The Greater Phoenix Chamber opposes the Responsible Budget Act (Prop 106), as it does not align with the Chamber’s Public Policy principles.
The proposed ballot initiative would amend the Phoenix City Charter to require the City to conduct an additional annual assessment of all of its pension liabilities. If the annual assessment of all city of Phoenix employees’ retirement systems demonstrate that the retirement systems are not at least 90% funded, then a cap is imposed on budget growth for City programs excluding budgets for police, fire, first responders, and labor contracts executed before January 1, 2018.
Prop 106 dictates that any excess City budget funds greater than population growth and inflation growth increases—except for budgetary line items for police officers, firefighters, and first responder protections—must be spent solely toward pension debt. The initiative would require elected officials to reimburse the City for all future pension contributions made by the City on the elected officials’ behalf.
While the drafters of Proposition 106 seek to fully fund the retirement systems for Phoenix City employees, the proposition contains several troubling and problematic provisions that would directly harm citizens.
First, the language of the proposition is confusing, ambiguous, and internally inconsistent. The confusion will likely result in prolonged lawsuits and potentially unintended consequences that will cost the City money.
Second, the proposition does not address the root causes of the funding shortfall in the retirement systems, which is a result of the basic structure of the systems. So, it may not achieve the apparent objective.
Third, the strict limitation on City spending, other than payments for the retirement systems and certain public safety-related expenses, is overly restrictive. The ballot measure language does not allow any clear exclusions, exemptions, or distinctions. The attempts in the proposition to exclude certain funds and revenues is ambiguous and subject to misinterpretation. This ambiguity ensures that the measure will be very restrictive to ordinary and essential City operations—possibly more than intended.
The Chamber urges the supporters of the proposition to work within the structures of the City budget process to advance their goal without the challenges presented by the language of the proposition.
Furthermore, the Chamber encourages city leaders to further reform the public pension and retirement systems in ways that will ensure the systems are financially and actuarially sound and will not cause unexpected and excessive costs to government, public employees, and taxpayers. Prop 106 demands the City to relinquish funds from other areas of need to combat growing pension debt, which is counterproductive to the City’s fiscal soundness.
On behalf of our 2,400 business members and their hard-working employees, the Chamber urges voters to join us in voting no on Prop 106.