Member Russell Buckley: Taxpayers Lose Again

I'm really bummed out. I just left the City Council meeting where our elected representatives voted unanimously to approve an MOU for non -safety workers that barely addresses our single biggest financial problem - pensions. Like almost every government institution in the state, La Mesa pays exorbitant pensions to its employees. They are far in excess of what private sector taxpayers receive. The most significant reason we got into this financial mess, and remain in this mess, is that the people we elect at almost every level of government are afraid or unwilling to confront the public employee unions. The La Mesa Council is no exception. Two years ago the city persuaded us to vote for a tax increase (Proposition L) by telling us that if we didn't pass it, we would be overrun by gangs and forced to drive on roads filled with potholes. Nary a mention was made of the overgenerous and exceedingly expensive pensions that were the primary cause of our need for additional income.

I have spent the past year doing my best to alert the council members to the pension problem. Last year they did, to their credit, finally relieve taxpayers of the burden of paying the "employee portion" of pension costs (around 25% of the total costs). In about June of 2009, the San Diego Division of the League of Cities, led by Sandy Kerl (our former City manager), developed a recommended pension proposal to help stem the spiraling costs. Under the plan non-safety workers would receive 2% of the average of highest three years salary for each year worked and could retire at age 60 - a 2% at 60 plan. That is much more generous plan than most private sector workers receive - but still a significant improvement on what La Mesa taxpayers give our non-safety employees. Our non-safety workers receive a pension of 3% of highest final single years salary for each year worked at age 60 - a 3% at 60 plan. You might quickly figure out that the existing plan is 50% more generous than the recommended one.

So, what did our Council members do with pensions in the just concluded non-safety employee contract negotiations? They included a second tier pension arrangement (only applying to new workers) that moved from a 3% at 60 plan to a 2.5% at 55 one. FYI, there is no difference between the two plans until age 55 - and even then the savings are minor relative to what a responsible plan would have generated. The Council actually reduced retirement age! When Social Security began, some 60 years ago, the retirement age was set at 65. Average lifespan has increased steadily since then and our Council just decided to reduce our non-safety employees full retirement age from 60 to 55. What in the world is our Council thinking?

I don't know whether the Council members are oblivious to what is going on, cowed by the unions, or have some other motivation. What is important is not why but what they did. Pension costs to the city are projected to increase to over 5 million dollars a year. As of March our unfunded pension/medical liability was about 27 million dollars. Our reserves are near the bottom of what the council has deemed to be a prudent number. Nothing has been done to wean the City off of the deceptively promoted 6 million dollar Prop L tax increase. Any shortfalls in the pension program (CalPers) - and there may well be more - are made up by taxpayers.

Our Council let us down in their actions in the non-safety negotiations. Based on the extremely tepid change in non-safety pensions, I don't expect anything to be done for the Fire and Police unions. La Mesa taxpayers continue to be the losers. I'm disgusted.

p.s. If any Council members care to respond to this, I would love to have a public debate.

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Comment by Craig S. Maxwell on July 29, 2010 at 4:52pm
We do deserve to know, Russell. Extravagant pensions are draining government coffers at all levels--Federal, State and municipal. Yet, in spite of this, the response of our officials has seemed to consist of little more than what Sacramento Bee journalist called "kicking the can down the road" with accounting chicanery and misleading rhetoric for the next sorry generation to deal with. Too bad. We need honest, courageous leadership more than ever to deal with these matters--qualities nearly non-existent among La Mesa's politicians.
Comment by Russell Buckley on July 29, 2010 at 2:33pm
I don't know whether or not it is appropriate for me to comment about my own blog - but I'm going to try. I simply want to remind the City Council members of my invitation to discuss this issue publicly. As you know the Public was kept totally in the dark about recent MOU negotiations (more so than I believe the Brown Act requires) so we have no idea why you: (1) failed to implement the reduced pension policy set forth in the Proposed Regional City Pension Standard that we helped to draft (2) or at least returned to the standard that was in effect prior to the 50% increase in multiplier that you implemented in 2003 (3) or why you reduced full retirement age from 60 to 55, (4) or why you maintained the annual multiplier at 2.5%, (4) or why you failed to change from high one to high three, (5) or what this decision does to our $27 million unfunded liability, or to keep our reserve fund at a prudent level, or to our ability to wean ourselves off of the $6 million in Prop L taxes. Since our taxes support the pensions, I think we deserve to know.
Comment by Craig S. Maxwell on July 28, 2010 at 2:34pm
Thank you again for your patient effort, Russell. Last night the council gave every indication of having made up it's collective "mind"--and here I'm using that word in the loosest possible sense--well in advance of your clear and compelling presentation. Interesting that none of them even questioned your (somewhat disturbing) findings or conclusions in the slightest. In fact, their responses seemed to consist mostly of blank stares. But, by contrast, when when the city manager spoke, well, then they were all ears; and this in spite of the fact that what he said was none too coherent.
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