Pasadena's Budget Shortfall: What's the Answer? (Pasadena Now link): The City of Pasadena has a big budget problem on its hands. Beginning with the coming fiscal year, the City’s spending will begin to outgrow its revenue. And, ironically, the answer to the problem lies smack in the middle of the reason for the problem.
The problem and the answer, experts agree, both fall under the heading of “pension costs.”
As Mayor Terry Tornek said in his last “State of the City” speech, “Our [pension] cost during this time held in the lower $30 million range. Last year, it climbed to $39 million; four years out, the forecast is a whopping $65 million; a 100% increase in five years. And based upon recent CalPers actions, the number will get even worse.”
While the Mayor and a number of other City officials have already suggested cutting back services and laying off City employees, at least two experts say that solution has already left the station.
Caltech political science professor Rod Kiewit explained that those steps wouldn’t work because “when you cut back on the number of employees, then you’ve got fewer employees paying into the retirement system, so it’s like a mini version of Social Security. You’ve got more and more retirees and fewer workers. The number of public retirees grows by about 4% a year.”
One needs look no further than the City of San Bernardino, just an hour so down the 210 east, to prove Kiewit’s point.
Several years ago, San Bernardino imposed a 10 percent pay cut for its city employees, but the firefighters union challenged the decision in court and won. The city now owes union members back pay. Pension costs in San Bernardino reached $25 million in 2012, doubling the 2006 costs in only six years.
A 2007 review by consulting firm Management Partners Inc had said that San Bernardino’s finances were at risk because public safety spending was growing faster than city revenue. The review called the public safety salaries “autopilot” budgeting, budgeting that provided “little incentive for labor groups to negotiate at the bargaining table.”
In his 2010 presentation, San Bernardino City Manager Charles McNeely projected that spending would outstrip revenue through 2015. For the current fiscal year, he predicted spending would exceed revenue by $40 million, which is about the difference city officials forecast last week.
“I don’t know how you could come out of that meeting not understanding we had a serious problem,” McNeely said at the time. “I told them, ‘You’re headed for trouble, it’s a train wreck, you can’t keep doing business this way.’”
San Bernardino filed for bankruptcy in August, 2012, buried under a deficit of more than $45 million. The City has only recently begun to re-emerge financially, having had their bankruptcy payment plan approved in December by U.S. Bankruptcy Judge Meredith Jury.
Mod: The tax strategy in Sierra Madre apparently is orchestrating a steady drumbeat for increases, all without City Hall acknowledging the real cause of this claimed need. During the 2016 Measure UUT campaign the Library was chosen as the designated damsel in distress. And if I am reading this correctly, in 2018 the expected parcel tax campaign will be based on a need to save the Fire Department. So why won't the city acknowledge its real problem? Do they think that you can't handle the truth?