Phoenix’s Pension Reform Act
Pensioners First takes no position other to say that existing benefits should, in general, not be harmed or removed-
Phoenix pension-reform initiative is not a sham
Scot Mussi, AZ I See It – March 25, 2014
Mussi: Let’s set the record straight about Phoenix’s Pension Reform Act
• The Phoenix Pension Reform Act would end costly pension “spiking.”
• It would transition new employees to a 401(k)-style defined contribution system.
• And it would protect taxpayers from ballooning pension costs.
It’s no secret that Phoenix has a broken pension system.
Our reputation as an oasis in the desert is threatened by the same fiscal challenges facing Detroit and Chicago. Years of abuse created a pension crisis that will cost taxpayers billions of dollars if not fixed.
The picture is bleak and urgency is needed to get this challenge fixed now. The annual cost to Phoenix taxpayers to fund the pension system has ballooned from $28 million in 2000 to $110 million in 2013.
On top of that, the existing pension system is only 56 percent funded with a $1.5 billion liability for taxpayers. The recent credit downgrade and $40 million dollar budget deficit are a direct result of ballooning pension costs.
Not only are taxpayers at risk, but so is the promise we made to our existing city employees. They deserve better.
The Citizens for Pension Reform Committee is stepping forward to bring relief to residents and the pension system. The Phoenix Pension Reform Act is a citizen initiative that strikes the right balance by fairly supporting new municipal employees, protecting taxpayers and keeping promises made to current retirees and participants.
In March, the group filed more than 54,000 signatures supporting the ballot initiative. The outpouring of support from Phoenix residents wanting real and fair pension reform is overwhelming.
Unfortunately, critics and opponents who are benefiting from the current broken pension system are more interested in misleading the public with half-truths and scare tactics. One false claim is the initiative affects the Public Safety Retirement System for police and firefighters.
This statement is simply not true. This initiative does not affect police and fire!
Specifically, the Pension Reform Act gives us the opportunity to repair Phoenix’s broken pension system by:
• Ending the illegal practice of pension spiking and other windfall pension payouts.
• Transitioning new city employees into a more sustainable and fair 401(K)-style defined contribution system.
• Allowing existing employees to opt into the new defined contribution plan.
• Protecting taxpayers from ballooning pension costs while ensuring existing and future pension obligations are met.
The power brokers at City Hall have refused to act and have made it clear that they are not interested in fixing the problem. Citizens for Pension Reform gathered together to offer a reasonable solution through the Phoenix Pension Reform Act.
It is time that the voters of Phoenix decide the issues for themselves. The initiative takes the issue out of the hands of the politicians and special interests to provide an opportunity for genuine pension reform.
Scot Mussi is chairman of Citizens for Phoenix Pension Reform and executive director of the Arizona Free Enterprise Club.