More and more it seems, I spend my Fridays talking. So if you wanted a little made-for-TV response to the pension board's big decision Friday not to change its accounting practices and pass along a brutal bill to the city, here you go.
My perspective on this is simple: This is only good news in the sense that reality has won and the city will now have to face up to the consequences of its leaders' past decisions unlike anytime before.
You see, before now, the pension scandal has been largely been the stuff of drama -- legal and political intrigue. Sure, it has had profound effects. In fact, Mayor Jerry Sanders is mayor because of it.
But the reason it was an issue in the first place is now about to be as clear as it possibly could be. It was a scandal because the city had, repeatedly, agreed to both shortchange its pension fund and give its employees more benefits at the same time. It was like buying a car and mortgaging your house to do it.
And that's a big deal because, eventually, we were going to have to make up for this. We were going to have to pay.
Not to say we haven't already paid. As discussed before, the annual payment the city makes to its retirement system has skyrocketed. The payments used to be in the $45 million range. In 2004, it jumped to just more than $160 million and they had it leveled out there for several years. They had figured out ways to keep it at that level.
Imagine if we'd have taken that $120 million difference and instead invested it in a massive infrastructure bond. Could have had all the sewers, libraries and Convention Centers we wanted. This was how big of a decision it was to do what past city leaders did without much of a public debate. They gave a massive chunk of the future of the city to employees without ever figuring out how they would pay for everything else at the same time.
Like a bad mortgage, at some point, you have to start paying it off.
The mayor had hoped the pension board would consider options that would have pushed the pain further out. But the fund's trustees, rightly, prefer assets to promises. They have a fiduciary responsibility to ensure they protect the health of the fund and they did. And leaders now have an obligation to pass along the healthiest city possible to future generations. It's one thing to owe money for a massive facility from which we'll all benefit for decades. It's another thing to pass along debt for mere operating costs.
Imagine, for example, making your kids pay off credit card debt for lavish dinners you never could afford but still enjoyed.
Now the big bills are going to come. To fund the benefits we've promised employees, we're going to have to come up with hundreds and hundreds of millions of dollars every year. And it's going to get worse. The pain the mayor's staff says is on the way is only just the beginning.
So I said this on TV and I'll say this again: The mayor and City Council now deserve our understanding and sympathy because they're about to, finally, face down the most difficult financial situation they've ever faced. They will have to confront employees and taxpayers in ways that will take both courage and vision.
If they can pull it off, they will be municipal heroes. This is their opportunity and their challenge.
The mayor has a chance to be remembered for generations for guiding us through this period and reimagining a troubled city. He can use the intelligence and resources in his office to try to get out of it -- to try to do everything possible to avoid hairy decisions -- or he can chart a new course and change the city forever.
Scott, while I agree with your point about facing reality, I still think you're getting the history more wrong than right. That lavish dinner we enjoyed but couldn't afford? It wasn't mainly benefits. The increased benefits were effectively a bribe to our credit-card company (read: the pension fund). The lavish dinner was street repairs, police, fire, stadiums, conventions, etc. etc., for which our revenue had ceased to be adequate beginning at least as early as 1991. Those are the main courses we couldn't afford in the 90s but bought anyway. // This point is important because even with the pension underfunding and benefit increases out of the picture, we would STILL have a structural deficit. And that's how we got into this mess in the first place.
why does everyone still fail to mention, these'dinners' are the convention center, additions to then Murphy stadium for the Chargers, and a new ballpark for the Padres. Here's what the employees got, lesser or no pay raises (to the business norm at the time) for the promise of increase/better retirement, Simple as that Only problem, the city failed to pay its bill, again, simple as that, and the debt grew to the point, the city said the credit card company (your example) was at fault for loaning them the money. While you mull all that over, isn't that exactly what obama is doing to the country right now??
when Lewis writes "The mayor has a chance to be remembered for generations for guiding us through this period and reimagining a troubled city. He can use the intelligence and resources in his office to try to get out of it -- to try to do everything possible to avoid hairy decisions -- or he can chart a new course and change the city forever." The problem is the mayor, like Chip Diller yelling "All is Well" at the end of Animal House, proclaimed in 2008 as loud as anyone could hear that the City was fine and lots had been done (and that his opponent was a liar). Now a year and half later pretty hard to reverse course. So don't expect miracles. San Diego will muddle along - lets hope not declining past the point of no return.
Scott ... here's another issue: three major cases are still around. No one at the City wants to settle... On the other hand, SDCERS has made repeated gestures to settle the litigation even going to the expense and trouble of bringing in experts from Harvard University, but for whatever reason, Mayor Sanders and C.A. Jan Goldsmith want this all this to continue. The three pieces of litigation are, in no specific order: 1. a dispute over SDCERS member benefits between July 2005 and November 2007 when former City Atty M. Aguirre sat on changes to the Muni Code. 2. The pricing of purchase of service credits where the City wants to roll back contracted purchased benefits but never included the over 400 individual in the litigation. And 3. The neverending case before Judge Barton. What offers has the city made to end this? None.
Sympathy? For refusing until now to face down an obvious problem? Sorry. I don't buy it. Sanders and company dodged and weaved and fiddled while the problem just continued to get worse. He may not have caused it, but by delaying the inevitable, Sanders has ultimately made it worse. No sympathy here. Support? That's going to come from my pocketbook, regardless of whether I want to help or not.
Chris, Putting food on the table in your household would also be unsustainable if you were to go out and purchase a new BMW every week. I hope you understand the comparism. New Stadium, Library, Convention Center? Give me a break! Keep what we have, reign in the spending, trash tax for San Diegans, Hotel tax for visitors! And just maybe a 1/2 cent sales tax increase. This solves the Citys problems instead of placing the weight soley on the back of City employees who aren't even responsible for the mess that the Mayor(s) and the City Council caused.
While excessive spending is a concern, the simple and I believe incontestable fact is that public pensions, benefits & pay are far more generous then the private sector and now cost far more than those who lack such largess are willing and able to pay. We refuse to pay any more taxes, etc to give others what we don't have. Public unions have wrecked budget after budget across the nation and enjoy "success" for their members largely because they 1) often have no competition and 2) exert undue and disproportionate influence over weak vote seeking politicians. Only recently has the public's eyes been opened to union excesses. Police able to retire as early as 50 with 90% of pay? Crazy. Lifetime pensions for teachers with COLAs close to final pay? Unaffordable. The world has changed for all but public unions. Time to rein them in and take back our budgets.
Sorry. From the front pages your arguement is convincing. Check the facts. SDPD is paying for their own pensions. $1100.00 a month for some coming off the top of their salaries. 90% of their top salary at age 50? True but very rare. Average salary is less than $40,000 a year for retirement. Public unions have wrecked what? It is the polititians we put in office that wreck the system. If you were offered a Brand new700 series BMW for for the cost of a Kia, but just have to wait for one year, what would you do? The fuzzy math comes from the people elected by YOU!
Reduce benefits to gov and union workers is the only way to get out of this mess, let them pay for their own retirements like the average tax payer. The need to break unions and stop them from stealing from the next generation.
The city employees do pay a good sized chunk toward their own retirement. I pay well over $800 a month for mine. This is not 401k or deferred comp or anything else that is just my mandated contribution. It is also toward the bottom end becuase I was hired when I was young so the formula keeps mine lower. I also will never receive social security due to not enough credits. This mess is not from the employees it is from the city not paying their share. And taking out of the fund that they purposely underfunded to pay for other projects. Its kind of like paying tons of money to remodel your house but not paying your mortgage.
I am a City employee and I DO pay for my own retirement to the tune of $1100 per month out of my paycheck. I have never understood how public employee unions are to blame. Of course they are not really unions in that they have no authority to strike or take any other work actions. The bottom line is that the City always has the power to impose a contract and they have many times. The unions have no way to prevent that. Ultimately the employees receive whatever benefits the City decides to give them. Rolling back benefits is a different matter because teh law protects vested benefits. Don't like the benefits employees receive, blame the elected offials. They made the decisions.
The City made choices. They decided to build a $400,000,000 ballpark on their own dime for one on the nations most terrible teams to a man (Moores) who could have afforded the stadium on his own dime... fleeced again. $70,000,000 to the Chargers. Now they want a $500,000,000 expansion to a convention center that mostly lays vacant. They want build a $432,000,000 new city hall, and a new $180,000,000 library for the homeless to sleep in. On and on. For years us city employees received no cost of living raises and in trade a "pay you later, not now" mentality of increased pension benefits. The only thing there is that they for years didn't pay the actuarial "mortgage" to the fund. I could personallly care less what they do now. The City of San Diego is LOADED!!.. they are the county's largest landowner.
Continued..... Torrey Pines, all 36 holes and a few square miles on an ocean bluff in La Jolla has to be worth $1 billion to some developer. We own the land at Fairbanks Ranch Country Club... We own half of downtown. We're loaded. We're not bankrupt. Not even close. Even if we were, the pension fund is the last to get raided in court as proved by the Orange County bankrupsy. Sorry Charlie.. I get my pension. Well deserved. Management forgot to pay their bills. By the way, I get $400 taken out of my check every 2 weeks for my pension contribution. I've worked for the City over 20 years. Nothing is free. We're taking paycuts, layoffs, just like private enterprise. The average city pension is $30,000..... They only publish the big wigs pensions to ruffle feathers.
Scott. I hope you are hearing Augmented Ballot, who is right on. You remind me a bit of the UT (Uninformed Trash) writers when you refer to our "big bills" as going to fund the employees' pension. Why do so many seem to discard the Council's decision to UNDERFUND the pension for so many years, which is a big factor in the size of the current bill. The 2.5 % at 55 puts City employees on even footing with other government agencies, not above average. Be more forthright, not SLOPpy
It is fine to write, "They will have to confront employees and taxpayers in ways that will take both courage and vision." However, the no-new-taxes advocates are so powerful in SD, with the help of the U-T, that city government will never "confront" them. We will see a continued deterioration of city services (and, therefore, of the city itself) until the "kill the beast" view of government will achieve its ultimate result: destruction of any sense of community obligation in favor of Darwinian individualism. John Galt will have won, and the rest of us (including this financially comfortable, upper-income retiree) will be losers.
Too swamped now but I believe you can find the kernels of analysis on that subject in a few of the Aguirree reports, the Kroll report, and some of Chiron (SDCERS actuary). I remember (but I wouldn't bet the farm) that it was estimated that underfunding+benfit increases were something like 70% of the nut (remember, they need to increase contributions when they increase benefits) and 30% were investment underperformance but that is from memory
For years the City decided not to give raises and in lieu of them decided on a "pay you later, no now" mentality with it's employees, some of the lowest paid in the state... I'n fact the police may be the lowest. However, they "didn't pay the mortage" on the increased pension obligation. Can't have it both ways. Sounds like Obummer. It's about time someone finally said... "Hey, pay up". About time. The mayor's a dreamer anyway. A $450 million dollar new city hall, $180 million dollar homeless shelter, Oh, I mean library. $500 million expansion to an already underutilized convention center. We paid $400 million for the ballpark and gave away via public domain the land to the rich. We spent $70 million on Qualcomm and athe Charers want to move anyway.... And both venues are negative cash flows to the city. Free trash service, onandon.
his is why it is hard to have a rational conversation. 1) The amount CURRENTLY paid to retirees is, actuarially, irrelevent. The question is not what the payout are today (we KNOW SDCERS has strong assets and positive cash flow). The important question is, in real dollars, what will be the average pay out in 10-15-20 years. That is the looming liability and the big nut. 2) I am SOOOOOOOOO tired of rehashing history. Yes, they cheated and stole. Go protest in front of Susan Golding's and Jack McGrorary's cribs. Send a bill to the RNC to pay back the subsidy given in 1996. Let us know how much good that does. Much less important then the "why" is the answer to "now what" and which is going to require a ton of political courage.
I am sorry you are tired of "rehashing history", but the fact is that by not holding anybody accountable, the same mistakes have been allowed to recur again and again. It is so bad now that our current mayor in these desperate times for the city is proposing the same pet projects that Golding was pushing years ago; convention center expansion, Chargers stadium and new central library. Do you really think it is irrelevant where Sanders big ideas came from and what those people were guilty of? Those who ignore history are doomed to repeat it, and lord knows it is Groundhog Day in San Diego. As our former leader would say, San Diego is a "five-spiral crash."
I am sorry you are tired of "rehashing history", but the fact is that by not holding anybody accountable, the same mistakes have been allowed to recur again and again. It is so bad now that our current mayor in these desperate times for the city is proposing the same pet projects that Golding was pushing years ago; convention center expansion, Chargers stadium and new central library. Do you really think it is irrelevant where Sanders big ideas came from and what those people were guilty of? Those who ignore history are doomed to repeat it, and lord knows it is Groundhog Day in San Diego. As our former leader would say, San Diego is a "five-spiral crash."
That is because the average you site is based on the current payout for past retirees who had a lower multiple based on a lower salary (from 10 or even 20 years ago). The current payments are so high because they are being made to support the retirement of CURRENT employees, who have much higher pay and a higher multiplier.
Has everyone forgotten whose idea it was in the first place to purposely underfund the pension system ? As in former mayor Susan Golding ? And her sidekick, city manager Jack McGrory ? Why do these two get a free pass from local media ? Why didn't the former city attorney go after them ?
Scott, It is important to understand why the City increased pensions while underfunding the system. Raising pensions was done to bring the City up to the levels of other local governments' pension levels, to avoid having to increase salary levels, and to compensate the pension system for 'borrowing' the money in the first place. Why the need to 'borrow?' Because of a lack of leadership by the elected officials. Proposition 13 severely restricted new revenues but the Mayor & Council refused to prioritize and continued to try to be all things to all people. How to pay for the Republican Nat'l Convention and the new downtown ballpark? Borrow from the pension system, of course. Each year, the City Manager was instructed to play games with the budget to avoid facing up to cutting service levels or raising revenues.
Users may post more than one comment, but should not pose as multiple users. Multiple posts from the same IP address but with a different user name on each will be reviewed to determine whether abuse has occurred.
Posts with overly personal attacks or unsubstantiated allegations may be edited or deleted.
Please be patient with the posts -- there may be a delay before they appear on the site -- and make sure to enter the code in the "image verification" box.
Post a comment
Scott Lewis on Politics
The Scott Lewis on Politics blog, abbreviated cleverly as SLOP, is a collection of observations, insights and the occasional scoop on public affairs in San Diego. Please feel free to e-mail Scott at scott.lewis@voiceofsandiego.org.
Listen to voiceofsandiego.org's radio program on AM 600 KOGO: Latest Episode (November 8): Scott Lewis and Michael Zucchet talk about the city's budget
PRINT 
E-MAIL STORY
SHARE
FACEBOOK
REDDIT
NEWSVINE
DIGG
DEL.ICIO.US
BLINKLIST
Don't want to miss a story? Want to be the first to know about breaking news? Sign up now.