COTTONWOOD -- Cities and towns all over Arizona are shuddering at the thought of paying down the unfunded liabilities of the Public Service Personnel Retirement system.
Cottonwood, for one, has a $9 million debt that has come to roost.
The state pension system for police officers and firefighters has less than half of the money it needs to fund current and future retirement payments, an amount equal to $7.78 billion.
Cities and towns around the state face extra-large pension bills from the Arizona Public Safety Personnel Retirement System because of a state Supreme Court decision that shot down a law that cut costs for the system. The highest court ruled unconstitutional Permanent Benefit Increase (PBI) changes made by Senate Bill 1609 in 2011.
That was the Fields Case, explained Rudy Rodriguez, Cottonwood's Administrative Services General Manager. Now, Rodriguez would like to divert funds from every budget source possible to help plug Cottonwood's debt sooner than later to avoid accumulated interest.
The average lifetime annual pension for a public-safety retiree is $53,236, nearly three times what an average retiree receives in the more financially-stable Arizona State Retirement System for teachers and government workers, according to an Arizona Republic finding.
Rodriguez says the unfunded amount for the Cottonwood Fire Department amounts to nearly $1.5 million, but the unfunded liability for the Cottonwood Police Department is $7.59 million. The unfunded amounts could be paid off over 22 years in exchange for a 7.85-percent interest rate, pushing Cottonwood's $9 million debt to $21 million.
The City of Prescott, by comparison, is one of the Arizona cities considering raising taxes to pay down its debt.
Arizona is not the only state facing a pension crisis. Time Magazine has called it a "Pension Time Bomb in America."
Illinois is facing bankruptcy. One columnist says California is facing Death by Pension, in a periodical called PensionTsunami.