It’s the legacy of overly generous promises, notably a legislative giveaway to public employee unions by Gov. Gray Davis in 1999, plus the fallout from the December vote by the California Public Employees’ Retirement System board to cut the “discount rate” – its long-term projection of investment returns – from 7.5 percent to 7 percent. It will be phased in, starting in 2018-19.And it was just 0.5 per cent lowering of expectations. What would happen if this were to be lowered by 1%? 2%? 6%?
For Sacramento, the higher pension contributions make up the vast majority of projected deficits that by 2022-23 could rival those during the Great Recession that forced layoffs and major cuts in city services, including public safety and parks.
There’s time to avoid painful budget cuts, but only by belt-tightening now. That’s even more crucial because the City Council went on something of a spending spree last year, before the CalPERS action.
Those budget projections assume that voters renew the Measure U half-cent sales tax, which now brings in more than $40 million a year and is set to expire in March 2019. The numbers also include about $5 million more a year, mostly in property taxes generated in part by the development around Golden 1 Center.
Wednesday, March 8, 2017
Why California cities and counties should act scared by pension payments
From the Sacbee: