PSPRS Pensions Affecting Prescott’s Budget, Public Safety Workers Not to Blame

Pensioners First – PSPRS pensions affecting Prescott’s budget, public safety workers not to blame – 2/5/2014 6:00:00 AM  – The Daily CourierPension hike puts City of Prescott budget in the red

Cindy Barks The Daily Courier
PRESCOTT – Even before factoring in anticipated cost increases in insurance coverage, Prescott officials are predicting that next year’s city budget will face a high-six-figure decrease in available money.


“It’s going to be a challenging year,” Budget and Finance Director Mark Woodfill said Tuesday after delivering a report to the Prescott City Council on this year’s mid-fiscal-year status.


While sales tax revenues have continued to show growth of more than 5 percent, Woodfill and Prescott City Manager Craig McConnell say other factors would more than eat up any revenue increases.
Tuesday’s budget presentation showed that the city expects local sales tax revenue to grow by about $400,000 next year, “as the economy recovers.”


But offsetting any in-creases will be a number of negative factors, including: a $150,000 hit from the state’s reform on construction sales tax and tax collection, which is scheduled to go into effect on Jan. 1, 2015; and an $863,000 state-mandated increase in employee pension costs.


Factoring in just those two known impacts, the city’s budget is behind by more than $600,000.


And Woodfill said the city also faces some “unknowns,” including a possible increase in the premium amount the city will have to pay to the Arizona Municipal Risk Retention Pool for its liability insurance and Workers’ Compensation coverage.


“Insurance rates are going to be going up,” Woodfill said, noting that city has been involved in a number of recent claims and lawsuits. (Before the end of 2013, Prescott was among the governmental entities named in more than 100 claims over the June 2013 Yarnell Hill wildfire, which killed 19 of the Prescott Granite Mountain Hotshot crew, and destroyed more than 100 homes).


The city also faces insurance coverage costs related to the Affordable Care Act, Woodfill said.


McConnell pointed out that next year’s $863,000 increase in pension costs would be “above and beyond the half-million-dollar increase from the previous year.”


That, in turn, serves to “hamstring” the city in other areas, McConnell said.


The presentation noted that next year’s expected increase would bring the city’s total employee pension cost for the fiscal year to about $6.7 million.


The cost breakdown attributes about $12,000 of the increase to pensions for the 426 city employees in the Arizona State Retirement System, while $572,000 would go toward pension costs for the 65 fire employees (in the Public Safety Retirement System). About $279,000 of the total increase would go toward pension costs for the 72 city police employees (also in the Public Safety Retirement System).
Despite the discrepancy between the amount going toward public-safety and non-public-safety pensions, city council members stressed that the city should not place blame with its employees.


“I want to express to our public safety and police that we don’t blame them for these challenges,” Councilman Greg Lazzell said.
McConnell agreed, noting that this week’s council meeting began with recognition by citizens who said the employees in both the police and fire departments had gone beyond the call of duty in separate incidents.


“That’s the norm,” McConnell said, noting that the city’s public safety employees regularly provide “great service.”


Councilman Chris Kuknyo also voiced concerns about pitting public safety employees against other city employees, by “saying ‘you’re not getting a raise because of them.’ It needs to be better conveyed to employees that it’s just the facts; it’s not trying to assess blame.”
While city officials say it is still too early to know whether next year’s budget will include employee raises, the budget information referred to “the cost (and difficulty) of funding ‘across-the-board’ merit and/or cost of living adjustments which are then built into future year budgets as recurring expenses.”


To help deal with expected cost increases, the presentation included a number of city goals, including cost reductions through a public/private partnership at the Antelope Hills Golf Course; formulation of an economic development plan at the airport; pursuit of entrepreneurial opportunities to generate new revenue; and taking tourism development to the “next level.”


Budget discussions kicked off on Jan. 30, and will continue throughout the spring.

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