Who is behind the initiative to bankrupt the City of Tucson?

Posted by AzBlueMeanie:

A Virginia-based advocacy organization
started by longtime ballot initiative activist Paul Jacob, the
Liberty Initiative Fund, is behind the initiative in Tucson that would affect the pensions of new hire employees (the
Arizona Constitution and case law precedents prevent the City of Tucson
from changing the contractual obligations of the pension for any
current employees or retirees). Here’s a copy of the initiative: 2013-I004.pdf.

More about the Liberty Initiative Fund’s Paul Jacob here. [Paul Jacob writes a weekly column for Townhall.com, and was the term limits movement’s leading voice, running U.S. Term Limits, the nation’s largest term limits group.]

This ill-conceived pension initiative would bankrupt the City of Tucson. Initiative
to change pension system could bankrupt city, Tucson official warns

A planned citizens initiative that would force the city to put more
money into funding employee pensions could bankrupt the city, officials

* * *

While the city would see substantial savings under the proposal 15
years down the road, Finance Director Kelly Gottschalk said, the
increased cost leading up to that 15-year mark is so high it’s unlikely
the budget could hold out long enough to experience any benefit.

estimates the change would cost taxpayers $24 million extra in the
first year alone and tens of millions more each year for more than a
decade, placing the city in line for potential financial ruin

One of the biggest potential hits to the Tucson Supplemental
Retirement System is that the initiative mandates all new hires be
offered only the 401(k)-style plan. The city currently has about 2,700
active employees to 2,700 retirees.

With no new employees
contributing to the current system, taxpayers would have to fill the
gap, and closing the system would mean the city must hasten its payments
to fully cover the approximately $340 million in unfunded liability.

other problems could also emerge. Michael Hermanson, the city’s pension
and benefits manager, said there are currently 200 city employees
eligible for retirement. If they retire immediately out of fear their
benefits could suffer, it would reduce the ratio of working,
contributing employees to retirees to less than 1-to-1.

said the city has made the appropriate changes over the years, such as
increasing contributions and lowering benefits, to maintain the current
system, so she believes the fears are exaggerated.

“We’ve put the
plan in a good position. It doesn’t look like it, but that’s because of
the drop in the market,” she said. “I think the plan in place is fine.”

A better solution, she said, is passing an initiative to lock in the city’s current funding levels.

* * *

A few weeks ago, Tucson became the first in a planned nationwide push
from the Liberty Initiative Fund, a national organization dedicated to
public-policy advocacy, to curb what it considers unsustainable public
pension systems.

The Liberty Initiative Fund got involved because it was contacted about
five months ago by some Tucson residents concerned about the solvency of
a pension system.

Are they the usual suspects on talk radio and in the Tea Party? Most of them are not even Tucson residents. And they don’t know squat about pension fund financing. Their actual motive is fostering anti-public sector employee resentment from private sector employees who no longer have pensions. It is a divide and conquer the working class through economic resentment strategy.

City Manager Richard Miranda has already created a Pension Education
Committee to answer questions and concerns from city employees and the

The city is also preparing the best way to get its message out via public information campaigns and other mediums.

are also preparing to enter the fray. They see the initiative as the
first in a series of attacks on public pensions in the state and think
this is the time to defeat it before it spreads to police and fire
pensions and the Arizona State Retirement System.

That’s why a
broad coalition, from Tucson’s police and fire unions to the local
unions representing city employees, and potentially their statewide and
national counterparts, is making plans right now on ways to fight the

Tucson does not need some out-of-state right-wing organization
interfering in the city budget process. Moreover, this initiative would
do nothing to impact the employee pensions that are actually driving
pension costs: Tucson police and fire pension costs are expected to jump
20 percent next year, and those pensions are controlled by the state. These pensions are exempt under this initiative.

Tell the
Liberty Initiative Fund and its local yokel supporters, the Committee for Sustainable Retirement, to “get outta town!” It is a safe bet that most of the people funding this committee are not even residents of Tucson.

Comments are closed.