Residents of Joplin should vote on Tuesday, Nov. 5, to approve Proposition B to increase the city sales tax by a half-cent to bail out the city’s chronically underfunded pension plan.
The payout under the current self-funded defined-benefit pension plan is a preexisting obligation on Joplin taxpayers. The city is on the hook for the money, and it must retire the debt somehow. To that end, taxpayers and the city have pursued unsuccessfully various strategies for more than a decade. Regardless, the fund now could pay out only about 64% of benefits it will owe over time. The city is set to pump $3 million into the fund next year and employees also will pay into the plan, but that won’t bring the payoff any closer.
Proposition B is the best hope of getting the city and its taxpayers off this unhappy merry-go-round by retiring the debt that is the existing pension fund. The proposed tax would be collected for 12 years or until the pension reaches a funded level of 120%. The dedicated funding cannot be used for any other purpose, and the tax could even be retired early.
The plan would switch new police and firefighting recruits into the Missouri Local Area Government Employee Retirement System. Police and firefighters working under the current plan could be enrolled in the LAGERS state retirement plan if they chose to move.
Police and firefighters do not pay into Social Security while on the force, nor do they collect Social Security for their work in public safety when they retire. Public safety workers accept the increased risk and tough working conditions of their jobs in part because of their defined-benefit retirement systems. But those systems are only attractive when they can be expected to be solvent enough to actually pay the benefits promised.
City officials have said switching to LAGERS will boost hiring and retention of public safety workers because the statewide system is solvent, is not dependent on supplemental taxpayer funding and can be retained and transferred with the police and firefighters when the public safety workers are hired from other communities that participate in the same system.
Jim Furgerson, Joplin fire chief, has said the proposal is essential for changing the situation he sees in which the city trains firefighters and then loses those trained people to other cities that offer better benefits. “We’ve talked a lot about the pension part of this proposition, but the more important piece to me is the recruiting and retention,” he told the Globe recently.
The proposal will also save taxpayers money by paying off and closing the pension fund. “What this does over 20 years is saves taxpayers about $28 million,” Jeremie Humphrey, president of Joplin Professional Firefighters, IAFF Local 59, told the Globe.
In plain language, we’re going to have to pay off this obligation anyway; we might as well pay it off in the smartest, quickest way possible.
Proposition B will do that.