A group of Arizona House lawmakers is launching an effort aimed at cutting the soaring costs to communities of police and fire pensions, with its leader warning that cities could end up declaring bankruptcy if legislators fail to act.

The new committee announced by House Speaker J.D. Mesnard comes just over a year after 70 percent of voters approved changes to the state’s public safety pension plan designed to return it to solvency in 20 years.

The voter approval and separate legislative overhauls to the Public Safety Personnel Retirement System, known as PSPRS, couldn’t address current costs because the state Constitution bans cuts to promised pensions. Instead, they established less generous and lower-cost pensions for new hires and changed how current cost-of-living increases are calculated, a switch intended to stabilize the system over time.

Republican Rep. Noel Campbell of Prescott said he understands the difficult task ahead but believes the pension issue requires urgent attention, calling the debt load a “tsunami.”

“We have to start taking a hard look at this because my fear is that two, three years down the road here, cities, municipalities will start filing (bankruptcy),” Campbell said Friday.

There are 230 different entities — cities, town, counties and fire districts — in the PSPRS plan, and each is responsible for its own liabilities in the plan. Employers have seen median contribution rates soar to an average of 52 percent of each officer’s salary as the value of the pension plan failed to meet expected returns to meet its obligations. A decade ago, the rate was 21 percent, and just last year it was 42 percent.

Full Content: US News

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