Reading Friday’s news, I couldn’t help think of the union official who, sitting on a Capitol Weekly panel with me after the last General Election, said in response to my bringing up concerns on the pension issue: “That’s yesterday’s news.” Actually it is today’s news over and over and over again. In fact, there were three separate issues of pension alarms reported Friday.
- The agreement to keep tuition unchanged at the University of California worked out by Gov. Jerry Brown and UC President Janet Napolitano included movement toward a plan to relieve crushing pension obligations on the UC budget. As the Sacramento Bee reported, while details remain to be worked out, the plan “will introduce a pension tier with a dramatically lower compensation cap, and could shift new hires from a guaranteed benefit to a 401(k)-style defined contribution plan.”
- The Los Angeles Times reported that the California Public Employees’ Retirement System yearly investment goal will likely be missed. Over the last 10 months CalPERS has earned 3% on its investments, well short of the 7.5% goal. Even though last year the fund exceeded the goal by a healthy amount, CalPERS is still below the overall revenue target needed to be considered whole. That could mean state and local taxpayers could be on the hook to kick in money to the retirement funds – while trying to save for their own retirements.
- An effort by Disneyland to invest $1 billion in their theme parks in Anaheim comes with a proposal to extend an entertainment tax exemption on park tickets. The Anaheim City Council is considering the proposal. But according to the Orange County Register Mayor Tom Tait is opposed. The reason Tait said he was opposed to extending the exemption, which he supported as a council member when it was first applied in 1996, is because the city faces an unfunded pension obligation of about $500 million.
The argument of pension obligations squeezing budgets because of diminishing revenue for city services is real. The urge to raise taxes to cover those obligations is also real and elected officials like Tait are acknowledging the problem.
Pensions won’t become yesterday’s news until solid reforms are in place and taxpayers are not subject to reduced services or higher taxes because of pension obligations.