Yes on Proposition 487

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Proposition 487 would reform the city of Phoenix’s pension system. We hear from a proponent of the measure, Phoenix city councilman Sal DiCiccio, one day after hearing Phoenix mayor Greg Stanton speak against the measure.

Ted Simons: Good evening, and welcome to "Arizona Horizon." I'm Ted Simons.

Ted Simons: Proposition 487 is a controversial measure to reform the pension system for city of Phoenix employees. Yesterday we heard Phoenix mayor Greg Stanton speak against prop 487. Tonight we hear from city councilman Sal Diciccio, who supports the measure. Good to have you here.

Sal Diciccio: Thank you, Ted.

Ted Simons: Why is prop 487 a good thing for Phoenix?

Sal Diciccio: The city of Phoenix is in a financial crisis. We've had more revenue than we've received in the city of Phoenix in our history. And we're still facing financial problems. And it's being eaten up because of pension costs. The city of Phoenix saw -- We've got over 500 police officers short on our streets right now. We saw new tax increase on water, all the pay for pension costs, so what 487 does is fixes the broken system and stops pension spiking.

Ted Simons: Pension spiking -- I thought pension spiking was stopped?

Sal Diciccio: It's the biggest game you're being told. It's not true. If you're a police officer and firefighter that got stopped because state law stops from you doing that because they're under a different pension plan. Under the city of Phoenix pension plan, spiking still continues, as a matter of fact in last year's budget alone it was $19 million was because of pension spiking in last year's budget alone.

Ted Simons: When supporters say $240 million has been saved since pension spiking was stopped you say --

Sal Diciccio: It's only the police and fire. It doesn't include all the other civilians. Which we saw the city of Phoenix. We just did a list of the top 50 retirees. 50 individuals at the city of Phoenix that have already retired, by the time they're 75 or going to take $183 million taxpayer dollars. With 14,000 employees --

Ted Simons: Prop 487, would it not stop payment to state-run Apache Junction system -- Pension system for police and fire. Opponents say it will, and I know whether or in the this affects police and fire is a major sticking point. They say because you stop paying to that state-run pension system it will affect them. Your response.

Sal Diciccio: Totally -- I hate to use this word, but it a lie. It's just not true. All you have to do is read "The Arizona Republic" and they point out it's just not true. The state pension fund is run by the state of Arizona. The city of Phoenix can't opt out. There are no rules, there's nothing put into the system that once you're in the system, can you get out of it. So that is basically been put out as a red herring to confuse voters.

Ted Simons: But then, geologist, because they say 487 isn't as clearly as written as it should be, it does risk unpredictable rulings from judges later on regarding whether or not it affects public safety personnel.

Sal Diciccio: More disinformation from the other side. What they're trying to do is create so much disinformation people say I'm not going to vote out. What the voters need to know, what they ought to be voting on is do they want to fix the broken pension system or not? 487 does that. The politicians won't fix it. They're not going to fix it. They had their opportunity to fix it, and they chose not to do that. Again, if you look at the editorial, they said the city of Phoenix officials refused to fix the broken pension system. So citizens had to take this into their own hands. You're seeing the government unions passing this disposition. They did it during the food tax debate. They said the money was going to go for police and fire. Instead $150 million went for new pay raise and bonuses for union employees.

Ted Simons: But are there, this is from the supporters, the opponents saying there is a risk of unintended consequences and it is a risk when it comes to death and disability benefits, and retirement security for public safety personnel. No risk at all?

Sal Diciccio: None. Zero. Death and disability is a life insurance plan. It is not a pension. It's clear as day. And so what they're doing is literally putting the police and firefighters out there, just like they did during the food tax debate, in order to get sympathy from the public. That is what's occurring here. Police and fire are clearly excluded from the initiative. It is well written, it is a proposition that's going to save taxpayers over $400 million, and it stops pension spiking.

Ted Simons: When you say it saves $400 million, critics will say not only will it not save money, it's going to cost $300 some-odd million dollars in transition costs going from a pension system to a 401(k).

Sal Diciccio: First the transition costs would be related to whether the 401(k) costs money or not. It saves money. Here's where it saves it. The city of Phoenix employees -- The public doesn't know this. They get two retirement plans. They get a pension and they get a 401(k). Right now. Today they get that. What this does is it says you have to choose between one or the other. You get to keep everything you've earned, their sick days, all those days they get to keep it, but going forward, they have to choose one. By choosing one, that automatically saves $18 million a year. The second savings comes in pension spiking of the by stopping pension spiking it saves $19 million a year right off the bat.

Ted Simons: Source of income, though, would need to be replaced according to the mayor. Source of income would need to be replaced and the unfunded liability.

Sal Diciccio: Unfunded liabilities are being taken care of with 487, because it allows more money being put toward the unfunded liability. The current pension system is broken. It has an unfunded pension liability of $1.5 billion. So by having these extra dollars in there to do that -- What the mayor is telling you, he's going to make a decision between the union employees or the public. That's the decision he's going have to make. Is he going to protect the public in this or the union employees? When he's talking about the compensation part, that's what he's talking about, because when you're looking at these two retirement plans, you only get to choose one. You get to keep what you earned but you have to choose one. He wants to replace that so he games system.

Ted Simons: Again, I want to get back to this prop 201 a couple years ago. I thought that began to address things and I think the critics of 487 say $600 million is already employees, new hires, have to work longer, retirement age is higher, they have to put more -- Three times as much -- Isn't that a start, aren't you on the right path?

Sal Diciccio: It was a start. It was a small start. It wasn't a big start. What it didn't do, it didn't fix the system completely. If you read the editorial today, it basically said the Phoenix officials punted on fixing it. You got to move the ball somewhere down the field. What this does is literally creates the long-term fix the city needs otherwise you'll see more cuts in services, or more tax increases.

Ted Simons: Does not what the city put in place before, though, prop 201, does that not in the end eventually achieve those goals as well?

Sal Diciccio: No. It doesn't. Because it doesn't get you there. If you look at what they put together, they're already having a hard time hiring employees. If you talk to the city manager he'll tell you that the current plan, because it's -- The cost of pensions are skyrocketing, when employees have to pay half that cost, which is under that, they're choosing not to do that. And even the report that the city of Phoenix put out, they said, if 487 goes in place, those employees will move over to this system because it's better financially for them for new employees too.

Ted Simons: Last question. Do critics -- Critics are saying this entire 487 deal, it's funded by out of state interests, Koch brothers involved here, they say, and it's basically an attempt privatize and manage the pension system all of those monies. That this is not something good for Phoenix, it's good for Wall Street.

Sal Diciccio: They're creating another distraction to try to confuse voters. The majority of the people watching this on TV are under a 401(k) within their own plans within their own businesses, wherever they're at. They already have that. The only ones getting these lucrative benefits are government workers. And the government unions. That's what they're doing right now. What this does is it moves everybody to the same plan that everybody else has in the private sector. The same ones that are funding the pension plans, the taxpayers. It moves everybody under that and treats them fairly. The people that are under the pensions get to keep their pensions going forward. Anyone new has to switch over.

Ted Simons: All right. We had the mayor last night, now we had the other side with you. It's good to have you here.

Sal Diciccio: I really appreciate it. Thank you.

Sal DiCiccio:Councilman, Phoenix;

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