Our “leaders” in the City of Tucson continue to openly display their utter fiscal ignorance and irresponsibility. Now, they are issuing more debt, conveniently disguised as Certificates of Participation, to pay off the $1.5 billion unfunded liability debt in the city’s public safety pension plan.
This unfunded liability is caused by two factors – lucrative pension benefits and a ridiculously high discount rate utilized to determine annual required contributions. The only sensible way to reduce and ultimately eliminate this unfunded liability is to either reduce pension benefits or lower the discount rate to more properly estimate expected returns.
Lowering the discount rate would, of course, multiply the current unfunded liability, and significantly increase the annual contributions the city must make to the pension plan. So, rather than face the facts, Tucson’s city leaders decide to take out a new credit card to pay off the debt of the old credit card, while continuing to use the old credit card to rack up more debt. Tucson taxpayers should be so ever thankful!