The San Luis Obispo City Council is looking at mixing cuts with new tax revenues to cover an impending $8.9 million budget shortfall due to rising pension costs.
At its Dec. 12 meeting, the council heard a variety of staff recommendations to keep the city solvent through compounding increases to payments to the California Public Employees Retirement System (CalPERS) to cover employee pensions. The city’s liability to CalPERS is about $150 million.
Strategies include pursuing new taxes on stormwater services and cannabis ($2.25 million to $3 million); cuts and efficiencies in city departments ($2.25 million to $3 million); and cuts to employee compensation ($1.5 million to $2.25 million). Other ideas include establishing a pension trust fund and prioritizing an extensive list of planned infrastructural projects.
City Council members agreed with most of the staff’s approach but suggested other strategies, like raising the city’s transient occupancy tax, which is currently 1 percent lower than the state average, according to city staff.
“I think it’s worth doing a little bit of soul searching about those other revenue streams that are maybe more externalized, coming from visitors to the community,” Councilmember Dan Rivoire said.
Other council suggestions included finding operational efficiencies by working with regional agencies, investing in solar projects to bring long-term savings, and identifying more employee concessions, like eliminating free parking privileges.
In January, the Public Works Department will bring to the City Council the list of capital projects to discuss and prioritize. The City Council will eventually adopt a completed financial plan in April with all of the elements.
“I know it’s coming very slowly for those who want us tell them right now what we’re doing,” said Vice Mayor Carlyn Christianson. “But I think that when you’re moving such a big ship over some really bumpy roads it’s important to go slowly.” Δ
This article appears in Dec 21-31, 2017.
How about going bankrupt , okay not going happen . But would be the solution in the private sector , you weren’t fiscally responsible and you failed ,
But you cant pass along your failure to the public you suspose to serve? Okay you wont do that , than time make hard choices ,,,
First , stop all pensions now , existing and new ones , go 4o1 k route city matches
Employee contribution … now thats a long term fix … we then City, county ,state , never could afford these pensions , so we have to have the courage to draw line in the sand , and say we honestly cant afford it ( you dont want us go bankruptcy ) but we will match employees reasonable contribution … that solves long term
Second short term fix
Raising taxes on someone else always a lot less painful than whats necessary ,
But in real world we would lay off staff until we paid shortfall . That stops some problem , But That would be admitting we screwed up and we are adult enough to solve problem. We pay off your debt than we talk about brining some folks back until thannwe live with mistakescwe made .
Again , thats what real world would do … but city county tax more / solution tax everyone else . And than spend more . But just once wouldnt be nice to say we spent the money we never had , now going be adult in room .
Defined retirement benefits are creeping into budgets, especially when those benefits are underfunded. The unintended consequences are that its unfortunate that future generations, unable to vote today, will bear the costs of many enacted pension programs, entitlements and boondoggle projects, requiring them to pay higher taxes and work later into their lives to pay for these promises.
The international business world is intelligent enough to know that DEFINED BENEFITS, neither capped nor precisely quantifiable in advance, financial disasters to any business, thus all businesses focus on the known, i.e., defined CONTRIBUTIONS alone.
More than 62,000 retired California public workers earn at least six figures in annual retirement benefits.
The CalPERS fund alone is more than $139 billion in the red. The East Bay Times reported last year that CalPERS’ retirement debt “averages out to $11,000 for every California household,” a relevant comparison since “taxpayers, not government workers, must make up the shortfall.”
Since the public pension system is severely underfunded, city governments need to fund the retirements of former employees by taking money from government services as the increasing pension costs will likely continue to crowd out resources that otherwise would go to public assistance, recreation, libraries, health, public works, and in some cases public safety.
Stealing from the young who have no votes, but silently shoulder the costs and bear the burden of unfunded promises of these programs to enrich the old seems to describe the Governments expansion of entitlement benefits and other government services, along with the taxes young people will have to pay to support them, mostly to subsidize older Americans.
Even before those young folks can vote, our Golden State schools are on track to force substantial budgetary cutbacks on core education spending, as public schools around California are bracing for a crisis driven by skyrocketing worker pension costs that are expected to force districts to divert billions of dollars.
When it comes to gathering sufficient property taxes, Prop 13 is no problem at all except for profligate spenders. Look at the history of my San Diego County a history which pretty much reflects the history of property taxes in the urban/suburban counties that hold over 85% of California’s population.
According to San Diego County, in 1977 the year BEFORE Prop 13 took effect (when everything was working great, according to Prop 13 critics) our countywide property tax revenue was about $639 million. In the 2016-2017 fiscal year, our county reports property tax revenues of $6.013 BILLION. Hence for every property tax dollar collected in 1977, the county in 2016-17 collected $9.42. And BTW, according to the County Assessor, since Prop 13 passed, 97% of the pre-Prop 13 county owner-occupied homes have changed hands (and been reassessed) at least once.
During that time frame, our county population has grown about 96%, and inflation has gone up about 292%. Thus property tax revenues today are higher than in the bloated PRE-Prop 13 year, even after adjusting for both inflation and population growth.
http://riderrants.blogspot.com/2016/07/a-defense-of-prop-13-updated-2016.html
When the next recession hits, cities will have to consolidate and merge. Many cities already share the same essential services in the form of police and fire which are provided by county sheriffs and fire authorities. Often park and recreation are contracted to regional JPA’s. Too much redundancy in the public sector increasing costs. Do three cities with a combined population of a 100,000 really need three city managers, three assistant city managers, three planning departments; etc., etc. Need to change the rules governing unions ability to make contributions to the politicians that they in turn negotiate labor contracts. Too much redundancy and unwieldy unions are driving costs.