By Josh Altic
- The Pension Hotspots Report is a monthly publication about local pensions and pension reform efforts.
As of November 28, 2014, ten pension related measures were proposed for this year. Five of these were approved and two were defeated. Court decisions removed the initiatives in Pacific Grove, California, and Ventura County, California, from the ballot. A measure in San Jose, California, seeking to alter previously approved reform was not put on the ballot.
San Bernardino strikes a deal with CalPERS instead of playing hardball on pension debt:
San Bernardino, California, has followed Stockton in trying to work with CalPERS to repay pension debt despite both cities filing for bankruptcy and a court ruling that, on the surface, gives bankrupt cities the ability to reduce pension payments. As it turns out, the multi-hundred billion dollar pension fund holds all the bargaining chips, making the court ruling somewhat devoid of practical application. If Sockton, for example, were to have reduced its payments, CalPERS protocol would have automatically cut the benefits for city employees to 60 percent, pushing workers to quit in droves according to city officials. Similar practical consequences ruled the day over strict legality in San Bernardino as well. Although the ruling in bankruptcy court gave both cities the option to reduce or eliminate payments to the pension fund giant, they both decided it was more practical to make a deal with CalPERS instead of trying to contend with what San Bernardio's attorney Paul Glassman called the "800-pound gorilla."
Councilman Sam Liccardo elected mayor of San Jose after pledging to stand behind 2012 Measure B pension reform:
In a close race that Ed Mendel, publisher of CalPensions.com, called a "referendum on voter-approved pension reform" - referring to Measure B - Sam Liccardo narrowly beat out union-backed Dave Cortese, despite a well funded campaign against Liccardo. Opponents said Liccardo's stance on pension reform would lead to policy that could drive quality employees away from the city. Liccardo, however, earned victory by defending the necessity of strong pension reform. In his campaign document, Liccardo wrote, “How we get past our budgetary burdens will depend on whether we have a mayor who will fully litigate — and implement — Measure B reforms, and ensure that we’re paying our long-term obligations.” All those concerned or interested in the state of pensions and pension reform in California will now closely watch San Jose to see what court decisions and policies will result from Liccardo's efforts to uphold the lawsuit-encumbered overhaul of pensions approved by voters in 2012.
In order to cover rising pension costs, Carbondale, Illinois, may impose seventh tax increase in six years:
City officials in Carbondale have determined they need an additional $175,000 per year to cover the increasing costs of pension benefits and interest on pension debt. On December 16, 2014, the city council will make the final decision on a property tax increase of $16 per $100,000 of assessed property value. Some taxpayers, such as Rebel Pinkston, have expressed frustration at the continual increases. Pinkston said, “When they decided to use property tax to finance police and fire pensions they had to have known that these pensions far out-creased [sic] inflation every year. So they will have to come to us every year asking for more money." He continued, "Other towns get by with far less. I'm just curious as to why Carbondale needs so many police officers." City officials, however, insist that, without the tax increase, important city services will have to be cut. City Manager Kevin Beity said that state law does not allow cuts to pension payments as an option. He said, "That means there will be cuts in the general fund in other areas. Whether that is in capital projects, people, or services that we provide those are all options that we will have to look at."
- ↑ The Sacramento Bee, "Public pensions in California pass another bankruptcy test," November 18, 2014
- ↑ Fox and Hounds, "San Jose Pension Reform: New Players, New Ruling," November 17, 2014
- ↑ WPSD, "Tax increase may be needed to fund Carbondale pension deficit," November 18, 2014
- See also: School bond and tax elections in Illinois
Illinois mandates school districts to hold elections issuing bonding for new construction and capital improvements, exceeding the property tax cap, or create a working cash fund. Since 2006, Illinois has had referendums over the property tax cap which is governed under the Illinois Property Tax Cap Act of 2006 which requires voter approval if a school district wants to exceed their property tax cap for up to four years. The other type of referendum is a Chapter 20 referendum. Under Chapter 20, a school district must have voter approval if the voters petition a school district to create a working cash fund to pay liabilities. Only school districts that serve a city, town, or village less than 500,000 in population can hold a Chapter 20 referendum.
In multiple areas in Illinois, local ballots have an advisory question about Pension reforms at the state level for public employees. Though the State General Assembly sees it as a much larger issue that cannot be easily fixed by a simple ballot question, especially one which has no power. The pension fund has suffered greatly due tot he recession and has become expensive to maintain. Lawmakers have proposed the idea of a bill to reform the system already, but outsiders feel that it still would not address the many flaws of the system. Similar measures to change how municipal pensions are funded was passed, but one addressing fire and police officers was not able to get through. Though members of both are hoping for positive results on the advisory question, hoping that the State government will get the picture that residents do what a comprehensive reform of the system to be undertaken.