In their search for finding ways to better fund the Public Safety Personnel Retirement System, the La Paz County Supervisors approved a plan to be placed before the County Supervisors’ Association that would allow counties to pay off unfunded liabilities for the retirement plan via special excise taxes.
The proposal will go before the supervisors’ association at their legislative summit. If approved, the association will push to have it made into law by the state legislature.
As was reported in the Pioneer, the La Paz County Sheriff’s Office has enough to cover only 33 percent of their current and projected future pension expenses. As a result, they are required to contribute the equivalent of 75 percent of their employees’ salaries to the PSPRS each year.
La Paz County District 1 Supervisor D.L. Wilson said county residents are already paying for these expenses through the general fund. He said a special excise tax would spread the burden to others, including the county’s many winter visitors.
County Finance Director Terry Krukemyer said the idea came out of conversations between Wilson and himself, and added Wilson was the one who took the initiative on it.
“He ran with it,” Krukemyer said.
According to the proposal, the excise sales tax could be no more than 1.5 percent. For communities that have judgement bonds they’re paying off, the tax could come to no higher than what it would take to make the combined amount reach 1.5 percent.
Wilson noted La Paz is the only county with judgement bonds, and the excise tax for them is 1 percent. This would mean that, until those bonds are paid off, the highest the sales excise tax for the pension plan could go would be 0.5 percent.
Under the proposed plan, the revenues gathered would go to the State Treasurer’s office and from there to the public safety retirement plan. The county would not see any of these funds. It would be similar to the way the judgement bonds are being paid off.
Wilson said the county sheriff’s required contribution is likely to stay at 75 percent for the next 10 years. The excise tax would reduce that rate by 5 to 7 percent each year. Within seven to 10 years, the contribution rate would be reduced to a more “normal” rate around 12 percent.
Wilson said the CSA had people whose calculations would likely be more accurate than his own.
Krukemyer said the tax would likely generate $1.4 million per year for the county. In addition to the sheriff’s office, there are other entities in the county whose unfunded liabilities would need to be figured into this. The Buckskin Fire Department has substantial unfunded liabilities. The Parker and Quartzsite Police Departments also have unfunded liabilities, but these are not a large as those for the sheriff’s office and Buckskin fire.
Wilson said that, if the CSA approves the proposal, the earliest it could be enacted into law would be August 2020. It would not go into effect until Jan. 1, 2021.
Wilson and Krukemyer said their goal at this point was to get the proposal before the CSA for their consideration and discussion.
The CSA’s Legislative Summit is set for Oct. 28-30.