Finance

Pension Ruling Could Cost Arizona Taxpayers Millions

February 21, 2014
 

A unanimous Arizona Supreme Court ruling will restore cost-of-living raises to retired judges and elected officials at an eventual cost of roughly $375 million to the retirement system and taxpayers.

The 5-0 decision made public Thursday upheld a Maricopa County Superior Court ruling that declared unconstitutional the Arizona Legislature’s actions in 2011 to suspend raises because of the pension trust’s poor financial health.

“It’s a pretty clear indication of what the law in Arizona is now,” said Ken Fields, a retired Maricopa County Superior Court judge and one of two retirees who sued to reinstate the raises. “It was a difficult decision, but it’s not going to be a popular decision.”

Elected officials and judges share the most generous pension program in the state. In their ruling, the justices noted that their decision eventually will benefit them as retirees.

A key state lawmaker said the ruling likely will pressure the Legislature to put a measure before voters, possibly this fall, to amend the Arizona Constitution by inserting provisions that could diminish benefits and rein in the rising cost of public pensions.

“This ruling wipes out most of the pension-saving reforms we enacted a few years ago,” said Rep. John Kavanagh, R-Fountain Hills, who is pushing for a voter referendum. “This will cost a lot of money and a lot of taxpayer money to buttress this system that has been poorly managed.”

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