Prop. 106 wrong for pension debt

Proposition 106 is a well-meaning proposal to force Phoenix to better meet its pension obligations.

The measure prescribes a more reasonable way to calculate pension debt and an ideal level at which the plans should be funded.

If only the proposition would actually make a notable dent on the pension debt itself or go at the problem in an equitable manner.

The “Responsible Budgets” proposal is simply the wrong answer.

Let’s be clear: Phoenix faces big challenges on pension liabilities.

Its plans for police officers and firefighters are roughly 60% unfunded. The one for other workers is slightly better at 40% unfunded.

The city is paying $426 million this budget year alone toward those plans; for perspective, its entire general fund budget is $1.3 billion.

Prop. 106 effectively calls for freezing programs paid out of the general fund at this year’s level, allowing for additional spending based on population growth and inflation.

All extra revenue would go toward public safety workers’ pension liabilities, then the pension plan of other city of Phoenix workers.

There are several problems with the proposition:

It unfairly distributes the burden. Paying down the pension would come at the expense of programs such as parks, libraries, senior centers, neighborhood services, and arts and culture.

That’s because the measure excludes from budget limits all police and fire functions — even though those functions account for nearly 70% of the general fund budget.

The budget restrictions would be in place for an untold number of years given how underfunded the pension plans are.

Only a fraction of the overall budget is in play. Proposition 106 also excludes programs funded by dedicated or enterprise funds, such as water and aviation, whose total amount is actually almost twice as large as the general fund.

It pits first responders against other city workers. Extra money goes first to public safety pension plans, until the two are at least 90% funded, before it’s directed to the non-public-safety workers’ plan.

The proposition also puts a cap on budget growth arising from labor contracts that were reached before Jan. 1, 2018 — which suggests that labor contracts after that date, including one that was struck July 1, could be amended, nullified or eliminated.

Union representatives interpret that to mean workers could lose the latest negotiated wage and benefits concessions as a result.

It raises questions whether that element of the measure is even legal.

Proposition 106 is an admirable concept that falls short in practice.

It locks up funding and ties the hands of the City Council to nimbly address immediate problems. Putting budgets on autopilot is a poor way to govern. That doesn’t let Phoenix off the hook. Modest changes have been taken to blunt the effects of ballooning pension costs, including getting employees to contribute more money toward the plans.

But the city has also made some questionable decisions.

Two years ago, instead of biting the bullet and reining in spending, the Phoenix City Council voted to stretch out its pension payments by an additional 10 years at a cost of an extra $2.3 billion in interest.

The “Responsible Budgets” measure is a fallout from that decision. We sympathize.

The challenge to City Manager Ed Zuercher, Mayor Kate Gallego and the City Council is to find meaningful ways to curb spending and redirect more money faster toward pension debt. Proposition 106 is a wake-up call for them to stop with half-hearted, incremental solutions.

If they don’t exercise that power, it stands to be taken away by the next better crafted proposition that comes along.