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My Rose-Colored Glasses Fell Off

12 June 2017   Mary Beth Hrin

Another proposed tax increase. Another betrayal of public trust.

Prescott City Council placed Proposition 443 before the voters “claiming” the money generated from the sales tax increase would be used solely to “pay down” our Public Safety Personnel Retirement System (PSPRS) liability. And at first I supported and believed them. But after sitting through council meetings, budget hearings, and lastly, forums in support of the proposition, it is abundantly clear that is not council's intention at all. Therefore, I realize I can no longer support their Proposition 443. 

The ballot language states the revenue raised from the .75% sales tax increase “shall be dedicated to the payment of the city's unfunded liability.” It further states the tax will sunset in ten years or sooner if the pension liability reaches “$1.5M or less as determined by actuarial value.” Sounds clear enough. But sleight of hand is at play here. You need to read the ballot language carefully. Prop 443 reads the revenue shall be dedicated to Prescott's pension liability -- NOT to reduce the liability. Big difference. Let me explain. 

Our annual required contribution (ARC) to PSPRS every year consists of 2 components:

- normal pension cost (this fiscal year approx. $1.35M) and 

- unfunded pension liability (this fiscal year approx. $6.5M). Total of $7.85M.

Using Prop 443 money to pay just the unfunded pension liability portion of our annual required contribution each year will NEVER reduce our exploding liability. Moreover, voters must also understand Prescott always paid the total required ARC, yet our pension liability continues to rise exponentially. The only way to actually reduce Prescott's unfunded liability is to use the entire sales tax revenue generated from Prop 443 (approximately $10M/yr.) along with paying the ARC ($7.85M) each year from the general fund. After all, isn't that what council originally told us: that every single cent of Prop 443 would be appropriated to “pay down” our pension liability? 

But what council members, candidates, and Stand for Prescott folks now unabashedly tell the public is Prop 443 revenue will be used to pay the $6.5M unfunded pension liability portion of Prescott's ARC. And that $6.5M -- previously coming from the general fund to pay our unfunded liability – will now be available for the library, parks and recreation, additional city personnel, etc. In fact, I recently attended a forum where a city councilman unequivocally stated to those in attendance, “The purpose of Prop 443 was always to free up money for the General Fund.” (Actually, no. You told us the purpose was to pay down Prescott's pension liability.) At best, using revenue generated from Prop 443 to free up general fund monies for any other budget item is disingenuous to the taxpayer. At worst, it is a complete betrayal of public trust -- especially in these dire financial times.

I, for one, am tired of politicians asking for taxpayers' hard-earned dollars when there is no accountability -- especially when the money is not used for its intended purpose: to reduce the city's pension liability. At least in this instance, we already know this council has no intention of paying down Prescott's exploding pension liability with the revenue from Prop 443. Only we can hold them accountable. If we pass Proposition 443, we have no one to blame but ourselves.

Mary Beth Hrin

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