« Shopping Trip? Breakfast? | Main | Drought in the Sierra »

August 06, 2015

Comments

Joe

It looks like Kamala Harris' Proposition summary statement is deja vu all over again. The SacBee reports

Backers of a similar pension-altering measure sued Harris last year over her office’s description of that initiative, arguing that the characterization would bias voters against the measure. The court ruled against them, saying there was “nothing false or misleading” about Harris’ description.

They had similar criticisms for the title and summary issued Tuesday, which state that the measure “eliminates constitutional protections” for current employees and would lead to “significant effects – savings and costs – on state and local governments.”

“This simple initiative gives voters the ability to stop sweetheart and unsustainable pension deals that politicians concoct behind closed doors with government union bosses,” former San Jose Mayor Chuck Reed and former San Diego City Councilman Carl DeMaio, the measure’s proponents, said in a joint statement.

Read more here: http://www.sacbee.com/news/politics-government/the-state-worker/article30794346.html#storylink=cpy

Joe

Dan Walters at the SacBee has a bit more detail on how CalPERS actions affect local cities:

Sixteen years after it abetted one of the most irresponsible political acts in state history – a massive increase in public pension benefits – the California Public Employees’ Retirement System may finally be reforming.

In 1999, CalPERS told the Legislature that the benefit increase state worker unions were seeking could be financed from investment earnings with no effect on taxpayers.

Much later, it was revealed that CalPERS’ actuaries had provided several scenarios, but its union-dominated board adopted the most optimistic, giving the Legislature and then-Gov. Gray Davis the justification (and political cover) they wanted to boost benefits.

Most local governments followed suit and, for a while, it all seemed to work. But when the Great Recession struck less than a decade later, CalPERS suffered immense losses because of the high-risk investments it had made to meet its optimistic earnings projections.

In recent years, CalPERS ramped up mandatory contributions from state and local governments to cover its losses, and then again to deal with the demographic reality that as baby boomers retire in droves, payouts will increase sharply.

Meanwhile, prospects for hitting the fund’s investment earnings target have declined, leaving it with a substantial unfunded liability, roughly 25 percent of its obligations.

Ever-higher demands from CalPERS are not a huge issue for the state budget, because it spends relatively little on workers’ salaries. But they are a big burden for local governments, particularly cities, because so much of their spending is on workers’ pay, particularly for police and firefighters who enjoy high salaries and extraordinarily generous pensions.

Read more here: http://www.sacbee.com/news/politics-government/capitol-alert/article40310031.html#emlnl=Morning_Newsletter#storylink=cpy

Joe

According to today's SacBee, the ballot initiative is dead for this year:

For the third time in five years, an effort to put a government pension measure before voters has stalled for lack of money.

Former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio announced Monday that they are backing off plans to qualify a proposal for the November ballot. Instead, they said in a joint release, “we have decided to re-file at least one of our pension reform measures later this year for the November 2018 ballot.”

Read more here: http://www.sacbee.com/news/politics-government/the-state-worker/article55310175.html#storylink=cpy

Joe

More debt calculations from the controller:

California faces a $74.1 billion obligation to cover state retirees’ medical expenses over the next three decades, according to a new report released by state Controller Betty Yee.

The figure, which captures unfunded retiree health care costs as of mid-2015, grew nearly $2.4 billion from the year before. It does not account for the impact of future inflation.

Read more here: http://www.sacbee.com/news/politics-government/the-state-worker/article56844253.html#emlnl=Todays_Top_Stories#storylink=cpy

Joe

You really have to love our state government. The SacBee is listing bills that are may or may not move out of the "suspense file" and get a vote in this session. Included is this doozy:

Senate Bill 1234 from Senate President Pro Tem Kevin de León, D-Los Angeles, would create a statewide retirement savings plan for private employees.

The State cannot even come close to running a retirement plan for state employees at near solvency so now they want to EXPAND to private employees??? Unbelievable.

Joe

The move to 7% from 7.5% is in the works. Of course, even 7% is wishful thinking
__________________________

The cost of that government pension is about to go up again, for California taxpayers as well as some public employees.

CalPERS moved to slash its official investment forecast Tuesday, a dramatic step that will translate into billions of dollars in higher annual pension contributions from the state, local governments and school districts.

Employees hired after January 2013, when a statewide pension reform law took effect, will also have to kick in more money. Older employees could see higher contributions, too, although that would be subject to contract bargaining.

CalPERS’ Finance and Administration Committee voted 6-1 to lower the forecast from 7.5 percent to 7 percent in phases over three years, starting next July.

Read more here: http://www.sacbee.com/news/business/article122088759.html#emlnl=Morning_Newsletter#storylink=cpy

Joe

The SacBee thought police somehow let through an article about real police and operating engineers trying to talk sense into CalPERS:

“It’s time for CalPERS to re-evaluate their investment strategies and focus more on improving their investment returns and less on ‘socially responsible’ investments,” said Steve Crouch, its director of public employees.

Opponents to divestment say those decisions are costly. CalPERS has missed about $8 billion in potential earnings because of its divestment choices dating back to the 1980s, according to a February report by Wilshire Associates.

That matters because both CalPERS and the California State Teachers’ Retirement System are badly underfunded, with each holding assets worth about two-thirds of what they’d need if they had to pay all of the benefits they owe immediately. If the funds don’t catch up, taxpayers eventually could be forced to make up the difference.
--------
Here's tasty bit:

Those proposals all have passionate supporters.

Dozens of Dakota Access Pipeline opponents packed CalPERS’ February meeting,

Dozens, I tell you, dozens!!!

Joe

The whole article is here:

http://www.sacbee.com/news/politics-government/the-state-worker/article161772508.html#emlnl=Todays_Top_Stories

Bruce Dickinson

Joe, let Bruce Dickinson remind everyone that all you need is a 40% stock market correction and a 20% drop in real estate prices, and California will be running big budget deficits again. Also Burlingame will be in deep doo-doo if it continues along the aggressive capital project spending trajectory (to wit, the too costly Rec center that can really be done at half-cost and new city hall).

Running governments, by its very nature has high fixed costs so revenue generation that is mostly dependent on the boom-and-bust of asset prices (property and capital gains taxes) will have much more volatility compared to the costs. The only way to deal with this, is to maintain surpluses so that any revenue shortfalls can be absorbed by the surplus, then once revenues pick up again, the surpluses are rebuilt. Folks, this is how basic businesses are run, yet, such extremely elementary concepts seem to evade government officials at the state and local level, even the city of Burlingame staff and seemingly, some of the city council, who ironically have business interests--one would think they of all people, would be the ones to get it.

Folks, seriously, you gotta get back to economics 101 before having any hope of avoiding future problems!

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)

About the Voice

  • The Burlingame Voice is dedicated to informing and empowering the Burlingame community. Our blog is a public forum for the discussion of issues that relate to Burlingame, California. On it you can read and comment on important city issues.

    Note: Opinions posted on the Burlingame Voice Blog are those of the poster and not necessarily the opinion of the editorial board of the Burlingame Voice. See Terms of Use

Contributing to the Voice

  • If you would like more information on the Burlingame Voice, send an email to editor@burlingamevoice.com with your request or question. We appreciate your interest.

    Authors may login here.

    For help posting to the Voice, see our tutorial.