Council: Paying down PSPRS shortfall is priority
Adopted final budget allows for use of $11M of reserves
As much as $25 million in city money could go toward paying down Prescott’s $78 million shortfall in the public-safety pension system (PSPRS) in the coming fiscal year, based on a City Council decision this week.
In a move intended to prove to Prescott voters that the city is “bound and determined” to pay down its unfunded pension liability, the City Council unanimously opted for an adjusted 2018 fiscal-year budget that gives it flexibility to use as much as $11 million from the city’s $15.6 million “unassigned” reserve fund to go toward the PSPRS shortfall.
The decision was a part of the City Council’s approval on Tuesday, June 27, of the $188 million budget for the 2018 fiscal year, which begins on July 1.
“It is imperative that we vote for option 2,” Councilman Steve Sischka said of the budget adjustment. “We need to show the voters that this council is bound and determined to pay down PSPRS as soon as possible.”
Councilwoman Billie Orr agreed, noting that the option would “show that commitment” to paying down the liability.
The $11 million payment would still require future action by the council, and City Manager Michael Lamar said that matter likely would go back to the council sometime after the Aug. 29 primary, during which voters will decide the fate of a 0.75-percent sales tax increase to pay down the PSPRS shortfall. He added, however, that the council has not indicated that the $11 million would be contingent on the success of the sales tax measure.
If the council were to choose to go ahead with the $11 million payment at that time, it would be in addition to the $7.8 million annual payment that city is obligated to make to PSPRS in the 2018 fiscal year.
The council also earlier agreed that about $1 million should come out of the city’s reserve fund to pay off required reimbursements to public-safety employees – owned after the recent court ruling in the Parker/Hall lawsuit, which challenged aspects of the State Legislature’s 2011 pension reform.
Another possible payment to PSPRS would depend on the outcome of the sales tax-increase measure. If the measure passes, the city expects that the tax would generate about $6 million between its effective date on Jan. 1, 2018, and the end of the fiscal year on June 30 – revenue that is dedicated to paying down the PSPRS liability.
In all, the 2018 PSPRS payment could total about $25 million, Budget and Finance Director Mark Woodfill told the council.
Local resident Sandra Smith voiced support for the additional $11 million payment from city reserves, calling it the “right thing to do.”
Also debated during Tuesday’s budget adoption was the need for an additional code enforcement employee to help Michael Fleming, the city’s sole code enforcement officer.
Councilwoman Jean Wilcox has pushed for another employee, maintaining that city code-enforcement duties are too much for one employee.
Fleming told the council that another officer would allow his department to be more proactive on enforcement. Currently, he said, enforcement is largely complaint-driven, and he does not have time to follow up on code issue that his notices while out in the community.
Local resident and current City Council candidate Connie Cantelme told the council that a number of blight-related matters are going unaddressed in Prescott. She showed the council photo examples of blighted areas that she said are within two blocks of the courthouse plaza.
“If you can’t put another code enforcement on staff, you really need to prioritize,” Cantelme said.
Councilman Steve Blair responded, however, that some residents choose to live in the conditions that Cantelme cited, and it is their right.
The council asked for further discussion on code-enforcement priorities before making a decision on adding a new employee. The budget would allow for flexibility to add a second officer, if needed, officials said.