Ted Simons: Phoenix mayor Greg Stanton joins us every month here on "Arizona Horizon" to talk about a variety of issues important to the city. We welcome Mayor Stanton to the show. Good to see you again. Thanks for joining us.
Greg Stanton: Happy to be back.
Ted Simons: Phoenix voters passed some pension reform, talk to us about it, your thoughts.
Greg Stanton: I'm super excited about the vote. 80% of Phoenix citizens decided to support our pension reform, I think it was fair both to taxpayers of the city as well as to the employees of the city. It will require that city employees, new city employees because of certain constitutional limitations, we couldn't adopt it for existing employees, new city employees will have to pay a lot more in order to receive a pension and we also increased the retirement age, a rule of and again, I thought it was fair, it saves the city about $600 million over years but also will still enable us to recruit and retain good employees. We took a balanced approach and that's why the people of Phoenix supported us.
Ted Simons: The changes include, 50-50 split, the city was what, three, four times?
Greg Stanton: A little more than that. Because of a cap in our charter of 5% of their salary, city employees only had to pay 5% of their salaries to the pension system, which means the city had to make up over 20%. It was over a 4-1 ratio and we're going to even that ratio out, being much fairer to the city employees themselves. That means they have to pay a lot more into the system to receive a pension
Ted Simons: I want to get to the retirement age in a second. Some thought it was too much of a balance and some thought it wasn’t enough.
Greg Stanton: Well as you know the issue of government pension is one of the hot issues and people think that we should be getting out of the pension business. One of our council members very publicly opposed pension reform, because they thought that we should be getting out of the pension business overall. Another council member thought that the rule of 87, having the highest retirement age of any government system in the state was too hard on the employees. So, you had criticism from the right and left, and that’s why I think we had the right balance in our approach.
Ted Simons: What is that rule of 87?
Greg Stanton: So it’s age plus years of service. Currently it’s the rule of 80. If you’re 50 years old with 30 years of service, you are eligible to retire. If you’re 55 years old with 25 years of service, then you are eligible to retire. That number will now be 87. Effectively increasing our retirement age by 3, 4, or 5 years. Again, this new rule of 87 is the toughest standard in the entire state. We thought that was fairest to the people who are paying this pension system, the voters in the city of Phoenix, and it was the right balanced approach.
Ted Simons: And the other side was saying something along the lines of what, a 401K system is better. Why would that not be the best, why do you think?
Greg Stanton: Well there’s a variety of reasons. First and foremost, it would cost the city a lot of money. Believe it or not, if we were to go to a 401K type system, we’d have to still pay the pension for those in the system and we’d have to put away money for the new people in the system. It would cost the city of Phoenix 100’s of millions of dollars. So, even our most conservative members decided to put the balanced approach on the ballot, because they realized that the way that the system is set up; going to that 401K would actually not be cost effective for our city.
Ted Simons: Last question on this. Was there much opposition of Unions?
Greg Stanton: No. The unions weren’t certainly supporting it, but there wasn’t a lot of active opposition from the unions. Look, there wasn’t a lot of active opposition from anyone. Which, anytime you’re dealing with pension reform, it’s such a hot issue around the country, you would expect that either people who are more conservative who say we have to get out of pension business would have come forward and opposed it. Or, there are those that think that we’re kind of a solution in search of a problem, and that we shouldn’t be doing any pension reform changes at all. It would come out against it. I think the lack of opposition is because we did take a very balanced approach. That’s the Phoenix way. We look at both sides. We try to find what’s fair for everyone involved. That’s exactly what we put on the ballot. I’ve been in this business a long time. You almost never get 80% of the people voting for anything, so I think it was a strong affirmation that our approach was the right one.
Ted Simons: The food tax. Still an issue. A lot of folks talking about it, a lot of folks still concerned about it. Do you still support ending this tax in April?
Greg Stanton: I've been consistent throughout time that we want to get rid of this, but if we can do it in a way that doesn't hurt our public safety which is the value of this community or hurt our credit rating, I know there's an issue about the political campaign a couple of years ago. Of course, I and virtually everyone else thought that our economy was much further along right now. Here's what I did, as we're going through the budget cycle, back in January, give us a budget that includes the food tax, give us a budget that doesn't include the food tax so we know we have them both side by side and we can see exactly what we would get with the food tax revenue source and what we will not get if we have to cut and then go to the very transparent public process. That's the most appropriate way of doing it. I want to get rid of that thing as soon as we possibly can but I want to do it in a way that reflects our community values.
Ted Simons: There are some who are concerned that the no food tax proposal is going to cause Draconian cuts. How will they be suggested? What will people see?
Greg Stanton: The city manager also presents a proposed budget and we take that budget out on the road and we're going to have over budget hearings, including a live on-line budget with myself and the city manager. I will personally be attending virtually every single one of these meetings because it's critically important but in addition to presenting a budget, I've also asked, he's going to fulfill this commitment of presenting a budget that doesn't include the food tax and the recommended cuts that would be associated with it. Here's the situation that we're in right now The budget is, the economy is getting better but it's not doing as good as we would have liked. We are significantly down in terms of revenue projections. Our contribution to the pension system is significantly increased. As you know, with the pay agreement we came to with our city employees were based on certain triggers for them to get the money that they gave up a few years ago to get that back, certain triggers have to be met. We're going to have to see from the city manager where those triggers were met, if we're actually going to be able to receive back the money that they gave back to the city a few years ago. We've got some big, big decisions to make and I want to hear from the public as much as possible before making this incredibly important decision.
Ted Simons: You know why we bring this up; you did say in your campaign that you've got to get rid of this thing by April. Was it in retrospect wise to make that pledge?
Greg Stanton: You make statements in a campaign based upon the best information. I think I took a balanced approach saying we should get rid of it by April but do it in a way that doesn't hurt public safety or the city's credit rating. I've got a long history in public service. I've always stood up for public safety. I have also always stood up for protecting the city's credit rating and that's an incredibly important thing. It's a gift that I've been giving and I want to make sure I hand that off to the next mayor after me that I hand off a perfect credit rating. You make the best decisions at the time but now that I am mayor, now that I am mayor, my obligation is to make recommendations, make votes that I believe are the best interests of the city as a whole. Politics is a tough business sometimes. And when you're campaigning, you try to make recommendations-- I've tried to have my first year in office be exactly based on what I ran on, I think I've got a pretty good track record of doing so. But now, I've got to let the city manager make this recommendation. Once I see the costs, I'm going to make a recommendation based on what's in the best interest of the people of the city and for our future generations.
Ted Simons: Mayor we appreciate you coming on. Thank you so much for joining us.