There’s been much speculation in the press about the sudden resignation of San Diego County Assessor Greg Smith. Theories abound.
But there’s no mystery why Assessor Smith is leaving and taking another job. The county pension plan drove Greg Smith out.
But not the way you’d think. Financially, he’d be a fool to stay. And Assessor Smith is no fool.
Greg is one of the sharpest, most responsive elected officials in the county. I’ve written a complimentary op-ed about him earlier this year, touting his efforts to ease the process of adjusting down one’s property taxes in a recession. I talked with Greg about his retirement, and he was quite open about his story.
Greg Smith started with the county in 1977. He became County Assessor in 1983. Under the county’s retirement formula, at age 60 he can start receiving a guaranteed pension of 3% of his highest salary times the number of years worked for the county – not just for the years while functioning as the county assessor. But Smith is retiring early at age 58, so he gets a bit less – 2.8% per year vs. 3% at age 60.
Hence Smith will now retire early from county “public service” at age 58 after 32 years with about 89.6% of his highest salary. Currently he’s earning $182,300, so his initial pension will be about $163,400. Not bad for a “public servant.”
Why would he want to work any more for the county when he can get a second six figure private sector salary working in San Diego while drawing an 89.6% county pension? In essence, at this point, Smith is working at the county for about $20,000 salary a year.
Logic tells us that there’s another reason to retire now. With the economic meltdown of our state and local economy, it’s likely that we’ll see pay freezes for at least the next two years for county employees – and certainly for elected county officials. But once a government employee retires, an automatic, guaranteed annual cost of living pension increase kicks in. While capped at 2% a year, Smith’s 89.6% pension could quickly approach his full frozen salary.
Only one problem with such logic – it assumes the County Supervisors have any clue as to the magnitude of the economic meltdown they are facing. Clearly they don’t.
That’s why the Supervisors already have voted four consecutive 4.5% pay increases (compounded annually) for Assessor Smith for 2007, 2008, 2009 and again for 2010. Similar increases are scheduled for the other elected county elected officials. No adjustments or freezes have been made to reflect the economic downturn. The county is claiming poverty while continuing to give opulent pay increases.
Go figure. SOMEONE has to!
But back to Greg Smith. He is foregoing those last 4.5% 2009 and 2010 pay increases because of an exceptional new job opportunity. Plain and simple. It’s a chance to receive two lucrative income streams – the county pension and a private salary.
Here we see the final irony of our insanely generous government pension plans. Supposedly employers pay good pensions to RETAIN good employees. But with governments’ generous pension formulas and early retirement age options, we actually drive OUT our government employees. Such 30 year veterans can retire at age 60 or sooner with almost the same pay they earned — plus annual COL increases.
When Smith retires, we taxpayers essentially are on the hook to provide two salaries – one for Smith, and one for Smith’s replacement. Call me wild and crazy, but I think we just established why state, county and city governments are now in a world of financial hurt.