Ahwatukee residents will get to vote in August on two initiatives championed by Phoenix Councilman Sal DiCiccio after his “Responsible Budgets” initiative was certified for the ballot.
While DiCiccio personally helped launch the budget initiative, he also has supported a second that has been certified for August – putting the brakes on any extensions of the light rail system
The Responsible Budgets initiative would require that new spending growth be limited to the increase of population plus inflation and that every dollar above that must be used to pay down the city’s unfunded pension obligations that now exceeded $4.5 billion.
It would require an annual accounting of city pensions, using the historical 10-year average rate of return and real-world business accounting principles” and require that the first pension debt to be satisfied would be that owed first responders.
The budget initiative also forbids Phoenix officials from curbing the hiring of police and firefighters or altering their pensions to comply with the spending restrictions it imposes and would require elected officials to pay out of their own pocket for their pensions.
“Right now the way the system is rigged,” DiCiccio said in a Facebook post celebrating the Responsible Budgets initiative’s certification for the ballot. “No one here at city hall actually knows how big our problem might be, not even our mayor and council.”
“The crazy rich politicians in Phoenix are fighting this initiative because it will force them to pay for their own retirement and not use a single penny of your money,” he wrote. “Right now, Phoenix politicians get a taxpayer paid pension AND a taxpayer paid 401k … This initiative will force them to use their own money for these Cadillac benefits. You and your family should no longer be forced to pay for Phoenix politicians to receive sweetheart pension and retirement deals.”
The budget initiative is part of former Utah Congressman Jason Chaffetz’s nationwide effort to address “the out-of-control, unpaid pension liabilities that are destroying cities from coast to coast,” according to a release.
“Unfunded pensions are the single greatest crisis of our time. It consumes the back halls in our nation’s Capitol, and yet virtually nobody is doing anything about it,” Chaffetz said, noting the problem affects all levels of government. “None of us have the means to pay for the promises we made.”
At the time Chaffetz and DiCiccio launched their campaign for the initiative, they called attention to the “hard choices necessary to avoid a financial collapse.”
Chaffetz is the honorary chair of the national Responsible Budgets campaign, and calls the overall problem of unfunded public employee pensions “the greatest fiscal crisis of our time.”
“Almost every state, county and city is drowning in pension debt that puts their very solvency in question, and there’s no one for cities to run to for a bailout – the federal government is in the exact same position,” he said.
Earlier this year, the nonprofit Truth in Accounting released its annual look at the debt burden of hundreds of cities in the United States and gave Phoenix’s finances a “D” grade.
“Phoenix’s elected officials have made repeated financial decisions that have left the city with a debt burden of $2.7 billion,” it said. “That equates to a $5,900 burden for every city taxpayer. Phoenix’s financial problems stem mostly from unfunded retirement obligations that have accumulated over many years. Of the $9.1 billion in retirement benefits promised, the city has not funded $4.5 billion in pension and $185.5 million in retiree health benefits.”
Voters also are tentatively slated in August to vote on the future of light rail, although that initiative is being challenged in the court by the Associated General Contractors of America, which is suing to keep it off the ballot.
A Superior Court judge is expected next month to hold a hearing on the association’s contention that the petitions signed by citizens to get the question on the ballot left out critical details.
The initiative was launched last year by a group of light rail opponents called Building a Better Phoenix.
Created in the aftermath of some fierce public opposition to the construction of a light rail extension into South Phoenix, the group wants Phoenix to divert its share of light-rail construction costs to other transportation improvements, primarily buses and road repairs.
The city’s light-rail money comes from a $31.5 billion, 35-year transportation plan funded by a sales tax increase that voters approved in 2015.
About 35 percent of the funding is currently dedicated to light-rail expansions, while 51 percent goes to buses and the remaining 14 percent to street repairs.
Valley Metro opposes the initiative and said it could cost the region $3.5 billion in federal funding for light rail. The agency also said it would not stop work on the South Phoenix line despite the upcoming vote.