Town Manager Dave Bullock is reversing course and now recommends a 4.5% millage increase for Longboat Key taxpayers in fiscal year 2013-14 to pay for rising pension costs.
That’s because the state of Florida’s Division of Retirement is questioning the assumption rates for two pension plans the town is trying to close by the end of the month.
State officials believe an 8% rate of investment return for the firefighters’ pension plan and a 7.75% rate of return for the general employees’ pension plan is not attainable moving forward.
Since state officials are pushing for a 7% rate of return for both closed plans moving forward, Bullock is now calling for a millage rate increase. The town, meanwhile, will work with actuaries to make revised assumption rates in the coming weeks.
On Friday, Bullock sent a new budget recommendation to the Longboat Key Town Commission that calls for a 0.878 millage rate increase. The recommendation would boost the current millage rate from 1.8872 mills to 1.975 mills, for a 4.5% millage increase. If approved, the recommendations would generate $400,000 in the town’s pension reserves account to pay for the increase in pension costs.
Bullock had previously recommended keeping the millage rate flat for another year.
“The town may choose to address a portion, or all of this increase, in this proposed budget in order to lower the impact in the following fiscal year,” Bullock wrote.
If the commission chooses to wait, Bullock said a tax increase is not necessary this year.
Before the announcement, Bullock’s latest recommended budget revealed that pension plans costs for fiscal year 2013-14 were set at $2.6 million annually. It’s up to the commission to address just a portion, or all of the $400,000 increase in next year’s budget. If the commission agrees with the town manager’s recommendation to address the entire $400,000 pension increase this year, pension costs will be reduced the following fiscal year.
“The potential budget impact of this issue is noted in your budget report and continues to unfold daily,” Bullock wrote in his recommended budget.
The commission is scheduled to discuss the issue and adopt a millage rate and 2013-14 fiscal year budget on first reading and public hearing at its 7 p.m. regular meeting Tuesday, Sept. 3, at Town Hall. For a complete recap of the meeting, visit www.yourobserver.com.