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City Voters Reject Plan to Cap Spending and Divert Savings Toward Pensions

A view of Phoenix, where voters in an Aug. 27, 2019 election rejected a ballot measure that would have capped city spending and pushed money toward the city's pension system.

A view of Phoenix, where voters in an Aug. 27, 2019 election rejected a ballot measure that would have capped city spending and pushed money toward the city's pension system. Shutterstock

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The ballot initiative in Phoenix is on track to fail by a wide margin.

Voters in Phoenix appear to have strongly rejected a ballot measure that would have imposed broad limits on the city’s spending and funneled any resulting surpluses toward the underfunded pension plans that cover retired city employees.

Unofficial results for the Aug. 27 special election, last updated Wednesday evening, showed that Proposition 106 was failing. Only 34% of voters, or 60,491 people, had backed it and 66%, or 119,563, cast their ballots against the measure.

“They won. They kicked our butt,” Chuck Warren, a public affairs consultant who was one of the key proponents of the initiative, said in an email on Wednesday.

Warren pledged that the initiative’s supporters, who included conservative city council member Sal DiCiccio, would regroup and have a version of the measure back on the ballot next year, or in 2022, unless the council takes new action to address the city’s pension debt.

Warren told Route Fifty earlier this month that he’d heard from council members in five other cities who were interested in pursuing legislation or ballot initiatives similar to Proposition 106.

The measure drew rebukes from a range of city leaders and influential groups, including first-term mayor Kate Gallego, six city council members and the local Chamber of Commerce.

It appeared on the ballot alongside another proposal, Proposition 105, that would have blocked spending on the expansion of the light rail system that serves the Phoenix metro area. The campaign that opposed the pension ballot initiative also opposed Proposition 105.

The proposal to restrict light rail construction was trailing badly Wednesday, 63% to 37%.

“It was clear that this race was about far more than a difference of opinion. It was more fundamental than that,” Gallego said in a statement. “It was about what we want our city to be.”

“Welcome to the Phoenix of the future—where we invest in our transportation, our parks and our libraries,” she added.

Opponents of the pension measure argued it would hurt spending on other priorities and tie the hands of officials when it came to budgeting. They also said the city is already on track to pay down a roughly $4.5 billion pension funding shortfall over the next 25 years.

That $4.5 billion “net pension liability” figure is the amount by which benefit payments in future years for city retirees are expected to exceed pension fund assets. As it stands, the city’s retirement system is not facing an immediate risk of not being able to meet its obligations.

Proposition 106 would have required amending Phoenix’s city charter to restrict much of the city’s spending so that it increased only in line with inflation and population growth. Revenues in excess of these levels would have gone toward pensions. 

The cap would have remained in place until the retirement plans were at least 90% funded.

More details on Proposition 106 can be found here in Route Fifty’s earlier coverage.

This post was updated Wednesday evening with the latest vote tally figures.

Bill Lucia is a Senior Reporter for Route Fifty and is based in Olympia, Washington.

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