Joe Nation Is The Bearer Of Bad News
In what turned out to be a more than two-hour long presentation to the council on the current state of Costa Mesa's pension obligation situation, he painted a bleak picture. His slick, informative slide show can be viewed HERE. When the whole presentation is available on the city web site I'll return and post that link here, too. (As promised, you can view the streaming video of the study session HERE.) You can read Bradley Zint's take on the presentation in the Daily Pilot HERE, and Mike Reicher's coverage in the Orange County Register, HERE.
DOOMED WITHOUT CHANGES
According to Nation, who has become the go-to guy on the pension crisis since he was drafted by his Stanford department chairman to fully-immerse himself in this issue, Costa Mesa's relationship with the CalPERS pension system is unsustainable and, unless dramatic, drastic steps are taken, it will saddle the current taxpayer's children with the debt.
NEGOTIATION AND MORE TAX REVENUE
He tells us that for our city, and most others around California, to dig themselves out of their pension difficulties it will require pension reform - changes in the pension formulas and two tiers with lower benefits for newer employees - and increase in revenues. In the latter case, he suggested that a one-quarter cent sales tax increase would raise $5.5 million annually, which would close the gap less than one-third of the way. He also suggested a parcel tax of $370 per household for every household in the city for the next twenty years. He said that would resolve the shortfall. He described that kind of approach as "uncommon, but not unheard of". He told us that Oakland assesses such a fee - $1,200 - and "they are a lot worse off than you are!", which didn't give me any comfort at all.
PROPHET OF DOOM
Among the many interesting comments Nation made during his presentation went like this:
"A lot of people consider me a progressive or liberal. I think that this is a progressive or liberal issue. And I think it's a progressive or liberal issue because, if you don't deal with this, you as a city, not only will you not have police officers and fire at the levels that you need, you won't have a library, you won't have potholes filled, you won't have parks, you won't have anything you care about."
BENEFIT ENHANCEMENT REPORT
I left the meeting before Bobby Young presented his discussion of the "Fiscal Impacts of the 2.5%@55 Enhancement for Miscellaneous Group. I'm going to review his presentation on tape, but you can see his slide show HERE.
RIGHEIMER WRAPS IT UP
I did fast forward to the end of the meeting and watched Mayor Jim Righeimer's summation. It didn't leave me feeling particularly good about the future. He called for collaboration between the City and Employees to try to resolve the problem. He said in no uncertain terms that this state-wide problem will not be fixed until it crashes, blaming it primarily on the unwillingness of the legislature and the CalPERS Board to come to grips with the true financial reality of the situation. He did state unequivocally, "There's no way this is going to get paid off. It can't be paid off. That's another 15-18 million dollars a year. There's going to have to be some movement from the state legislature and PERS to go ahead and change benefits going forward for existing employees. That will not happen in the State of California until it crashes." He went on to say, "The situation is 'Where is Costa Mesa going to be when that happens?' and I, for one, am not interested in giving additional payments to PERS. I don't mind putting it aside somewhere else, but I can't imagine sending them an additional 10-15 million dollars a year when it can just disappear tomorrow and we'll be tossed into the same category with everyone else."
I'M BUMMED OUT, TOO
So, are you feeling good about this now? I'm not. I encourage each of you to try to carve out the time to watch Nation's presentation, Young's presentation and, especially, Righeimer's summation. The play schedule for this event on Costa Mesa Television - Channel 24 on Time Warner Cable and Channel 99 on ATT U-Verse is below. Click on image to enlarge.