Originally Published: July 30, 2017 6:01 a.m.
See Prop. 443 supporters' position
In the eyes of opponents of Prescott’s Proposition 443, a sales tax increase will do nothing more than deal temporarily with the city’s budget issues.
They say a bigger-picture approach is needed.
“All they want to do is solve a budget shortfall,” said John Lamerson, treasurer of the Citizens Tax Committee, a tax-watchdog group that has taken a stand against 443.
Lamerson, whose brother Jim Lamerson has voiced support for 443 in his role as Mayor Pro Tem on the Prescott City Council, maintains that the additional sales tax revenue would not solve the real problem, which he says is centered on the shortfalls of the statewide Public Safety Personnel Retirement System (PSPRS).
“Unless you solve PSPRS’s system issues and get rid of Article 29 (a pension protection in the Arizona Constitution), you’re not going to get off the dime,” Lamerson said. “It’s a really flawed, broken system.”
He and fellow CTC member Chris Kuknyo have been high-profile opponents of the city’s attempt to raise revenue through a 0.75-percent sales tax increase in an effort to pay down its $78.4 million PSPRS unfunded liability.
Kuknyo, who was on the Prescott City Council two years ago when the city attempted its first PSPRS-related sales tax increase (a 0.55-percent tax, which was rejected by voters in 2015), said that although he voted to put the earlier proposal on the ballot, he also opposed that measure.
“I voted to send that tax to the voters, because it was a choice that the citizens really had to make,” Kuknyo said, adding that he ended up casting his ballot against the 2015 measure.
Since then, Kuknyo says he has done more research on the pension system, and has even more concerns now. “The more I dive in, the scarier it gets,” he said. “PSPRS has lost billions and billions of dollars. If we stay on this road, they’re not going to have a pension.”
Growing state awareness
Lamerson, Kuknyo and other 443 opponents maintain that momentum is growing at the state level for reform that would change the way the PSPRS does business.
And they say the city should let that process run its course before going to the local taxpayers.
On Wednesday, July 26, a town hall meeting conducted by State Reps. Noel Campbell and David Stringer attracted more than 150 people to the Prescott High School Ruth Street Theater to hear presentations on PSPRS.
The two state legislators serve on a state ad hoc committee on the PSPRS, and both have voiced support for letting the voters decide whether an Arizona Constitutional protection for public pension systems (Article 29) should go away.
Many of the audience members at the town hall indicated their support for such pension-reform measures through applause and comments critical of the PSPRS.
The town hall occurred several days after a Prescott Valley summit of Arizona mayors, during which support arose (although not unanimously) for a legislative bill that would seek a referendum on the constitutional protection.
“We have people who are finally getting to work on this issue,” Kuknyo said. “We need to come together and force the state to act. It’s going to be some hard decisions to fix this fund.”
A 2011 legislative effort to reform PSPRS, requiring a larger employee pension contribution, was overturned by the courts – a ruling based, in part, on the constitutional protection that states that public pensions “shall not be diminished or impaired.”
Along with the criticism for PSPRS, the July 26 town hall also generated some support for the pension.
Casey Gonzales of the United Flagstaff Firefighters, for instance, pressed Stringer about his comment at the July 26 mayors’ summit that the state had “over promised” in its pensions to firefighters and police officers, as well as on the legislator’s statement that the constitutional protection should be eliminated.
“Maybe the protection is there for a reason,” Gonzales said of the measure that was approved by voters in 1998.
In addition, Gonzales pointed out that the state pension for elected officials also has an unfunded liability. “Why is PSPRS the only plan ever mentioned?” he asked, suggesting that Campbell and Stringer were against public safety.
Campbell responded that the effort for reform is intended to help PSPRS. “We’re doing this whole process because we’re trying to save this system,” he said, maintaining that removal of the constitutional protection would allow the courts to step in.
Stringer contended that voters should have the right to decide the matter. “I want everyone in this room to know that you are not a prisoner of the law,” he said. “This is an issue that should go back to the voters. So sir, it’s back on the front burner, and it’s going to be decided.”
While the “no on 443” camp is hoping for legislative reform, Lamerson points out that past moves by the legislature have hurt the system.
“You have the favor factory down there, passing the PBI (Permanent Benefit Increase), passing the DROP (Deferred Retirement Option Plan) program,” he said to benefits were in effect for years, and have been recent subjects of reform. “How can you have the legislature passing all kinds of new benefits, and then you have the fund trying to manage the system?”
Kuknyo says the best-case scenario for the system would be for Gov. Doug Ducey to get involved. “I’d like to see Ducey call a special session, and tell the legislature to deal with the PSPRS,” he said, although he allows that is not likely to happen.
Meanwhile, the opponents say the city’s move toward a sales tax is hurting the reform efforts.
“We don’t want to keep funding bad behavior,” Kuknyo said. “We’d like to permanently fix PSPRS, and we don’t think these problems Prescott is facing will go away.”
Through the sales tax increase, he maintains, “The yes campaign wants to do something to temporarily mask these problems. Prop 443 just makes everybody comfy again for two or three years.”
(Watch for a future series installment on what happens if the sales tax fails).