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Sat, Oct. 19

On a money hunt: Raising sales tax mulled as way to pay down Prescott’s PSPRS debt

PRESCOTT – Facing upwards of $72 million in unfunded obligations in its public-safety pension, the City of Prescott is once again in the midst of finding a stabilizing money source.

A committee consisting of three Prescott City Council members has embarked on discussions to follow through with the main goals compiled during a series of recent strategic-planning discussions with the entire City Council.

Topping the list of goals: Stabilization of the city’s general fund – the source of money for most city operations, including police and fire, as well as money for the Public Safety Personnel Retirement System (PSPRS).

“The dialogue is going to be ongoing with the subcommittee,” City Manager Michael Lamar said Thursday, Dec. 1, of the Strategic Plan Committee. “They will be taking one issue at a time.”

Strategic-plan goals

• PSPRS debt

• Economic development, including Prescott Airport

• Customer service

• Quality of life

The committee’s first meeting took place Nov. 18, and, along with organizational matters, it focused on the number-one goal of finding a way to stabilize the general fund by paying down the PSPRS debt.

Councilwoman Jean Wilcox, who is chairing the committee, noted this week that dealing with the PSPRS debt is “a key component” of that goal.

Although Wilcox says a full list of options for dealing with the PSPRS still “remains to be seen,” she added that a sales tax increase of some sort likely would be in the mix.

To get an indication of how the local business community might view such a measure, Wilcox says the Strategic Plan Committee is planning a lunch with about 15 key local business and property owners – likely on Dec. 16.

The purpose of the luncheon will be to gauge “how they might accept” the various options, Wilcox said.

Meanwhile, the committee will be conducting regular meetings to continue its discussions. Lamar said the meetings would take place about twice a month. City officials say the next committee meeting is tentatively set for 10 a.m., Dec. 9, in the downstairs conference room at Prescott City Hall, 201 S. Cortez St.

Lamar says the committee meetings could go on for months, as the group works its way through the strategic-plan goals, which also include: Economic development, including the Prescott Airport; customer service; and quality of life.

Wilcox noted that while work is already underway on some of the other goals, the general-fund issue is especially urgent because it affects many city services.

“We have an obligation to pay what the PSPRS board tells us to pay (each year),” Wilcox said. “The amount keeps increasing each year, and we have to pay interest on the remaining amount.”

As the pension obligation increases, the pressure grows on the general fund, which also pays for various other departments, such as parks and recreation, library, and community development.

“Our operations have to be paid out of the same pool of money,” Wilcox said, noting that without a new source of revenue, the city will be looking at fewer amenities.

In August 2015, voters rejected a sales tax-increase measure that would have dedicated the revenue toward the PSPRS debt.

Since then, the City Council has broached the possibility of another sales tax ballot issue, but opted to wait until the state of Arizona dealt with pension reform, which occurred in the 2016 legislative session.

Still, Wilcox said, “There’s a lot more that the legislature can do.” But she added: “Realistically, they’re not going to bail us out.”

Adding to the urgency, the long-running Hall v. Elected Officials’ Retirement Plan (EORP) lawsuit was decided in favor of employees this past month – likely increasing the city’s previous $72 million in unfunded liability.

Prescott Budget and Finance Director Mark Woodfill said Thursday, Dec. 1, that city officials were still reviewing the pension actuarials to determine the amount of the impact from the lawsuit decision.

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