Phoenix Puts Pension Issue on Ballot

phx-cnclmn-sal-diciccio.jpg

DALLAS - Phoenix will ask voters to approve changes in the city's pension plan designed to save $38.8 million over 20 years.

The ballot proposal, approved by the Phoenix City Council on a 6-3 vote March 23, is the third in three years to come before voters.

Under the proposed rules, existing retirees or employees in the system now would not see an impact to their pension benefits, nor would public safety workers.

One element of the proposal would cap pensions that the most highly paid employees would be able to earn in the future. Overall, the measure is designed to retard "pension spiking," which is the artificial inflation of an employee's income toward the end of a career to boost retirement benefits.

The proposal also would limit payments by new employees for their pensions. A 2013 pension overhaul has led to soaring contribution rates for new hires, officials said.

Cities in the Phoenix area have witnessed a $28.6 million spike in police and fire pension bills for next fiscal year, according to a survey by The Arizona Republic. Among the seven cities that will pay more for pensions next fiscal year, Mesa, the largest suburb will pay the most at $8.7 million. Phoenix ranks second, according to the Republic.

The Phoenix ballot proposal came from the Civilian Retirement Security Ad Hoc Committee, a group of business and political leaders appointed by Mayor Greg Stanton.

The mayor created the committee last year after a conservative group's ballot initiative to dismantle the pension system.

Council members are scheduled to vote on refining the ballot language at a later meeting.

Council members Bill Gates, Sal DiCiccio and Jim Waring voted against the ballot proposal, questioning its adequacy to limit the pension system's financial risk to taxpayers or to stop pension spiking.

DiCiccio called the plan "another gimmick," saying the city should make structural changes to fix the pension system.

Phoenix carries general obligation bond ratings of Aa1 from Moody's Investors Service and AA-plus from Standard & Poor's. Outlooks are stable. The city has about $1.5 billion of GO debt outstanding.

For reprint and licensing requests for this article, click here.
Arizona
MORE FROM BOND BUYER