PRESCOTT — Concerns this week that setting a city sales tax election for August could derail any state efforts toward pension reform in the ongoing legislative session caused the Prescott City Council to postpone a decision on the matter – at least for a week.
While a majority of the council initially appeared to support setting an August election to decide a sales tax increase for dealing with the city’s $81 million in unfunded public-safety pension liabilities, Mayor Harry Oberg worried that taking the move now could “blow up in the city’s face” at the state level.
During a Tuesday, Jan. 24, council meeting, Oberg maintained that the city should let State Rep. Noel Campbell work toward statewide reform of the Public Safety Personnel Retirement System (PSPRS) before committing to a local fix.
A Prescott sales tax effort now – so early in the 2017 legislative session – could “pull the rug out from under” any efforts that Campbell might have in the works, Oberg said.
His comments, in turn, led the remainder of the council to agree to wait until at least next week to decide whether to set a special city election on the matter. The council agreed to set a special voting session at 3 p.m. Tuesday, Jan. 31, at Prescott City Hall, 201 S. Cortez St., to revisit the issue.
Meanwhile, a 9 a.m. Monday, Jan. 30, council meeting also is planned with the city’s state lobbyist Barry Aarons to discuss the PSPRS issue.
Although they agreed to the delay, several council members pushed for pursuing a local fix to the PSPRS liability despite any state legislative efforts.
Councilwoman Billie Orr maintained that the city can “do both” – work toward finding a local revenue source for the city’s millions of dollars in unfunded pension obligations, and help Campbell with statewide reform.
“Let’s get this fixed; let’s reform this system,” Orr said. “But that doesn’t mean we should let Prescott fall apart (in the meantime).”
As the city has faced higher annual costs for its growing liability with the police and fire pension system, it has cut other departments that also are funded through its general fund (parks and recreation, library, and community development).
A council Strategic Plan Committee has studied the situation over the past several months, and has recommended asking voters for a 0.75-percent sales tax increase for the next 10 years. Officials say the revenue would help the city pay down its liability with the PSPRS, freeing up the general fund for other city services.
Oberg has pushed for reform of the pension system, which he said, “Forces the taxpayers to make them whole again” after repeatedly failing to meet its investment return projections.