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Pension Hotspots: San Jose and San Bernardino, California
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November 28, 2014
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."[1]
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.[2]
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."[3]
List of 2014 local pension measures
Approved
City of Yorba Linda Elimination of Pension and Health Care Benefits for City Council Members, Measure JJ (November 2014)
City of Oakland Municipal Retirement System Termination, Measure EE (November 2014)
City of Piedmont Pension Debt Refinance Bonds, Measure A (February 2014)
Orange County Board of Supervisors Pension Contributions, Measure A (June 2014)
City of Porterville Authority over City Employee Benefits Amendment, Measure Y (June 2014)
Defeated
City of Phoenix Pension Reform Initiative, Proposition 487 (November 2014)
City of Springfield Police/Fire Pension Fund Sales Tax Measure (April 2014)
Not on ballot
Pacific Grove City Initiative To Void Ordinance 02-18 Pension Increase (November 2014)
City of San Jose Pension Measure to Alter Measure B Reform Charter Amendment (November 2014)
Ventura County Sustainable Retirement System Pension Reform Initiative (November 2014)
See also
External links
- County Employees Retirement Law of 1937
- Morningstar, "Morningstar report analyzing public pension debt on a state level," September 16, 2013
- Pew Charitable Trust, "Cities Squeezed by Pension and Retiree Health Care Shortfalls," March, 2013
- Moody's website
- Standard and Poor's credit ratings website
- Governmental Accounting Standards Board website
- Pension Tsunami website
- Pew Charitable Trust, "A Widening Gap in Cities Shortfalls in Funding for Pensions and Retiree Health Care," January 16, 2013
Additional reading
Footnotes
