Or so the often heard theory goes. I personally am not aware of any massive erosion of the City's employee base, nor does it seem to me that the level of personal suffering experienced by those who work here is any greater than it is in private industry. As a matter of fact, I think most would agree that the benefits of working in government have become far better than what most in private industry are experiencing these days. With many questioning why it is that they need to pay ever increasing and onerous levels of taxation in order to finance things that are not now, or ever will be, available to them.
Sierra Madre's utility taxes, at 10%, are currently the highest in California, especially when you include in these considerations the wide range of categories being taxed. It is the price that has to be exacted when a small city of less than 11,000 attempts to fund the kinds of employee benefits its big brothers in places like Los Angeles and Pasadena are able to offer their help.
And now that bar is being set even higher. This from the Pasadena Star News (click here):
CalPERS changes to squeeze finances in many cities - Many cities will be required to pay more to the state pension system for at least a few years because of changes the system's board approved Wednesday, stretching its already-thin finances. The actuarial adjustments, designed to make the California Public Employees' Retirement System once again fully solvent within 30 years, won't go into effect until the 2015-16 fiscal year.
But it's already worrying many cities where CalPERS is a large and growing expense. "Right now, for Upland, we're having a tough time making ends meet," said Upland City Manager Stephen Dunn. "This is just more costs that we're going to have to cover, which means it's less services. "
Dunn calculated the changes will cost at least another $500,000 a year, based on information provided by the California Public Employers Labor Relations Association.
In San Bernardino, which stopped paying CalPERS since it filed for bankruptcy in August but plans to resume payments in July, the likely increase was one of several serious issues the city would need to watch out for, consultant Michael Busch of Urban Futures warned. "It's not a rumor any more. It's going to happen," Busch said of the actuarial changes. "And that's an uncertainty you need to be aware of. "
San Bernardino continues to defer payments to many other creditors as it continues in bankruptcy court, with a financial situation that's better than when it filed for bankruptcy but still precarious and dependent on bankruptcy protection, Busch said. Any increased costs hurt, including those with CalPERS, the nation's largest pension fund and the city's largest creditor.
The changes in the way rates are calculated will help avoid large increases in extreme years, but was a tough decision, CalPERS board President Rob Feckner said in a written statement.
"This was one of the most difficult, yet most important decisions we have had to make," Feckner said. "Moving our plans more swiftly toward full funding will ensure a sustainable pension system for our members, employers and ultimately taxpayers over the long term. "
CalPERS expects almost a 25 percent increase in the portion of its future obligations that are funded over a 30-year payment.
So how are cities like Sierra Madre going to be able to afford to keep paying into a state retirement system that continues to consume more and more of its financial wherewithal? That is the dilemma facing towns such as ours. And with our elected leadership appearing to be more than willing to obligate the taxpayers with the responsibility of paying for such things, there really is no other option available to them except to continue asking for more.
And what is it that we are shoveling our tax dollars into? The news site City Journal (click here) recently posted an article that does not paint a very pretty picture.
The Pension Fund That Ate California: CalPERS’s corruption, insider dealing, and politicized investments have overwhelmed taxpayers with debt - After spending years dogged by unpaid debts, California labor leader Charles Valdes filed for bankruptcy in the 1990s—twice. At the same time, he held one of the most influential positions in the American financial system: chair of the investment committee for the California Public Employees’ Retirement System, or CalPERS, the nation’s largest pension fund for government workers. Valdes left the board in 2010 and now faces scrutiny for accepting gifts from another former board member, Alfred Villalobos—who, the state alleges, spent tens of thousands of dollars trying to influence how the fund invested its assets. Questioned by investigators about his dealings with Villalobos, Valdes invoked the Fifth Amendment 126 times.
California taxpayers help fund CalPERS’s pensions and ultimately guarantee them, so they might wonder: How could a financially troubled former union leader occupy such a powerful position at the giant retirement system, which manages roughly $230 billion in assets? The answer lies in CalPERS’s three-decade-long transformation from a prudently managed steward of workers’ pensions into a highly politicized advocate for special interests. Unlike most government pension funds, CalPERS has become an outright lobbyist for higher member benefits, including a huge pension increase that is now consuming California state and local budgets. CalPERS’s members, who elect representatives to the fund’s board of directors, ignored concerns over Valdes’s suitability because they liked how he fought for those plusher benefits.
CalPERS has also steered billions of dollars into politically connected firms. And it has ventured into “socially responsible” investment strategies, making bad bets that have lost hundreds of millions of dollars. Such dubious practices have piled up a crushing amount of pension debt, which California residents—and their children—will somehow have to repay.
Get ready to dig even deeper.
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