The Need for City of L.A. Pension Reform is Black and White

Gary Toebben

August 28, 2012

Last Tuesday, the Los Angeles City Council directed Chief Administrative Officer Miguel Santana to begin work on a new pension tier for new civilian hires. We applaud this action and urge the City Council to create a new tier that will greatly reduce the pension obligations of the City in future years.  

At the same meeting, the Chamber presented a proposal that would begin to address the unfunded liabilities of the existing pension plans for current employees. This proposal would begin to reign in the City's growing obligations and leave more money in the budget for City services like police, fire, streets, parks and libraries.  

In the world of politics and policy, we do not see a lot of situations that are black and white. Most of the time we are doing all we can to navigate the gray. This is not the case when it comes to the City’s growing liabilities in its three pension systems. The City has a civilian employee system that covers City employees except for the Department of Water and Power, the Department of Water and Power civilian system, and the system for sworn employees in the Los Angeles Police and Fire Departments.

From 2002-2012 the City and DWP’s obligation to fund these three pension systems has increased more than 20 percent a year. In the current budget, City civilian and sworn pension costs eat up nearly 19 percent of the general fund. In four years, the CAO projects that number to be 25 percent. The total amount of taxpayer and DWP ratepayer payments into these three systems this year is $1.3 billion dollars.  

How does this pension obligation compare to the cost of other City services? It is more than the $1.2 billion LAPD budget and two and one-half times the LAFD budget. It is six times the cost of the Bureau of Sanitation, which picks up our trash, and eight times the cost of the Bureau of Street Services, which paves our streets and fills our potholes. 

These growing pension costs from these unsustainable systems leave elected officials with two choices every year, cut more city services or raise taxes and DWP rates. At the same City Council meeting last week, the Council voted to consider two tax increases.   

While the politics may be gray, this situation is very black and white. If our City leadership takes actions that whitewash our growing pension liability, the cuts in services and the increases in taxes are as predictable as death and taxes. We are at a crossroads. It’s black and white.

And that's The Business Perspective.

 




Total Votes: 1 Avg Vote: 5
 

Comments

5 trillion of our 14 trillion national debt load can be attributed to pensions, and growing. The current California problem is a mirror image of the national problem our current elected President has decided to bypass until he is re-elected, then he thinks, as California officials believe, higher taxes will pay this down and everything will be ok. Let?s build a train to no where, get shovel ready jobs, hire more government workers, give more free handouts to illegals all on the back of the tax paying public. This rather brilliantly cuts thru all the political double speak we get. Lesson # 1: * U.S. Tax revenue: $ 2,170,000,000,000 * Fed budget: $ 3,820,000,000,000 * New debt: $ 1,650,000,000,000 * National debt: $14,271,000,000,000 * Recent budget cuts: $ 38,500,000,000 Let's now remove 8 zeros and pretend it's a household budget: * Annual family income: $21,700 * Money the family spent: $38,200 * New debt on the credit card: $16,500 * Outstanding balance on the credit card: $142,710 * Total budget cuts so far: $38.50 Got It ????? You can't tax your way out of this mess. OK now Lesson # 2: Here's another way to look at the Debt Ceiling: Let's say, You come home from work and find there has been a sewer backup in your neighborhood....and your home has sewage all the way up to your ceilings. What do you think you should do ...... Raise the ceilings, or pump out the crap? Time to clean out the politicians, we need solutions not double talk.
Posted by: Mike O @ 2:53:00 pm
According to this senseless statement it seems that the only fixes for the problem affect the people that are paying the bills, the tax payers. Cutting services and raising taxes, you don't say! Try to understand that the people you're asking to pay more in taxes so city workers can retire in their fifties while many of them recognize that now that their retirement funds have been diminished, they might have to work well beyond 65 and possibly for the rest of their lives. All so a bunch of city workers who were promised cushy pensions by the same people that the unions backed during elections with egregious donations and payoffs can retire and live happily ever after. How about considering a cut to pensions for employees that have been employed less than 20 years and making them work longer like the rest of society. It's becoming more and more difficult to sympathize with people that work half as hard and earn more than people doing the same type jobs in the private sector. There are more options, the unions just won't let the politicians consider them.
Posted by: Robert G @ 12:42:00 pm
 

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