Dave (thanks Dave) put the numbers on the 1% sales tax measure proposed by Staff and Council –
“That 180 million is going to cost us over a quarter billion. In other words, we will have to pay over 73 million in interest to get 180 million. In other words, the interest will cost us over 40% of the bond.”
“That’s over 73 million that won’t go to roads, won’t even go for cops or fire or even the crazy pensions. It goes right to Wall Street. And not the Wall Street in Chico.“
Dave added later, “One of those consulting firms the last city council hired said for an average family of four the 1% tax increase would cost them $800 in additional tax a year.“
I’ll add, at the present time, the city has no other real debt except the pension deficit, also known as, the Unfunded Actuarial Liability (UAL). They have leases on equipment and vehicles, but nothing approaching the UAL. Last time I asked the Finance Dept for that figure, it was over $145 million. And growing, despite increasing “stabilization” payments.
Those “stabilization” payments are funded by “allocations” from every department, a percentage of payroll. The last payment was over $11.5 million, and the Finance Dept. and various consultants have said that payment will keep going up, projecting $18 million by 2026.
Staff has brought in paid consultants to talk about a Pension Obligation Bond, leasing city infrastructure such as streets – Sean Morgan wanted to lease the airport. They’ve discussed every jackass notion that skitters across their shallow brain pans, but they refuse to discuss raising the employee contributions.
Here are the topics that need further discussion: The California Rule, and Defined Contributions vs Defined Benefits.
The California Rule states that our public employees have been guaranteed certain benefits, and that we can’t go back on those agreements. But here’s the thing – the California Rule doesn’t say we can’t require higher contributions out of employees.
Defined Benefits are the current agreement. That means, no matter what happens with our city finances, we have to pay the pensions – 70-90% of the employees’ highest year’s earnings. A good laywer could easily make the argument that WE didn’t promise these benefits, CalPERS did. They told us they’d make enough on the market to cover the insane pensions. Instead, we keep getting reports of malfeasance and mismanagement – including bribe taking and self-serving investments. They’ve failed to make their target year after year, and raised the city’s contributions as a consequence. Right now, the taxpayers are footing over 30% of the pensions, with the employees limping along at 15% or less. Management, with the highest salaries, pays only 9%.
Defined Contributions – that is what it sounds like. That’s what private sector employees get – if anything. That means, wthe employer (us) promises to contribute a set amount, based on a percentage of their salary. And then they can contribute as much as they want. That’s how 401K’s work.
They have special 401K’s for public employees, called a 457 Plan. Are you ready to be pissed off? In addition to his CalPERS pension, our city manager Mark Orme has negotiated himself a 457 Plan. According to publicpay.ca.gov , in 2020, the city put over $18,000 into Orme’s 457, in addition to over $22,000 toward his CalPERS pension. According to Transparent California, even with Orme’s 9% contribution to CalPERS, that leaves a deficit, just for Orme, of over $70,000. Plus interest fees.
I feel Orme owns that deficit, and should pay it. Or just take less in benefits. With a total salary of over $220,000/year, and a $62,000 benefits package, this guy is greedy pig.
Which will be the subject of my next letter to the editor, stay tuned.
Chico Taxpayers Association 
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