California cities should fess up about taxes and pensions
By Dan Walters
California’s political leaders don’t have to look very far to find a stark example of the pension cost crisis facing the state’s 482 cities.
Three blocks from the Capitol, in Sacramento’s city hall, Mayor Darrell Steinberg – a former leader of the state Senate – and other officials are seeing pension costs skyrocket.
“Over the past nine years, the city’s pension expense has increased by 28 percent or $14.5 million,” says a passage in the city’s 2017-18 budget. “Over the next eight years, the city’s pension cost is expected to more than double what is currently paid.”
The California Public Employees Retirement System, which handles pensions for virtually all Sacramento city employees, says in its most recent “actuarial evaluations” that the city’s costs will rise from $92.8 million in 2018-19 to $159.4 million by 2024-25, a $66.6 million increase.
Keep that number in mind, because it bears an uncanny resemblance to another figure.
Immediately after explaining the rising pension costs, the city’s budget talks about Measure U, a half-cent increase in the sales tax that city voters approved in 2012 and that will expire next year.
Based on current retail sales activity in the city – $6.4 billion in 2016, the last year for which complete data are available – the half-cent tax now generates about $32 million a year, mostly dedicated to police and fire services.
City officials not only want to ask voters to renew that tax, but Mayor Steinberg and other officials may ask them to double it to a full cent, which would raise at least $66 million a year as taxable sales rise.
Sound familiar? It’s very close to the projected increase in the city’s annual pension costs, driven primarily by those for police officers and firefighters. By 2024, CalPERS projects, Sacramento will be paying 61 cents into the pension fund for every […]