CLEARWATER – Around Pinellas County, voters are learning that this year’s general election ballot is extremely long, with residents’ ballot being four pages.
The last two items for Clearwater voters are two referendum questions. Mayor George Cretekos and other affected representatives help shed light on what voters are being asked to decide.
Referendum question 1
This issue has taken several years to finalize and deals with far more concerned parties. The official ballot language for question 1, titled “City of Clearwater amend and restated general employees pension plan” is as follows:
“Shall the employee pension plan adopted by Ordinance No. 8333-12, meeting requirements of IRS-qualified plan; extending normal requirement date, decreasing multiplier, and changing beneficiary options for nonhazardous duty new hires; addressing re-employment; increasing employee contributions and changing overtime inclusion calculation for certain hazardous duty employees; delaying cost-of-living pension increase and changing beneficiary options for employees not eligible to retire; making changes to disability retirement provisions; making other changes; providing for applicability; be approved?”
Cretekos said that the city has worked for a few years with the three city unions to agree on modifications to their pensions. Finally, all four groups came to decisions that they all could agree to, and now the final step is to seek approval from the voters. Cretekos is glad everyone could finally agree.
“I thank (the unions) for doing that,” Cretekos said. “The entire City Council appreciates their working with us to bring these changes about. It applies to new hires and those who have not vested. And it will save the city approximately $5 million in the first year and actuarially, we are being told we could save $400 million over the next 30 years. The benefit levels will be reduced for the new hires and those who are not vested. It’s going to delay a cost-of-living pension increase, it’s going to provide some changes in the beneficiary options for employees, and it makes some other changes that pertain to how you calculate your overtime in their overall pension.”
The three unions involved are the Fraternal Order of Police, the Clearwater Firefighters Association, and Local 3179 Communication Workers of America, which represents all the communication workers and general wage employees. The pension changes will not affect those who have already retired or those who have “vested,” which means they have reached the required age and/or years of service to retire but still continue to work. However, current employees will see various changes to their pension plan, and all new hires will see even greater cuts. If the voters pass this referendum, the pension changes would go into effect on Jan. 1.
If voters do not approve the referendum, then the city would have to sit down again with the three unions and start from the beginning with negotiations, Cretekos said.
“If we don’t get approval, we would have to go back to the current plan and have to start the negotiations all over again, and we would lose the savings that we would get in the first couple of years because whatever the changes the bargaining units and the city would agree to, we’d have to go back to the voters, and that election would be down the road,” Cretekos said.
From the city’s standpoint, the whole point of changing the pension terms is to save money and ensure the pension is solvent. The city is required to contribute to the pension, and currently, the pension program is 96 percent funded.
“That is outstanding when you compare it to some of the other communities and even the state,” Cretekos said. “We are in great shape on our pension plan. But the pension plan also eats up approximately 27, 28 percent of the budget. And these changes, if approved by the voters, would allow us to reduce that percentage eventually to around the 15 percent range. So that means that the property taxes that people pay, instead of going to pensions, it can go to other programs.”
Among other things, the agreement also changes the number of years people would need to work before retirement, and the “multiplier” that determines one’s pension level is being decreased, Cretekos said.
“You get a certain percentage (of your wages,) so say you work five years and your retirement pay is based on a percentage of your five-year annual salary,” Cretekos said. “That is being changed. It’s being reduced. The money you earn in overtime pay is going to be capped now. Before, it was unlimited. Retirees used to get a cost-of-living increase effective immediately every year after their retirement. We’re delaying that cost-of-living increase five years after the pension kicks in.”
Not all of the changes apply to all of the unions. Certain unions are affected differently by the changes, depending on their other benefits and based on their type of service.
John Walser, Clearwater Police detective and president of the Fraternal Order of Police union, said that the biggest way the pension changes would affect his union is that sworn members of the police would then have to pay a higher contribution into their own pensions.
“One thing that’s unique (to Clearwater pensions) is that unlike a state pension, we don’t get Social Security at the city,” Walser said. “We pay into the pension and our contribution would go from 8 percent to 10 percent (of their overall paycheck.)”
The new changes would affect any new hires after Jan. 1 as well as those current employees with less than 20 years of service and not yet eligible to retire, he said. But he assures the current retirees that they would not be affected in any way by the changes. Also, non-sworn personnel will not have their contribution amount go up, but they will be affected in different ways.
Walser said that other unions, like state workers and Sheriff’s Office employees, they do not pay into their own pensions, and they also receive Social Security benefits. That is not the case with city of Clearwater unions, he said. They must solely rely on their pension and personal savings for retirement, he said. But the union members understand the economic times and the money that the city will save over time because of these changes.
“It’s going to continue to make the pension solvent,” Walser said. “We have one of the highest contributions in the state, but we understand that. With no resentments about it. We don’t get Social Security, unlike the Sheriff’s Office and other agencies who don’t contribute anything to their pension and get Social Security on top of it. And they get a higher multiplier. We understand all those things. But at the end of the day, we want to make sure our pension is solvent, and there are states and other municipalities where their pensions are underfunded, and we want to make sure we don’t incur that to the citizens of the city.”
Walser said the police union worked in cooperation with the city to come to the final terms, and though it will be difficult for the members to pay the extra money, they realize it’s necessary to ensure pensions for the current and future generations of police.
“These are difficult times, but everyone needs to step up to the line to meet these challenges and come through it,” Walser said.
For voters who may be reluctant to support helping to pay for city workers’ pensions, Walser explained that this form of retirement benefits actually helps save the taxpayers money.
“Federal law states you must either pay for pensions or Social Security,” Walser said. “If the city did Social Security, they have to contribute 7 percent. Right now, the city only pays 8 percent. If you’re going to give a 401k, that’s an addition. If you’re going to give a city policeman or fireman or city worker a 401k like most civilians have, then now you’re going to pay 4 or 5 percent on top of that. So now the city’s contribution becomes 12 percent, which is higher. So they can say that they don’t want to contribute to that, but federal law says employers will either contribute a pension or do Social Security. Some citizens think those bloated pensions that are in California and New York are somehow translated down here, and that’s just not the case.”
John Klinefelter, president of the Clearwater Firefighters Association, said that if passed, the firefighters would also pay the extra 2 percent toward their contribution, making it 10 percent of their wages. There also will be cost-of-living adjustments that are being frozen and that newer members will not receive at all, he said. Also like all city union workers, the firefighters do not receive Social Security or a 401k, so all of their retirement benefits rely on their pension.
These pension adjustments also will bring the city into compliance with a new state law regarding overtime, he said.
“Earlier this year, there was a new state law put into place that caps the amount of overtime that counts to pension earnings, and ours is capped at 300 hours annually,” Klinefelter said.
The state now allows for up to 300 hours of overtime each year to count toward the average salary amount that will be used to calculate pension benefits, he said.
The fire union came to the table a bit late, Klinefelter said. They thought their pension plan was fine the way it was and didn’t want changes, but he said they realize the market is bad and that some concessions needed to be made. He said the union stood firm on certain issues, and ultimately came to a decision that he feels is fair on all sides.
“We did not receive any additional benefits, but we’re happy that we’re able to maintain some of our current benefits,” Klinefelter said. “Like our pension allows us to retire after 20 years of service. We feel that after 20 years or so of fighting fires and providing emergency medical services to the citizens, it takes a toll on your body. Twenty-four-hour shifts, we work a 53-hour workweek. It takes a toll, so after 20 years of doing this job, it’s a long time, and the mental and physical aspects of it are tough on the body and the family, so we’re happy to keep it at 20 years of service, and we also kept our multiplier for years of service at the same level.”
The fire union also kept its disability amount the same, which Klinefelter said they are happy about.
“We didn’t gain anything other than getting to pay more for it, but we’re happy with what we maintained,” Klinefelter said. “Having to pay more for a lower benefit is always hard to swallow. Even with the economy the way that it is, our pension plan is one of the most stable in the state of Florida, so having to pay more for the same benefit is always a bitter pill.”
Nonetheless, Klinefelter added that it is important to ensure their pension is solid for future generations.
Steve Sarnoff, president of Local 3179 Communication Workers of America, represents all the other city union workers. This covers all general employees who are not sworn police or firefighters or management. There are more than 300 job titles and more than 800 people in this union, he said, including beach lifeguards, solid waste workers, office personnel, the people who maintain the drinking water to those who maintain the streets and stormwater.
The proposed pension changes would affect this union – those who have not earned their retirement qualification already – in a number of ways.
“They will have a small monthly benefit if when they retire they have a designated beneficiary, they will lose about 9 percent a month of their pension benefit,” Sarnoff said. “… And for those who are hired after January, unfortunately their pension would be greatly reduced. First, they have to work longer in order to retire. They have to work five years longer to retire. And also, their formula for their retirement benefit will be less. So their pension would be, basically, after 30 years, they would have a 50 percent pension. For some people, they say that’s not so bad. But remember, we don’t pay into Social Security.”
Also, only base pay would now count toward the pension benefits – no overtime, Sarnoff said.
Sarnoff is glad that through the negotiations they were able to preserve benefits for those who have already earned them. There are a lot of people, including himself, who have worked enough years to retire but continue to work for various reasons.
“There were sacrifices we had to make to keep our benefits in tact as much as we could,” Sarnoff said. “And putting it off to the next generation is something we really didn’t want to do, but we bargained for almost a year. It wasn’t something we gave up easily. And we struggled with it very, very, very diligently, and I hate seeing my children or grandchildren not have as much as I have. It’s not what we’re supposed to be doing. But unfortunately, some realities right now are such that we had to do that. So whatever the outcome of the election, we’ll deal with it either way. I am voting for the pension changes myself because I’m a city resident and a city taxpayer.”
All sides agreed on the plan, though Sarnoff can’t help but worry what all the continued changes will mean for the future of the workforce.
“I know our salaries aren’t as good as they once were,” Sarnoff said. “Will our salaries and benefits still be enough to attract the best and brightest? To hire and retain quality employees? Pure and simple, our jobs aren’t the kind of jobs you can come out of high school with no training and walk into. Almost all our jobs have technical aspects to them that require training. And people who have that training are in demand. It’s no longer a pick and shovel operation.”
Referendum question 2
This issue is less involved than question 1, but Cretekos said some people may be confused about it. The question, titled “Providing City Council with the authority to grant economic development ad valorem tax exemptions” reads as follows:
“Shall the City Council of the city of Clearwater be authorized to grant, pursuant to s.3, Art. VII of the State Constitution, ad valorem tax exemptions to start new businesses and expansions of existing businesses that are expected to create new, full-time jobs in the city of Clearwater?”
Cretekos helped break this down into more common language.
“Basically, it would give the City Council the authority to grant, under certain conditions after they review the applications from the businesses, to grant tax exemptions for new businesses that would create 10 high-wage jobs in the city.”
The city would have to review the specifics on the application, but generally a high-wage job would be between $50,000 and $100,000 or more, Cretekos said. If a business builds a new business does something like build a new building or expansion or buy a new major piece of equipment that directly contributes to the 10 or more new positions, they could receive this exemption, he said. However, the exemption is only for 10 years and is just on the city of Clearwater’s property taxes. Only about 25 percent of a person’s tax bill goes to Clearwater, he said. Also, they would have to prove each year that those 10 positions are still there.
“You can’t do it one year and then let three of those people go so you’re down to seven,” Cretekos said. “You have to certify that those jobs are still there.”
One of the reasons the city was eager to get this on the ballot is because cities such as St. Petersburg and Tampa have already passed similar measures, Cretekos said, and the city wants to be able to compete at the same level for businesses coming to town. Other cities, such as Largo, also have a similar referendum on the ballot or are entertaining the idea of it, he added. So far, there has been very little demand for actually using the exemption in the cities that already have it, Cretekos said, but at least this way it would allow Clearwater “to be able to compete on a more level playing field if our residents would approve it,” he said.