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Largo, state at odds over police benefits

LARGO — Since 1999, money meant for Largo police officers' retirement plans has been piling up, but the city has been unwilling to give it out for fear of guaranteeing a benefit that it couldn't afford in the future. More than $1 million in tax proceeds sits unused.

After a change in state law this year, however, Largo administrators think they can move forward with a plan to give the money out without costing the city. The state Division of Retirement disagrees, though, and could step in the way.

The money at stake is from the premium tax. The state collects the tax yearly on insurance policies (mostly automobile insurance) written in Largo and then gives it back to the city to be used for retirement benefits for firefighters and police officers. For 2010, the state collected about $516,000 in Largo to be used for police benefits.

Not all of that $516,000 went to police officers, though. Part of the annual collections have been held up since 1999, when a state law declared cities had to add new benefits if they wanted to use some of the premium tax money.

Fearful that a new benefit it can afford this year will be unaffordable 10 years from now due to inflating costs, city management hasn't added new retirement benefits. The portion of the premium tax tied to new benefits has stacked up to $1,033,000.

Largo's finance department has come up with a way to get this money to police officers without putting the city in a bind, though. It's called a share plan, and it basically means the city will split the money up according to years of service. The City Commission approved the plan in December, and 137 eligible police officers will receive between $900 and $11,700, according to city Finance Director Kim Adams.

There's a potential hitch, though. For years, the state has recommended a city count overtime hours toward a police officer's pension and said a city can't add a new benefit — like a share plan — before first meeting that recommendation. Largo just uses an officer's salary to calculate pension payout.

A 2011 state law inserted the word "may" before that recommendation, which Adams says makes it optional. Largo can now add a share plan without having to also factor in overtime hours when calculating an officer's pension, he says.

The state Division of Retirement does not agree with that interpretation, though, and Adams is expecting a disagreement.

"We're probably going to get some pushback, and we may end up in an administrative hearing," he said. "But we're doing it."

Keith Brinkman, bureau chief at the Division of Retirement, agreed that his agency will provide pushback. What that will mean is unclear. Brinkman thought Largo could probably give out the $1 million that is being held now, but the division would prevent future premium tax income from being split up through the share plan.

Adams, however, hopes the two sides can come to an agreement that allows the money to get to police officers.

"We are hoping to have this settled before the money is distributed," he said.

If the division doesn't step in, police officers should receive the extra money in the form of investment accounts in the next 30 to 60 days, Adams said.

Will Hobson can be reached at (727) 445-4167 or whobson@tampabay.com.

Largo, state at odds over police benefits 12/27/11 [Last modified: Tuesday, December 27, 2011 5:06pm]
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