Moving forward with a city solution now versus waiting for the state to come up with the solution: The debate over the City of Prescott’s public-safety pension shortfall continued this past week.
About 70 people turned out at Las Fuentes Resort Village Friday afternoon, Feb. 17, to hear a Republican Women of Prescott forum on the fate of the Public Safety Personnel Retirement System (PSPRS) unfunded liability.
Making up the panel were City Councilmembers Billie Orr and Steve Sischka, and City Manager Michael Lamar, with Jade Riley serving as moderator.
The forum generated about two-dozen written questions from the audience, which the panel members fielded – some with spirited responses.
For instance, when Lamar was asked if he would have applied for the Prescott City Manager job if he had known that municipal bankruptcy was an option, he responded, “Not only no, but hell no.” Orr had a similar response about the possibility of bankruptcy.
Indeed, the council has ruled out that possibility, but the questioner pointed out that the option continues to come up from members of the public.
City officials maintain that bankruptcy would be a harmful and unnecessary move for the city.
Sischka told the crowd he had heard from a resident of Hassayampa Village this past week, who said he and his wife were planning to move away from Prescott, because “she doesn’t want to live in any town that’s considering bankruptcy.”
And Orr referred to a recent article in Sunset Magazine, which listed Prescott as the top place to live in the Southwest, based largely on its outdoor activities. Orr maintained that bankruptcy would tarnish Prescott’s image, and could negatively affect the city’s outdoor amenities.
Lamar added: “The good news is there’s no reason for us to do that. The city’s OK financially.”
Orr and Sischka have been among the council members to push for a 0.75-percent city sales tax increase to pay down the PSPRS shortfall, and they continued that support Friday.
And in conclusion, Lamar posed a question for those in the community who say the city should wait for the state of Arizona to come up with a solution for the PSPRS shortfall.
“For those who say we should wait – what are we waiting on, and how long do we wait?” Lamar asked.
Earlier Friday, state Reps. Noel Campbell and David Stringer, both R-Prescott, put out a news release announcing that Arizona House Speaker J.D. Mesnard has authorized an Ad Hoc PSPRS Study Committee to look into the situation, with Campbell and Stringer serving as co-chairmen.
After the forum, Stringer took a strong stance against the city’s sales tax proposal, maintaining that the ad hoc committee may come up with a statewide solution that would negate the need for the 10-year city tax.
In fact, Stringer said, “One of the impetuses (of the formation of the committee) was that the city seems to be going in the wrong direction with its sales tax.”
Rather than moving forward now, he said the city should give the state 18-months-to-two-years to try to resolve the problem – possibly by granting cities bonding authority to deal with the debt.
Another option might involve asking voters to make changes in the PSPRS system in the state constitution, he said.
In the news release, Stringer stated that a key goal of the ad hoc committee will be to protect the benefits of current retirees. He added that “recent changes in PSPRS approved by voters last year did not go far enough in addressing the systemic problem of a pension liability that is growing.”
The objective of the committee will be to “ensure the long-term solvency of the plan so it is equitable to everyone,” Stringer said.
But if the legislature were to fail in its year-and-a-half-to-two-year endeavor, Stringer said, “I would support a city tax increase.”
Orr has contended, however, that the longer the city waits, the greater the impacts will be on the other city services (parks and recreation, library, economic initiatives, and the airport), which have suffered as the PSPRS unfunded liability commitment has risen. In the coming year, for example, she said $7.6 million of the city’s $33 million general fund would go toward the PSPRS liability, which is more than $78 million.
Campbell emphasized after the forum that he was opposed to the city’s earlier move to continue hiring new police officers and firefighters this spring before a new tier of pension reform goes into effect July 1. But he said he was not pushing for a city delay in dealing with its PSPRS shortfall.
Rather, he pointed to the formation of the state ad hoc committee, which is expected to begin meeting after the end of the 2017 legislative session, and then meet monthly for four to six months.
The committee will consist of eight to 10 members, and all meetings will be open to the public, Campbell said, adding, “Everyone affected is welcome to come to the meetings.”
In the news release, Campbell stated: “Arizona is going to take the lead in resolving unfunded pension liabilities.”
The City Council will consider the PSPRS issue again at its 3 p.m. Tuesday, Feb. 21 meeting.