Prescott City Council members wrestled with Catch 22 situations this past week, involving the state pension system and costs the city could face if hiring public safety employees before reforms kick in.
At question are low staffing levels in the police and fire departments, securing a $1.5 million federal grant for new firefighters, and 11 new police officers and firefighters ready in the next few months to go to work.
The rub comes with the city realizing those new employees would become active ahead of the new tier of the PSPRS (Public Safety Personnel Retirement System) pension reform, which is scheduled to go into effect on July 1, 2017. The new PSPRS tier reduces the pension-contribution cost for the city. It applies to employees who are hired and enrolled in the PSPRS after July 1, but does not apply to those already on staff.
Estimates under the old tier show each new firefighter costing Prescott about $3,900 more in the first year (as compared to the new tier), and as much as $124,000 more over a 25-year career. For police officers, the estimated savings in the new tier would be about $3,700 in the first year, and about $120,000 over a 25-year career.
Bringing them on now would potentially add well more than $1 million to the city’s unfunded PSPRS liability, which is now at more than $81 million.
Despite not knowing whether or not those employees would make Prescott their career, it comes down to public safety versus pension costs.
The city’s public safety departments are operating on a shoe-string and a prayer, overworking current employees, incurring overtime, and closing or “browning out” fire stations. This also is taxing to the city’s mutual-aid agreement with nearby public safety agencies.
Public safety must come first, the new employees are needed now.
However, if we were to set that argument aside, consider that the city already offered the jobs to these 11 people. They are enrolled in training at the city’s cost and, if the city were to rescind those job offers to make it to July 1, Prescott stands to lose many or most of those now-trained recruits.
The city would have to start over and would suffer a black eye over integrity.
Did they figure it wrong, by not taking the impact of the pension reform date into account sooner? Yes. Councilman Greg Lazzell said, “We made a mistake. But to say we’re not going to take these men and women into the system – it’s not their fault.”
Another pension question city leaders are debating centers on whether to call an election for a three-quarters of a percent sales tax hike to cover that $81-million-and-rising debt or wait for Rep. Noel Campbell to negotiate further reforms in the state pension system.
Mayor Harry Oberg is pushing for the city to wait, something he did last time Campbell was at work on the issue. Oberg worries that moving ahead could “pull the rug out from under” Campbell’s continuing efforts.
The bottom line is any reforms, state officials have previously said, will not cancel out the city’s debt. We need to prepare for rain and move ahead. If the city determines it does not need the money from the sales tax hike, it can cancel the election or repeal the increase.
Right now, no decisions have been made. City leaders will meet Monday and Tuesday, Jan. 30-31, to decide what to do.