Chico Says No: There is no bigger reason for the City’s financial predicament than spiraling pension and other post employment benefits (OPEB) costs.

3 Oct

 Investigating the “Chico Says No” site further, I found this really good essay on Chico’s unfunded pension liability.

Something I’ve tried to remember to include in the pension deficit conversation but often forget, is OPEB – other post employment benefits. Yes, there is also a separate deficit on employee health benefits, for the same reason there is a pension deficit – our city employees expect very nice benefits – health insurance, vision, dental, life insurance, etc – but employees don’t make realistic contributions. Listen, the only reason they discuss the pension deficit AT ALL is that we’ve continued to press them about it for years. As we’ve kept pressing, they’ve raised employee contributions, by very tiny increments. The taxpayers pick up over half the “payroll” share and ALL the “catch-up”, or deficit payments.

And here’s what’s weird, like the author points out below – the catch-up payments get bigger every year, taking more money from the General Fund every year, but the deficit just keeps getting bigger. More about that tomorrow – or you can look at the budget yourself, here:

And now, from the Chico Says No website:

Why are the streets crumbling in Chico?  Why is the rest of the infrastructure in sad shape?  Why have City services declined?  And why has this happened while City revenue continues to rise?  The fact is the City has never had more money to spend and the infrastructure has never been worse.  Why do our local politicians and bureaucrats continually cry out for more money and raise fees and taxes?

There is no bigger reason for the City’s financial predicament than spiraling pension and other post employment benefits (OPEB) costs. These costs are referred to as unfunded accrued liabilities (UAL) meaning there has not been enough money put aside to pay for them.  Despite higher fees and taxes, despite money that is supposed to be dedicated for essentials like street maintenance being siphoned off to meet these costs, they continue to spiral out of control.

The City Council wants tax increases and although no City Council member will tell you the truth, the reason for these tax increases is to deal with the UAL.  It is unconscionable that our local leaders will not level with people like you who have to pay for this.

If you read nothing more on the subject, read this article:

Although it is over two years old it applies even more today because the problem is even worse today. The article states:

Local governments and school districts always tout these measures as necessary expenditures to rebuild crumbling schools, maintain overused parks and provide better police services, but don’t be fooled. Every new local tax these days is, essentially, a pension tax. These governments write the ballot summaries and provide ‘voter information,’ so they are able to sway the discussion away from the true causes of their fiscal peril.

And remember, no city in California has solved its UAL predicament by raising taxes or borrowing more.  All that can do is increase the cost to taxpayers and postpone the day when there will be no choice but to reform these liabilities.

Don’t vote for the politicians’ tax increases.  Don’t let them borrow more.  Instead, demand accountability and demand they reform the out of control unfunded liabilities before they cost taxpayers even more.

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