Phoenix public safety workers

Phoenix Lawmakers Weigh In On Proposition 487

When Phoenix voters go to the polls today, they will decide the fate of one of the most controversial ballot measures in the country: Proposition 487.

The measure would close of the city’s defined-benefit system to new hires and shift them into a 401(k)-style plan.

Public safety workers are excluded, but unions say death and disability benefits could still be reduced.

The Arizona Republic asked city leaders from both sides of the aisle to weigh in on the bill:

“In 2013, I was proud to co-chair the city’s pension reform committee that successfully passed $700 million in savings. That reform passed the right way — considered by a citizen panel and approved with more than 80 percent of the vote. Prop. 487 was written and funded by dark, out-of-state money, with no local consideration or feedback. If it passes, it will undo all the work we did last year, and the city estimates that it will cost taxpayers more than $350 million. Phoenix should vote no on Prop.487.”

— Daniel Valenzula, District 5, parts of west and central Phoenix

“Assumption of risk has been largely ignored except for Bob Robb’s recent analysis. The pension of former City Manager David Cavazos illustrates the importance of this issue. Although I voted against his large salary increase, council action raised his pension to approaching $250,000 per year for life, starting at age 53. If the economy goes bad, if an emergency arises, the city still owes approximately $250,000 per year. Another individual would need about $5million set aside (never to be spent because of an economic downturn, a family emergency or anything else) earning 5 percent every year to match that pension.”

— Jim Waring, vice mayor (District 2), northeast Phoenix

“Voting yes on Prop. 487 brings fiscal accountability back to the city of Phoenix. Our city is in a financial crisis. Pension costs are cutting into services and causing new tax increases. Phoenix is short more than 500 police officers, and the politicians imposed a new water tax to pay for increasing pension costs. Prop. 487 stops the financial bleeding. Without Prop. 487, you will see more cuts in service and higher taxes. We could add 150 new police officers if we just stopped pension spiking alone. Pension spiking costs you more than $19 million per year. Please vote yes on Prop.487.”

— Sal DiCiccio, District 6, Ahwatukee and east Phoenix

“If Prop. 487 passes, Phoenix would be the only government employer in Arizona and one of the few in the nation that does not offer a defined benefit plan. This presents a disadvantage in attracting quality employees and will deter current public employees in considering Phoenix as an employment option. The public sector already faces challenges due to less competitive wages. One of our attracting factors is pension benefits. Our city is additionally disadvantaged since we increased our retirement eligibility rule of 80 to 87, and research shows that lowering our pension benefits will be yet another detriment to the employment packages we offer.”

— Michael Nowakowski, District 7, southwest Phoenix and parts of downtown

“Voters considering Prop. 487 should make no mistake: This measure will cost the city millions of dollars we don’t have, and every dollar spent on this shoddily drafted ballot initiative is a dollar taken away from the other priorities of the city: flood control, better streets, hiring new police officers, and other vital city services. Reasonable minds can disagree about Proposition 487 on many levels, but in the short-term, the evidence is clear: Proposition 487 is expensive. Our city is in a very difficult financial situation, and we simply cannot afford Prop. 487.”

— Kate Gallego, District 8, southeast Phoenix and parts of downtown

See Pension360’s previous coverage of Proposition 487 here.

Video: A Closer Look At Phoenix’s Proposition 487

Proposition 487 is a Phoenix ballot measure that would close off the city’s defined-benefit pension plan for new hires and instead shift them into a 401(k)-style system. The measure would also prohibit pension “spiking” practices.

Prop. 487 has been surrounded by debate about its true cost, and whether it would reduce death and disability benefits for public safety workers — even though the measure is not intended to change public safety benefits.

The video [above] tackles these issues, and others, in an analysis of the measure.

Would Phoenix’s Proposition 487 Hurt Public Safety Workers?

In exactly one week, Phoenix voters will determine the fate of Proposition 487 – the controversial ballot measure that would, among other things, end the city’s defined-benefit plan for all new hires and shift them into a 401(k)-style plan.

The measure excludes public safety workers, so nothing would change for police and firefighters. Or would it?

In recent weeks, a fiery debate has emerged over whether Prop 487 would actually harm the retirement security of the city’s public safety workers.

Dustin Gardiner at the Arizona Republic writes:

Hundreds of firefighters and police officers chant “No on 487!” outside an upscale Biltmore office tower, rallying against a ballot initiative they contend will gut their most critical benefits.

They say the measure…would jeopardize their retirement security and death and disability benefits.

That dire situation they portrayed at the protest earlier this month — suggesting Prop. 487 will eviscerate the pensions of officers and firefighters and leave families of fallen first responders without benefits — is improbable given that state law prohibits it.

Nevertheless, the hotly disputed claim has become the dominant argument in the final stretches of the campaign over the measure, which would close Phoenix’s employee-pension system for new hires and replace it with a 401(k)-type plan. The initiative is on the Nov. 4 ballot for city voters.

[…]

“Given that police officers and firefighters don’t receive Social Security and judges are apt to make unpredictable rulings, we refuse to take such risks with the public safety of our community,” leaders of the city’s police and fire unions wrote in a joint letter this week.

The Arizona Republic editorial board published a piece on Monday calling the arguments of public safety unions “thin”:

Prop. 487, which applies only to the Phoenix-run retirement system for non-public-safety employees, expressly excludes police and fire pensions. State law requires cities to contribute to the statewide public-safety pension system. The Arizona Constitution explicitly protects personnel already enrolled. Legal precedent clearly is on the side of public safety.

Even attorneys opposing Prop. 487 acknowledge that their arguments are thin. So why the fierce opposition?

Part of the explanation must be set at the feet of the Phoenix City Council, a majority of which opposes the proposition. The council created ballot language that disingenuously depicts the proposition taking action that is constitutionally forbidden.

The council majority and staff have made it clear which side they favor. It isn’t the side of the city’s taxpayers, who must bear the rapidly increasing expense of the city’s grossly underfunded pension plans.

But, largely, the anti-Prop. 487 campaign appears to be a statement by the city’s public-safety unions, which will adamantly oppose any effort to change any public-employee retirement system that promises to lessen the financial burden on the city’s taxpayers.

Even to the point of rising up against a ballot measure that will in no way affect their benefits.

But union leaders call the measure “poorly written” and maintain that the ambiguity of the measure doesn’t bode well for public safety workers. From a column in the Arizona Republic authored by the presidents of three Arizona public safety unions:

Prop. 487 will impact Phoenix police officers and firefighters. The only question is: Exactly how much?

Because of this measure’s contradictory language and because, according to the city’s analyses, Prop. 487 has the potential to make it illegal for the city to contribute to the public-safety retirement system, our groups oppose this ballot measure. Simply put: It is the wrong kind of reform.

Inevitably, Prop. 487 will end up in court for a years-long legal fight. Our opponents and The Arizona Republic editorial board have discounted that risk — and the looming massive legal bills.

However, given that police officers and firefighters don’t receive Social Security and judges are apt to make unpredictable rulings, we refuse to take such risks with the public safety of our community. We hope Phoenix residents will refuse, as well.

Read the entire column from the union leaders here.

You can read the Arizona Republic’s editorial board piece here.