Fight to ban state benefits for lobby group dies – again

Sen. Steve Kaiser, R-Phoenix, revived a long-running fight at the Legislature this year to block employees of the League of Arizona Cities and Towns from getting state retirement benefits.

The league and a few other non-government groups were not allowed to get Arizona State Retirement System benefits until 2004, when the law was changed to accommodate another group, but Kaiser argues – as other lawmakers before him – that’s not an appropriate use of state funds.

He also insisted he’s not out for revenge although the League opposed some of his bills this session and got them killed, although the League thinks differently. 

“This appears to be a punitive measure targeted at the League for simply representing the interests of their residents,” said Tom Belshe, the League’s executive director.  

The issue over ASRS benefits for non-government groups didn’t begin this session, though. It spans 20 years.  

In 2003, then Attorney General Terry Goddard issued an opinion stating “associations that are neither created by state law nor designated as political subdivisions” are not eligible to receive state retirement benefits.

The Legislature passed House Bill 2049 the next year, which reclassified the league and other similar groups in such a way that they would qualify to receive ASRS benefits under the umbrella of “political subdivisions.”

Ironically, it was the Maricopa Association of Governments that lobbied to get ASRS in the first place, not the league, and the sponsor of that bill, former Rep. John Huppenthal, said that he regrets the legislation.

“In retrospect, I would view it as having been a mistake,” the former Chandler lawmaker said on April 11.

Huppenthal said “it was out of character for me” to sponsor the bill, but MAG worked hard to help him pass “significant transportation legislation,” when the group could have fought it.

“So it was sort of a moment of weakness, you might say. So, not a huge mistake but in retrospect, they needed it, and I had the clout to get it done, and they had done me some big favors,” he said.

Goddard said on April 11 that he doesn’t remember the opinion he issued, but emailed, “looks like I forced them to change the law!”

MAG’s executive director at the time, Dennis Smith, said it was to help MAG compete with the Arizona Department of Transportation for talent. Other groups like the league were just swept up in the new definition, according to Smith and the league’s executive director at the time Cathy Connelly.

“MAG prompted it because they were doing transportation planning and other activities like that and were having a difficult time either keeping or attracting really qualified people because they weren’t on state retirement, so maybe an employee would start out at MAG but go to Maricopa County or to ADOT or whatever, particularly in the transportation area,” Connelly said.

Smith said ASRS pursued MAG to join the system for many years.

MAG hired a new chief financial officer in the early 2000s, Becky Kimbrough, who said that the ASRS benefits would be better than what MAG was offering then, and pushed Smith to join in. He was surprised when an attorney told him that MAG wasn’t eligible to participate, especially since MAG’s sister organization the Western Arizona Council of Governments, was already getting ASRS benefits.

Western Arizona Council of Governments and other groups did participate in ASRS prior to 2004, which is why the attorney general’s opinion was requested to clarify the rules.

Smith said he’s surprised the battle against ASRS benefits for groups like MAG still rages. “That’s still going on? Oh, my goodness,” he said.

This year, Kaiser’s strike-all amendment to SB1202 died in the House Ways and Means Committee when Democrats and Rep. David Livingston, R-Peoria, opposed it.

“Should state retirement benefits be for state employees, or should they be for these quasi-groups that are lobbying against citizen interests sometimes? I feel like state retirement benefits should only be for state employees,” Kaiser said when he testified in the committee hearing March 29.

Belshe said Thursday in a text message that the League is a creation of the cities and towns, and besides representation at the capitol also provides “elected official, attorney and financial education” for cities and towns.

“With that in mind, the ability to transfer talent between state and local government and the body that supports them is only natural,” Belshe said.

Despite the bill’s failure this year, Kaiser isn’t deterred and said he’ll try the bill again next year. His legislation would only affect members hired after the bill’s effective date and would only affect league members, although other groups like MAG and the Arizona Interscholastic Association both get ASRS benefits and aren’t government bodies.

“Better to be specific than cast too wide a net,” Kaiser said.

Government agencies are subject to sunset reviews and audits, and members are appointed by elected representatives. Members of the league and similar groups are not elected nor appointed and forced to adhere to these government review processes.

Former lawmaker Michelle Ugenti-Rita tried to reverse Huppenthal’s law several times.

Ugenti-Rita said the league is greedy and found a way to milk the system, and she agrees with Kaiser that a non-government group shouldn’t be getting government benefits.

“The league is engaging in gross misconduct by fleecing the taxpayers of Arizona,” Ugenti-Rita said in a text. She was stymied in her attempts at change by Democrats and a few Republicans, just like Kaiser is.

As the representative for 91 municipalities, the league is one of the most powerful lobbying groups at the Legislature.

“We will continue to fiercely represent the best interests of our residents and the fluid transfer of talent to the League,” Belshe said.

Kaiser was confused by Livingston’s opposition to the bill. Livingston said one reason he didn’t support Kaiser’s bill is that it only targets the league when there are several similar groups getting the same benefits.

“The league is not the only one, so why pick on just one?” Livingston asked.

One Republican, former Rep. Rusty Bowers, opposed one of Ugenti-Rita’s bills for the opposite reason in 2016. He was worried that it was painting with “too broad a brush” and didn’t want MAG taken off the ASRS list. Huppenthal and Smith also argued that MAG is the most deserving to be on ASRS.

“One thing you can say about MAG though, if you’re going to do it for any entity, I mean they have a pretty classy track record of producing a lot of value and being as close as you can to one of these entities,” Huppenthal said.

Then-Rep. Doug Coleman, R-Apache Junction, said he opposed Ugenti-Rita’s bill in 2016 because MAG in particular serves a vital public function. He also cautioned that removing so many members from ASRS would increase the contribution rate for the public employees remaining in the system.

Livingston said another part of his opposition to Kaiser’s bill stems from concern over the strength of pensions. “I fight with the league all the time, but sometimes the league is right on pension issues,” Livingston said.