30-year option for paying PSPRS debt would bring down payments
But city says overall costs would increase
An option for spreading out payments on the City of Prescott’s public-safety pension shortfall for 10 more years will be a topic of discussion for the Prescott City Council this week.
The Public Safety Personnel Retirement System (PSPRS) decision will come during a special council voting meeting at 11 a.m. Thursday, June 15 — after a 9 a.m. meeting for continuation of the council’s budget discussion.
Both meetings will take place at Prescott City Hall, 201 S. Cortez St., as will a 1 p.m. study session.
City officials explained that the Arizona State Legislature approved a bill that allows employers (the city) to extend the amortization (payment) period for their PSPRS unfunded actuarial liability from 20 years to 30 years.
The City of Prescott currently has an unfunded PSPRS shortfall of more than $78 million — causing ever-increasing payments out of the city’s general fund. A sales-tax increase option is scheduled go to Prescott voters on Aug. 29 as a means of generating revenue to pay down the liability more quickly than the current 20 years.
While a decision would have to be made by June 20 in order for the adjusted 30-year amortization to become effective in time for the coming 2018 fiscal year, the city would have the option of taking action for future years at a later date, City Manager Michael Lamar said.
For the coming fiscal year, the extended amortization move would bring the city’s required contribution to PSPRS down by about $1.5 million.
Still, the memo added that the move would ultimately cost the city an additional $74.3 million more than the 20-year schedule.
City staff is not recommending the move, the memo stated.
At its 9 a.m. budget workshop, the council is scheduled to continue the 2018 fiscal-year budget discussion that began with two workshops in May. Lamar said this week’s discussion likely would focus on the city’s capital improvement program in its public works department.
He pointed out that the city’s annual budgets typically include projects that end up not being finished in that fiscal year — a situation that serves to make the budget larger than necessary. Lamar said Thursday’s discussion likely would look into what can be done in coming fiscal years. “What we want is a realistic assessment of what we can do,” he said.
For instance, Lamar referred to the pending centralization of the city’s wastewater treatment system at the airport location. While the city currently has that project on a five-year schedule, he said a seven-to-10-year time period might be more realistic.
During the 1 p.m. study session, the council will hear a report on registration for Prescott’s new business license program, which went into effect on Jan. 1, 2017.
The city is looking into launching an online business registry — a step that several council members supported when the business license program was approved this past year.
Lamar said the registry would be intended to provide basic information about the registered businesses. Thursday’s study session will include demonstration of the registry.