On Tuesday, Phoenix residents handily voted down Proposition 487, the ballot measure that would have shifted most new hires into a 401(k)-style retirement plan.
The Mayor was an opponent of the measure and called it “too extreme”; but some Phoenix leaders, even the ones that didn’t support Prop 487, are determined to continue the conversation on pension reform.
From the Arizona Republic:
Mayor Greg Stanton called the victory one of the greatest comebacks in Phoenix history. The group advocating for Prop. 487 had a major lead in the beginning, according to polling by both sides, and outspent the city unions, but city workers took to the streets and seized on concerns it could negatively impact public-safety workers.
However, other city leaders said the outcome must not signal the end of the pension-reform conversation. They said the city still has work to do to address rising costs that add to its budget shortfalls, setting the table for a debate over alternative reforms in the coming months.
“If the fiscal problems are not fixed, you will continue to see more cuts in service and higher taxes and fees,” said Councilman Sal DiCiccio, a vocal supporter of the initiative. “It’s making it harder and harder to deliver quality services.”
Taxpayers’ tab for the city pension system, not including police officers and firefighters, soared to $129 million this year, up from $27.8 million in fiscal 2002. At the same time, the city raised taxes and fees and cut employee compensation to balance its budget deficits.
And the city will likely face another budget deficit heading into the next fiscal year. Its costs for all employee pensions increased by more than $18 million this year alone. City leaders expect that trend will continue, at least in the near term.
“Now it’s time for us to step forward and do some reforms,” said Councilwoman Thelda Williams, who opposed Prop. 487. “I just never believed that (ballot measure) was the mechanism for us to do it.”
But there are obstacles to pushing through a new reform measure, especially since the city passed one as recently as 2013. From the Arizona Republic:
Any efforts for additional reform could face push-back from some City Council and labor leaders who contend the city addressed the problem with a 2013 ballot initiative.
In 2013, voters passed a requirement that municipal workers hired after July 1 of last year split pension-fund contributions 50-50 with the city and work longer before retiring, moves expected to help save $596 million over 25 years, according to the city.
The city also took steps to combat the practice of “pension spiking,” generally seen as the artificial inflation of a city employee’s income toward the end of a career to boost retirement benefits.
Phoenix’s new contracts with its employee unions end the controversial practice of spiking for police officers and firefighters but only cap it for other city workers, saving taxpayers an estimated $233 million over 25 years.
Prop 487 was shot down by voters by a margin of 56-44.