Phoenix pensions could be on the ballot — again

• Mayor Greg Stanton recently created a Civilian Retirement Security Ad Hoc Committee to suggest changes
• Last month, voters overwhelmingly rejected a ballot measure that would have closed the pension system
• Phoenix's ailing pension system has become a dominant issue as citywide pension costs have soared

Despite the voter-defeat of major changes to pensions for Phoenix city employees in the November election, city leaders are working to put more potential changes on a special-election ballot as soon as the spring.

Mayor Greg Stanton recently created the Civilian Retirement Security Ad Hoc Committee, a group of business and political leaders, to suggest potential reforms.

But the effort is already drawing criticism from both sides of the political spectrum, before anything has been recommended.

The committee doesn't include any prominent fiscal conservatives who've supported more drastic changes to the system. Nor does it include any representatives from city unions that would be directly affected.

Fixing Phoenix's ailing pension system has become a dominant issue as citywide pension costs have soared, increasingabout $25.7 million this year for employees citywide, including airport and utility workers.

MONTINI: First, we must reform the reformers.

At the same time, the city has raised taxes and fees and cut employee compensation to balance its budget deficits.

Scot Mussi, director of the Arizona Free Enterprise Club, a conservative advocacy group that spearheaded the recent ballot initiative to close the system, said he's not optimistic the mayor's group will challenge the status quo.

"You need to have people on there who first and foremost are going to be looking out for the taxpayers," Mussi said. "It doesn't seem like it's very balanced."

When the committee begins meeting Thursday, it will be led by City Council members Daniel Valenzuela, a labor-friendly Democrat, and Thelda Williams, a moderate Republican. More conservative-leaning council members weren't appointed.

Stanton, a Democrat, described the committee as a balanced cross section of business and community leaders. If anything, it's overly representative of individuals from the private sector, he said.

"One thing that I have learned in leadership is to wait and see what the recommendation is before you start criticizing it," Stanton said of naysayers. "I guess I'll let them live with their preconceived conclusions."

The council would have to vote to place the measure on the ballot.

The committee's business leaders include: Pamela Conboy, Arizona regional president for Wells Fargo; Rick DeGraw, chief administrative officer at Copperpoint Mutual Insurance Co.; and Sue Glawe, vice president of community relations at Blue Cross Blue Shield of Arizona.

The group does include one former labor leader: Pete Gorraiz, past president of the city's fire union. But public-safety employees would not be directly impacted by any changes as they are part of a state-run pension system for public-safety workers.

"I think the major concern is that we aren't included in the process," said Frank Piccioli, president of the American Federation of State, County and Municipal Employees Local 2960. "Because it affects us, we should be involved. We want something reasonable, of course."

Firefighters have suggested reforms to make their pension system more stable, an issue that likely will be heard at the state Capitol. Any changes made to the police and fire system could also save the city money.

Stanton has given Phoenix's task force a breakneck deadline, asking them to present recommendations to the full council by Jan. 31. If council members vote to put the issue on the ballot, it will be the third pension-reform measure voters have considered in three years.

Proposition 487, the most recent ballot question, sought to close the civilian pension system to new hires and replace it with a 401(k)-style retirement plan, among other changes.

The Free Enterprise Club collected signatures to get the issue on the ballot, sayingthe city hasn'tdone enough to address rising costs or limit the financial risk to taxpayers. Ultimately, 58 percent of voters rejected Prop. 487 in last month's election.

In 2013, voters soundly approved a council-backed proposal to require new municipal workers to split pension-fund contributions 50-50 with the city and work longer before retiring.

Stanton said those changes and additional efforts to combat the practice of "pension spiking" were significant and stabilized the system, saving about $830 million over 25 years. Spiking is generally seen as the artificial inflation of a city employee's income toward the end of a career to boost retirement benefits.

"The 2013 reforms were outstanding," Stanton said. "That doesn't mean that we don't need to look at ways to improve our pension system."

But other city leaders said despite Prop. 487's failure, it's clear previous changes didn't do enough to control costs and have created unintended consequences.

As a result of the 2013 ballot measure, new general city employees must now contribute more than 14 percent of their paychecks — a number that could soon increase to 17 percent — to their retirements. Many fear the city could face a hiring crisis as a result.

Councilwoman Williams, who opposed Prop. 487, said if the council doesn't do more this time around, a draconian initiative could wind up on the ballot. She fears pension costs will continue to exacerbate the city's budget problems.

Taxpayers' tab for the civilian pension system, not including police officers and firefighters, soared to $129 million this year, up from $27.8 million in fiscal 2002.

"Long term, it could break the city if we don't make changes," Williams said. "It has to be done, and the sooner we do it, the better."