Phoenix Pension System Issue May Be Decided By Voters
Pensioners First – The City of Phoenix’s budget and the costs of public safety pensions factor into the following article-
Phoenix pension system issue may be decided by voters
By Dustin Gardiner The Republic | azcentral.com Wed Mar 12, 2014
The fate of Phoenix’s ailing employee-pension system could soon be in the hands of voters after a group of political activists submitted petitions Tuesday seeking to overhaul it through a ballot initiative.
The Citizens for Pension Reform Committee, a group of conservative-leaning residents, wants to replace the city’s pension system with a 401(k)-style retirement plan for new employees. The initiative states it would also stop “pension spiking” by capping the pension benefits available to current employees.
Using paid canvassers, the group says it gathered more than 54,000 signatures in support of the initiative. They only need to provide 25,480 signatures from registered Phoenix voters to get the issue on the ballot for a 2014 election
“The outpouring of support from Phoenix residents wanting real pension reform has been tremendous,” said committee Chairman Scot Mussi. “The power brokers at City Hall have refused to fix our broken pension system, instead passing sham reforms thinking they can hide the problem from taxpayers.”
Deputy City Clerk Ben Lane said his office has 35 business days to verify and count the signatures. If enough valid signatures were collected, the City Council must call a special election that would likely occur in the early fall.
Opponents of the initiative, including employee-union leaders, say it’s being pushed by out-of-state groups with a right-wing agenda. They said the move would hamper the city’s ability to attract and retain talented employees, who often earn a smaller salary than their counterparts in the private sector in exchange for better benefits.
The city currently has a defined-benefit retirement system, which guarantees retired workers a set monthly benefit for life regardless of how the pension fund performs. Taxpayers must foot the bill for pension payments not covered by employee contributions and investment yields.
The cost to fund the pensions has ballooned, from $28 million in 2000 to $110 million in 2013.
If voters approved the proposed ballot initiative, Phoenix would move to a defined-contribution retirement system under which the city contributed a set percentage of a new employee’s pay to a retirement account, similar to private-sector companies that offer 401(k) benefits.
Proposed changes would apply only to new employees. Maricopa County judges have struck down changes to the state’s retirement system for existing employees, leading many to believe similar changes to the city’s system would not hold up. Supporters said the changes also would not affect police officers, firefighters or elected officials because they are under state-run pension systems
Luis Schmidt, president of American Federation of State, County and Municipal Employees Local 2384, said city voters already weighed in on the pension issue when they passed a series of reforms last year. Among the changes was a requirement that municipal workers hired after July 1, 2013, split pension-fund contributions 50/50 with the city.
“You have out-of-state interests trying to override what the taxpayers just did,” Schmidt said.
The ballot initative also faced criticism Tuesday from an unlikely source: Councilman Sal DiCiccio, an outspoken fiscal conservative who’s voiced support for the effort in the past.
DiCiccio said he was upset that Citizens for Pension Reform submitted the petition signatures the day after the funeral of Detective John Hobbs, a Phoenix police officer who was killed during a shootout last week. DiCiccio said it’s also unclear if the reforms would affect police officers and firefighters.
“To do this right on the heels of the funeral is incredibly disrespectful to the family. It just is,” DiCiccio said. “They have different jobs. Their jobs involve public safety. They just need to be excluded from this.”
Mussi said that while he mourns the loss of Hobbs, “the two issues are unrelated, especially since this doesn’t affect public safety.”