The Phoenix City Council approved the recommendations from the committee to end pension spiking on Thursday morning by a slim margin, but several council members said the recommendations did not go far enough to actually end pension spiking.
The council agreed to eliminate counting future sick and vacation leave compensation toward a pension for all employees and end the use of allowances for pension calculations. The action also begins to take a look at the city’s leave system.
Councilman Jim Waring, with the support of Councilmen Sal DiCiccio and Bill Gates, proposed a substitute motion that would have gone further to end all spiking by retroactively stripping current employees of benefits that have already been accrued. Waring’s motion did not have enough support to move forward.
“The first proposal is all done behind closed doors,” DiCiccio said. “It sends the entire issue to negotiations and sends it back to the same system that created the problem we see today. The motion created today is set up for failure… Spiking is cheating. This whole thing has been gamed. You will win as union leaders and the taxpayers will lose.”
City staff did not have models to show how much the committee’s recommendations might save the city in the long run. DiCiccio said he would have liked to see those models and models of other options so that the public could understand exactly what items were responsible for spiking pensions.
The committee hosted several public meetings and did hours of research before offering its recommendations.
“The task force’s charge was to eliminate pension spiking not to eliminate pensions,” said Councilwoman Thelda Williams, who sat on the committee. “I think that’s exactly what this committee did. It is addressing the problem, it has made recommendations and definitions, and it is lawful.”
Mayor Greg Stanton said that the way the issue was handled protected city employees, honored city contracts, obeyed the law, and created good policy moving forward.
The changes to rank-and-file employees are required to be made through negotiation in a new labor contract which will happen in July. Changes will go into effect for middle managers and executives on Jan. 1, 2014.
Councilman Michael Nowakowski was the only council member to vote against both proposals. He said he believes all pension issues should be decided solely at the negotiation table by experts.
“Sal doesn’t think this is going far enough no matter what we do,” he said. “The only way he will be happy is if you all have a 401(k)… This is all politics at its worst.”
Moving all city employees to a 401(k) is exactly what DiCiccio would like to see.
“The only real solution will be to support the citizen driven initiative that will move Phoenix to a 401(k) and stop the pension spiking,” DiCiccio wrote in a statement shortly after the meeting. The citizen-driven initiative he refers to was filed by the American Free Enterprise Club to eliminate city pensions and create a 401(k)-type of program for future employees.
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