Reprinted with permission from the Ventura Taxpayers Association:
“I do not know where we are going to get the money.” Five years ago Ventura City Councilman Morehouse did not know how prophetic he would be asking that question when he, Mayor Weir and Councilman Andrews were on the losing end of a vote to award retroactive pension increases for firefighters. In the 2015 – 16 budget, increased revenues are being eaten up by the growth in expenses and the question is still unanswered. Recent debate over local budgets has been dominated by concerns about how spending on employee pensions are “crowding out” funds for basic services. The economy is growing and spending is up, but taxpayers are seeing little benefit. Crowding-out finds its roots in a problem of simple math. Cities can’t run deficits. When growth in revenues fails to keep pace with any major spending category, some other category or categories must be reduced. Elected officials in cities throughout California, including Ventura, are realizing that without significant changes to current systems, public pension payments will quickly crowd out other discretionary spending like street repairs, and public safety.
Ventura’s math problem is simple and alarming. Citywide revenue is 10 percent lower today than it was in 2010 yet pension costs have increased 71 percent. Ventura’s budget expenses are increasing $2.8 million and the largest single increase is $1.2 million for pensions, not services to residents. the increased pension contribution is fully 66% of the increase, more than twice the increase of any other item. The truly alarming nature of the increase is the city has fewer employees than it did five years ago including 20 fewer policemen. And the city continues with it’s record of having the highest per capita Part 1 crime rate in the county and the police department responded to the highest number of calls for service in over 10 years.
Crowding-out is most noticeable by the fact that lower staff levels mean we have fewer libraries but more potholes and bad sidewalks and more crime than we had five years ago. The city has been forced to reduce the size of their police and fire departments because of rising employee costs, driven largely by surging pension costs. And the crowding-out by pensions is going to grow. In November 2014 CalPERS notified its members, including Ventura, that “current pension contribution levels are scheduled to increase further.” In the same report CalPERS warned “government employers throughout the state are reporting that these contribution levels are putting significant strain on their budgets and limiting their ability to provide services to the people in their jurisdictions.” What CalPERS is forecasting is the reality that more tax revenue will be absorbed in the black hole of pension costs, forcing the city to choose between more cuts in services, increased taxes or both. Alternatively the city should require that its employees pay more for their pensions than they currently do. Under new rules approved by Governor Brown, more pension costs can be shared by employees. For example, the city could agree with its unions that they will pay one-half of normal cost and part of the unfunded liability. So the question becomes who should pay. The 99 percent of residents who are not city or county employees save for retirement. It is only fair that city employees contribute more towards their taxpayer guaranteed pensions. Otherwise, taxpayers can expect to see continued erosion of city services and/or tax increases as ever increasing pension costs crowd-out vital budget priorities. Councilman Morehouse and Ventura residents still deserve an answer to their question. Where are we going to get the money?