PHOENIX, END ‘SPIKING’ TODAY
The Phoenix City Council needs to keep one number top of mind today: $12 million. That’s how much “pension spiking” in Phoenix’s municipal retirement system costs taxpayers every year, according to an analysis by
Twelve million dollars. That’s enough to restore 30 after-school sites. Eliminate another half-cent of the grocery tax. Or hire 120 police officers.
It’s a big number. But a proposal from the Orwellian-named Pension Fairness and Spiking Elimination Subcommittee wouldn’t begin to touch it. To call the plan modest is being kind. All the committee wants to do is ban the use of cellphone and car allowances, as well as unused sick and vacation time accumulated in the future, in pension calculations.
It would make as much of a difference as a woodpecker on the Chase Tower. This isn’t a serious proposal to stop pension spiking. It’s subterfuge. The council should reject this inadequate plan when it meets today.
Cellphone and car allowances are peanuts. The largest drivers of spikedpension costs are accumulated vacation and sick time.
In the private sector, those benefits are used to recharge batteries and keep workers healthy. Not so in the city, where batteries are drained and illnesses are spread so pensions can be boosted an average of 18 percent.
We expect city managers to dispute the newspaper’s findings today, as they did before publication. They’ll say the methodology was flawed, and even it if wasn’t, the city would suffer an immediate talent drain if the council were to keep campaign promises and eliminate pension spiking.
Take these arguments with a large grain of salt. No one benefits more from current practice than executives in the City Manager’s Office. Seven of the city’s 10 largest municipal pensions go to retirees from that office.
Besides, where would city employees go? The state, Maricopa County and Valley cities are all in the state system, which does not allow spiking and takes 11.54 percent of a worker’s paycheck, compared with 5 percent in Phoenix.
Current employees have a vested interest in leaving the system alone. Taxpayers do not. They keep getting stuck with the bills for this ultimate insiders’ benefit. The city’s pension system is flailing. In 2012, it could cover only 62 percent of its liabilities. Taxpayers are paying 42 percent more to support city retirees than they did just three years ago.
Eliminating all spiking, as the Arizona State Retirement System did in 1984, would not restore the Phoenix municipal system to rosy health. But it would help. And it would free $12 million annually for services that directly serve taxpayers. Road repairs. Firefighters. Longer library hours.
It’s understandable that staffers want to keep their sweet deal. Who wouldn’t? But council members shouldn’t let that sway them. They were elected to represent taxpayer interests, and that interest is best served by ending pension spiking. Today.