealth with employees by increasing pension benefits.

Five years later, pension payouts have doubled to $114.1-million.

But there's less wealth to share. Amid tanking sales tax and property tax revenues, Iorio says the city now must dip into savings to meet its required $21-million contribution to the pension fund next year.

Over the past year, the two investment funds that cover the cost of the city's pension payments have lost $400-million in value.

Even so, the mayor stands by her earlier commitment to improve pension benefits.

"In terms of recruiting, in my first couple years, our pension was a real negative," Iorio said. "You have to have a good benefits package to be competitive in the market."

While she sometimes butts heads with unions over pay, she consistently points to the improved pension benefits as a sign that she is generous with employees.

Iorio attributes some of the increased pension payouts to an uptick in the number of retirees.

But under her watch, the city has also boosted the multiplier used to calculate yearly payments to retirees, increased cost-of-living adjustments, and shortened the time it takes to vest in pensions.

Less than a year after taking office, Iorio backed a local bill approved by state lawmakers to change the vesting period for general employees from 10 years to six years and increase cost-of-living adjustments.

The multiplier, applied to years of service, determines what percentage of an employee's salary comprises annual pension payments. The greater the multiplier, the greater the benefits.

In 2005 and 2006, Iorio started inching the pension benefits multiplier for general employees from 1.1 to the state's 1.6. She made it as far as 1.2, withdrawing a request in April 2007 to increase it to 1.25, citing budget concerns.

She said she remains concerned about the low multiplier.

"You take your average wastewater or solid waste employee and the multiplier is not a strong enough multiplier for their retirement," she said. "Many of these people work very, very hard in physical labor jobs."

In her first year as mayor, Iorio did succeed in increasing the multiplier for police and firefighters from 2.5 to 3.15.

The plan entitles a retiree earning pension benefits on a $50,000 salary after 20 years with the city to get $31,500 a year. Under the old multiplier, the annual benefit was $25,000.

When Iorio took the plan to state lawmakers in 2004, state Rep. Ed Homan and state Sen. Victor Crist, both Republicans, warned her to look carefully at the proposal.

"We thought it was a very risky idea," Crist says now. "The actuarial assessment showed a huge ballooning payment from the city and that could possibly put the city in bankruptcy."

But state lawmakers approved the bill after voicing their concerns, and returned it to the mayor and City Council for a final ruling.

Iorio says it was a policy based on fairness.

She wanted to extend to police and firefighters the same level of retirement options offered to state and Hillsborough County employees.

"They're doing the same job," said. "If any legislator has a problem with what we were trying to do they can also look at their own state pension system, which offers a 3 percent retirement."

Janet Zink can be reached at jzink@sptimes.com or (813) 226-3401.

Funds lose value, but payouts rise

Fire and police pension fund value 2007:

$1.7-billion

Fire and police pension fund value 2008:

$1.4-billion

General employees pension fund value 2007:

$627-million

General employees pension fund value 2008: $504-million

Pension benefit payouts

Fiscal yearGeneral employeesFire and police
2003$20.6-million$37-million
2004$22.5-million$59.3-million
2005 $25.5-million$47.2-million
2006 $27.3-million$47-million
2007$29.4-million$63-million
2008$33.5-million$80.6 million

City of Tampa pensions chew widening budget hole 12/15/08 [Last modified: Tuesday, December 16, 2008 3:50pm]
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