If taxpayers had any lingering doubts that Phoenix is a lost cause when it comes to sane financial stewardship, a series of recent votes by the council should wipe them away.
First, the City Council voted in May to approve the FY 2018 budget that contains an ongoing structural deficit between $43 to $64 million. This, despite the fact that Phoenix has raised the sales tax, raised property taxes, added a water tax on utility bills and is currently taking in a record amount of revenue.
A few weeks after the budget vote, the council approved a restructuring of their ballooning pension debt, adding an additional $2.3 billion in liabilities onto the backs of taxpayers by extending the amortization schedule from 20 to 30 years.
Phoenix is drowning in pension debt, a problem city staff continues to acknowledge. Yet the amortization extension was implemented anyway to free up more money for the Council to spend in the next fiscal year. It’s a win for the politicians since they will be long gone when the bill for this budget gimmick comes due. Phoenix taxpayers, on the other hand, won’t be so lucky.
Then, just days after the pension vote, the council voted to spend $100 Million on an extension of the Sky Train at Sky Harbor Airport from Terminal 3 to the rental car lot. For those not familiar with the Sky Train, it’s the wildly unnecessary $1.6 billion-dollar train built to take people 4.3 miles from the airport to the light rail station on 44th street and Washington. That’s at a cost of $372 million per mile. By comparison, the 22-mile South Mountain Loop 202 highway project slated for completion in 2019 will cost $916 million.
According to the figures from Sky Harbor (which deserve a healthy dose of skepticism), approximately 10 percent of flyers used the Sky Train in 2016. Of course, that number would be substantially less if passengers weren’t forced to use the train for inter-terminal service after the airport cancelled inter-terminal shuttle bus service in 2015.
Most normal people would see the empty train cars going back and forth along this elevated eyesore and recognize the failure of the endeavor. But normal and city hall don’t go together, so now they think extending the line to the rental car lot will fix their white elephant.
It is all but guaranteed to fail—rental car shuttle buses are already performing this service at a fraction of the cost and an increasing percentage of visitors are using alternative services such as Uber or Lyft in lieu of renting. Once driverless cars start hitting the road in a decade, Sky Train use will dwindle to zero, but the debt service to pay for it will linger on the books for decades.
Now not everyone on the council is tossing Phoenix taxpayers over the financial cliff. Councilmen Sal DiCiccio and Jim Waring have consistently fought against each of these reckless measures, but they are outnumbered 7-2 on the council and are limited in what they can accomplish. Complicating matters further is an entrenched city staff that has a vested interested in maintaining the status quo. Add in the clout of the public-sector unions, and you have the iron triangle of municipal politics.
So what can be done? Unfortunately, any meaningful change in course will be difficult to achieve, and relief is likely years away. Two realistic reforms are possible, but both would involve going around the entrenched establishment at City Hall.
The first reform would be to consolidate the candidate election dates to even numbered years. Consolidated elections would not only save taxpayers money, but it would also increase voter turnout and engagement, a reality that strikes fear into the Phoenix power set.
A second fix would be to reform Phoenix’s broken pension system. For years the city has pushed sham reforms and actively opposed citizen efforts to transition non-public safety city employees into a 401(k)-style defined contribution plan. If enacted, pension reform would save taxpayers millions over the next 30 years.
In the meantime, Phoenix residents should expect the Illinois budget management strategy to continue at City Hall for the foreseeable future—higher taxes, more spending and creative new accounting gimmicks to hide the mountain of debt.