Opinion By Linda Sutter – July 5, 2023
Here is what is occurring in Oakland, Sacramento and other Cities
TAXPAYERS BEWARE
Walters: Bait and switch on pensions in Oakland and beyond.
Oakland’s pensions will eat up the $20M raised by a ‘parcel tax’ on the March ballot to fund the homeless, etc.
Oakland police and firefighters work on the southern edge of Lake Merritt after one man was taken to the hospital, where he later died, and a woman was found deceased in the lake in an early morning incident in Oakland, Calif., on Thursday, March 15, 2018. (Laura A. Oda/Bay Area News Group)
By DAN WALTERS, CALMATTERS |
PUBLISHED: December 8, 2019 at 12:01 a.m. | UPDATED: December 8, 2019 at 6:46 a.m.
Local officials, particularly those in California’s 400-plus cities, have been complaining loudly in recent years about pension costs, raising the specter of insolvency if they continue their rapid increase.
Last year, the League of California Cities issued a report declaring that “pension costs will dramatically increase to unsustainable levels.”
The California Public Employees Retirement System (CalPERS) confirms that projection in a new report.
The report reveals that mandatory “employer contributions,” including those from the state and school districts, as well as local governments, rose from $12 billion in 2016-17 to $20 billion a year later.
It also warns that the payments will continue to rise well into the next decade as the giant trust fund tries to recover from dramatic investment losses in the Great Recession, adjusts to lower earnings projections and handles a surge of baby boomer generation retirees claiming benefits.
“The greatest risk to the system continues to be the ability of employers to make their required contributions,” the new report declares, adding, “It is difficult to assess just how much strain current contribution levels are putting on employers. However, evidence such as collections activities, requests for extensions to amortization schedules and information regarding termination procedures indicate that some public agencies are under significant strain.”
Pension costs for “safety employees,” police officers and firefighters mostly, are rising especially fast. They now average about 50% of payroll and are projected in the new report to top 55% by the mid-2020s. A few cities are already nearing or reaching 100%.
However, as much as they complain about CalPERS forever dunning them, California’s local officials are largely unwilling to directly ask their voters for more taxes to pay pension bills.
Hundreds of local tax increase measures were placed on the ballot last year and hundreds more are likely to be proposed next year, but almost universally they are billed as improving popular local services, such as “public safety” or parks.
It’s where the concept of “fungibility” kicks in. If a city’s voters can be persuaded to raise their taxes for parks and recreation, for example, it effectively frees up more money to pay its pension bills without acknowledging that motive.
We saw a wonderful example of fungibility last year in Sacramento, where voters were persuaded to raise local sales taxes on the promise of civic improvements by an amount that closely matched increases in the city’s obligations to CalPERS.
We may be seeing another in Oakland next year.
The Oakland City Council is placing a “parcel tax” — a form of property tax — on the March ballot to improve parks, recreational and homeless services and stormwater drainage. The tax, $148 annually per real estate parcel, would generate an estimated $20 million a year.
As it happens, however, the most recent CalPERS report on Oakland’s pension obligations reveals that they will increase from $194 million in 2020-21 to $226 million by 2025-26, which would more than consume the revenue from the parcel tax.
So why don’t city officials just own up and publicly acknowledge that pension costs are driving their budgets into red ink and ask voters for more tax money to cover them?
They — and the unions that finance tax increase campaigns — clearly fear that being candid would backfire. If voters knew they would be paying more taxes to support pension benefits for city workers that are probably much better than they have themselves, they might refuse to go along.
Bait and switch is more politically expedient.
The simple answer is, they don’t. When people vote for their elected officials with a track record of foolish expenditures, this is what you get.
So the County and the City tell the voters in 2020 that they need to raise sales tax for police, fire, emergency, and infrastructure, then make token efforts to spend a tiny amount on those services that should be entirely paid for by the general fund, and then park most of the revenue in the bank to pay a short fall in the pension fund? In the mean time they increase the number of government employees to a point that the few regular citizens who vote will be out numbered by those employees and those beholden to the government in order to continue to raise taxes to insure those employees are taken care in a way much better than those being robbed to support this future train wreck.
Why the hell does this small city need three fire chiefs!
Well John the old saying goes, how many people does it take to screw in a lightbulb. They honestly believe that Steve Wakefields death was caused by the fact he was the only fire chief in del norte county. When in reality his demise was caused by his OCD and not allowing anyone else to handle business. A volunteer fire department program is just that. You don’t get paid, learning about fires and attending is your education. But not here. They elected to pay 3 fire chiefs $154,000.00 per year to work only 2 days per week which includes their sleep time. People here base their actions on emotions and not logic. This area is in deep financial trouble and they are taxing the hell out of just a few districts instead of everyone paying their fair share. Oh and by the way there are very few structural fires in our area. they respond to all medical calls and then don’t get reimbursed for it through insurances.