Rural Arizona County Budgets Swamped With Legacy Pension Costs

Legacy pension costs will be popping up more in local news (not national) due to waves of retirements. The unfortunate part of this news, many taxpayers will be finding out what generous and financially unstable benefit calculations were devised in to fund these retirements.

Still, the problems that have accumulated over the past decade have left most counties and towns paying about 65 percent of the salaries of police officers, firefighters, judges and other elected officials into the state retirement system for the next 20 or 30 years.

Voters did approve major changes in the system that will provide much less generous benefits for new firefighters and police officers. However, the changes only affect new hires, leaving the huge deficit unaddressed.

The deficit developed over a period of 5-10 years due to a combination of low investment returns and automatic increase in pension payments. Previously, towns and counties were paying about 15 percent of each member’s salary into the system. The system administrators told counties and towns the they would have to pay 65 percent of salary to provide enough money for the pensions of current and future retirees for the next 20 or 30 years.

The big payments had a serious impact on most county, town and fire district budgets, most are behind in their payments. The Navajo County Sheriff’s office owes $12 million and Apache County Sheriff’s office owes $11 million.

Show Low Police owes $8 million, Snowflake $3 million, Pinetop $5 million, the Timber Mesa Fire and Medical District $5 million, Holbrook $7 million and Springerville $1.2 million.

Hard-pressed rural counties will have a hard making those catch-up payments.

“For a small county like us, it’s a huge deal. If you look at the primary property tax – we bring in about $2.8 million,” he said, which is less than the payment for the retirement plan for the sheriff’s department. “A third of that’s going to just the excess state retirement payments.”

In fact, the retirement payments for the sheriff’s office represent almost 10 percent of county spending.

Source: White Mountain Independent

Published by Hoosier Econ

Located out of Central Indiana. Blogger of economics, politics and societal trends.

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