TALLAHASSEE | Dealing a setback to Gov. Rick Scott and legislative leaders, a trial judge ruled Tuesday that the Legislature’s move to save money last year by requiring public workers to contribute toward their pensions was unconstitutional.
Circuit Judge Jackie Fulford, in a decision that could bring fiscal disarray to government budgets, said the state and local governments must pay back the money that the 560,000 workers have contributed since last summer, with interest.
The ruling — if upheld on appeal — could cost the state and county governments nearly $1.5 billion this year, including $860 million for the state and $600 million for the counties. It would have similar financial consequences for the governments in the coming budget year.
In her decision, Fulford said making public workers contribute a portion of their salaries to their retirement was an “unconstitutional impairment” of their original employment terms with the state.
Citing a 1981 Florida Supreme Court decision, Fulford said lawmakers could change benefits for “future state service.”
“The Supreme Court did not, however, say it was acceptable for the Legislature to completely gut and create a new form of a pension plan,” Fulford said.
Fulford also ruled the mandatory pension payments represented an “unconstitutional taking of private property without full compensation” and a violation of collective bargaining rights of the public workers.
“To find otherwise would mean that a contract with our state government has no meaning and that the citizens of our state can place no trust in the work of our Legislature,” Fulford wrote. “Those are findings this court refuses to make.”
Fulford’s ruling means public workers who were hired before July 1, 2011, will be entitled to be reimbursed for their 3 percent contributions. Workers hired after that date will continue to have to contribute 3 percent of their pay because they were hired after the law took effect.
The lawsuit was filed by firefighters, police officers, teachers, state workers, university employees and other public employees and their unions.
Ron Meyer, a lawyer for the Florida Education Association, a teachers’ union, called the ruling “momentous.”
“This is a victory for the rule of law,” Meyer said. “The court said today that a promise is a promise. A contract is a contract. And even the governor and the Legislature have to live up to the covenants which they enter into.”
Marianne Capoziello, president of Polk Education Association said she is “thrilled, thrilled and thrilled about the judge’s ruling.”
“We anticipate an appeal, but we go forward with the faith that the court system will understand and afford the promises made to the public servants across the state of Florida,” she said.
Tony Blair, president of the American Federation of State, County and Municipal Employees, said he loves the judge’s ruling.
“Thank God we got the backbone and gumption to stand up to them (state officials) and do the right thing,” Blair said.
Last year, lawmakers passed, and Scott signed, a bill that beginning last July required workers to contribute 3 percent of their salaries toward their pension costs. The law also limited cost-of-living adjustments for retirees. Both were determined by the judge to be illegal.
At the time, lawmakers said the move was needed because of a budget crunch. They also contended it was fairer, because most private sector workers contribute toward the pensions. It marked the first time since the early 1970s that state workers were required to contribute toward their pensions.
Scott, who had originally pushed for a 5 percent pension contribution, said the ruling would bring “a swift appeal to reverse this decision.”
He said Fulford’s ruling would be stayed by the appeal, meaning it would have no immediate impact on this year’s budget or the 2012-13 budget, which the Legislature is scheduled to approve Friday.
Scott called the decision “simply wrong” and said it blocks Florida’s “common-sense pension reform.”
“This is another example of a court substituting its own policy preferences for those of the Legislature,” Scott said. “The court’s decision nullifies the will of the people and leaves Florida as one of the only states in the country in which public employees contribute nothing towards their retirement, leaving working Floridians with 100 percent of the tab.”
House Speaker Dean Cannon, R-Winter Park, also said the decision would not impact the state budget while it was on appeal.
He said lawmakers had pushed the 3 percent pension contributions to improve the solvency of the pension fund, avoid layoffs and pay cuts for public workers and bring “Florida more in line with the private sector and the majority of states that require a modest employee contribution to retirement benefits.”
Senate President Mike Haridopolos, R-Merritt Island, said he was “deeply disappointed” by Fulford’s ruling, which he called “a radical departure from past precedent.”
“She has proven once again that she is an activist judge who has no problem overstepping her authority and overruling the decisions of the state’s elected representatives and the critical role that we play as the budget writers for the state of Florida,” Haridopolos said in a statement.
Fulford also drew criticism from legislative leaders last year when she rejected a massive prison privatization plan, ruling it had been improperly inserted in the state budget.
A key question is how long the appeal will take. The next stop for the case normally would be the 1st District Court of Appeal.
But Meyer, the FEA lawyer, said the case, because of its importance, should be immediately appealed to the Supreme Court.
Andy Ford, president of the FEA, urged a quick resolution of the case.
“The state of Florida could choose to end this right now and pay the employees what they are entitled to,” Ford said. “Let’s just get on with the business of teaching the kids, driving the buses and protecting the streets. This is about all public employees.”
Locally, Sarasota County will lose about $5.8 million and Manatee County about $7 million — not counting interest — if the pension ruling stands, officials said.
It could add to other potential budget cuts facing the counties in the new state budget, including a plan to adjust Medicaid reimbursements to the state that could cost Sarasota an additional $6.1 million and Manatee $5 million.
Sarasota County Commissioner Nora Patterson said that, while the ruling is favorable for the roughly 2,000 employees who have not had a raise in at least four years, it could result in the county reversing a recent decision to put $6 million into economic development.
Commissioners will have to discuss the ruling with the county attorney and determine a course of action, she said.
“If we don’t make some other service cuts I suppose what will happen is we’ll spend more in fund balance and maybe have a rockier road a few years from now,” Patterson said. “It’s quite a blow. In general it seems the state Legislature doesn’t understand that you need money to pay for deputies and other county services. Their concern is centered on the state budget without looking at the necessary services that provide the quality of life in the state.”
Manatee had used its $7 million in pension savings to reduce taxes slightly and stave off potential cuts to Emergency Medical Services and law enforcement.
Those could be back on the table if an appellate court upholds the ruling.
“It’s a big hole,” said Nick Azzara, the county spokesman. “This is going to be tied up in appeals for several months. It’s premature to say how the county is going to tackle that expense.”
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