Senate seeks speedy pension reform, but House wary

Flanked by Senate President Andy Biggs, local officials and a coalition of various public safety groups, Republican Sen. Debbie Lesko on Tuesday publicly unveiled the much-anticipated legislation to overhaul the Public Safety Personnel Pension System.

Lesko and the others echoed a similar theme: Dogged by fiscal unsustainability, the current system is broken and is tethering on the precipice of bankruptcy, as pension costs are spiking and related debts are piling up.

Her proposal, a three-piece package that includes a constitutional referendum that would need voter approval in a May special election, has been co-signed by all 30 state senators and 39 of the 60 House members.

“I’m happy to report that after one year of negotiations, we have reached an agreement that will help preserve the retirement system for our employees – our firefighters, police and law enforcement – and will save taxpayers money,” she said.

Biggs and others heaped praised on Lesko for accomplishing the seemingly impossible by finding bringing together a broad coalition of groups usually at odds with each other at the capitol, including police and firefighters’ unions and the libertarian-leaning policy group The Reason Foundation.

“I thought ‘Who in the state Senate can I task with this job, which will be virtually impossible, and will draw the ire of every side and be extremely difficult to accomplish?’ And I thought, ‘I’ll pick someone who I like and I trust, and that’s Debbie Lesko,’” Biggs said.

Biggs said the plan is to pass the legislation out of the Senate by Thursday, and send it to the House the following week. And time is of the essence. The package must be out of both chambers and signed by Gov. Doug Ducey by Feb. 15 in order to give elections officials enough time to put the constitutional change on the May ballot.

But even as Biggs and the others expressed confidence about the reform package’s chances, trouble was brewing in the House.

A few hours before Tuesday’s news briefing, stakeholders were summoned to a meeting in the House, where multiple sources said a separate and potentially competing measure might be offered. Members of the House GOP leadership were conspicuously absent during the press briefing, and were not among the many co-sponsors of the legislation.

House Appropriations Committee Chairman Justin Olson, who is the main point-of-contact on the pension reform issue in the House, did not return calls for comment.

But House Republican Whip David Livingston told our reporter that House GOP leadership is being “very careful” about making sure Lesko’s legislation is the best way to solve the pension crisis before agreeing to put the legislation up for a vote in the House.

He noted that most of the work on the reform has been done on the Senate side, and said that House leadership had questions and suggestions for stakeholders’ today, but “that doesn’t mean we’re going to make changes.”

Still, Livingston didn’t rule it out, and wouldn’t discuss which aspects of Lesko’s legislation House leadership believes should be changed. He also wouldn’t promise that the chamber would take up the legislation before the February 15 deadline to get the language to elections officials to put the constitutional change on the May special election ballot.

Livingston said that, although 39 House members have signed on as co-sponsors of the legislation, he thinks that is more indicative of their desire to do something rather than a broad agreement that Lesko’s legislation is the best possible solution.

“We all agree that something has to be done. But the question is: Are we at the optimum agreement? And maybe we are. That’s what we’re trying to find out,” he said.

Lesko said she’s open to changes to the bill – but only if she and all the other stakeholders are agreeable to what’s being offered. “However, if there’s something that would blow up the deal, I will not accept amendments,” she said, reiterating she doesn’t know what changes are being sought by Olson or other House members.

When asked if Olson is “going rogue,” Biggs chalked it up to the “beauty” of the democratic process.

However, Biggs also admitted he has no idea what changes to the deal Olson and others in House are seeking. Biggs said he has spoken to House Speaker David Gowan about the reform package, but when asked if he received assurances from the speaker that it would pass, the Senate president jokingly replied, “Contrary to public opinion, I do not run the House.”

He quickly added: “I am confident that this bill is going to come out of the House.”

The legislation would make a host of changes designed to ensure the long-term viability of the PSPRS system.

The legislation would cut the annual cost four percent cost of living increase paid to retirees, and instead tie the increase to the Consumer Price Index rate, and cap the increases at a maximum of 2 percent.

The bill would split public safety employees into three separate groups based on their hire date. The most drastic changes to the system would apply to new hires only.

Under the legislation, new employees would split the cost of pensions with employers, much as other state employee pension plans work. New hires would also see a $110,000 per year cap on their pension payouts. New hires would also have the option of choosing a defined benefit or defined contribution plan.

And new hires in the PSPRS system would be required to serve 25 years and reach age 55 before being eligible for full pension benefits.