Follow the walnuts

Doing some research for a follow-up on a recent post –

Assembly Bill 1383: “doubling down on a mistake 27 years ago that has helped drive up taxpayer pension costs by more than eightfold.”

I took a trip back in time, courtesy of Dan Walters at Cal Matters. In this article, from 2019, Walters gives a pretty good report of what had happened to our budget since the deal the state made with CalPERS in 1999.

https://calmatters.org/commentary/2019/12/voters-taxes-pensions/

Local officials, particularly those in California’s 400-plus cities, have been complaining loudly in recent years about pension costs, raising the specter of insolvency if they continue their rapid increase.

Walters, a long time California observer, made that remark in 2019. Just last October, Chico City Council member Tom Van Overbeek complained loudly about Chico’s pension deficit. From the official city record – “Following a presentation from finance manager Barbara Martin, Councilmember van Overbeek stated he is concerned that the unfunded liability number keeps growing and inquired if all employees are part of CalPERS.” The finance director answered yes. “Councilmember van Overbeek stated the UAL increase from $117 million to $180 million is a startling increase.“

At the time, Van Overbeek suggested outsourcing city services. Think, Downtown parking enforcement, and how that went.

Former Governor Jerry Brown made some mild reforms of the pension deal – the Public Employee Pension Reform Act (PEPRA). That legislation required “new hires” to pay more of the agency costs, but not the true cost of the pensions, which has continued to rack up deficits in the millions all over the state. And now, the public safety employees, who essentially run our government with the biggest contributions at election time, are behind this new legislation, AB 1383.

Walters calls it, “Bait and Switch on Pensions” – that’s exactly what it was. The voters were never asked about it, it was all done by the governor and the legislature. They told us CalPERS would make up the lion’s share of the cost with stock market earnings. I frankly think the racetrack would have been more prudent, but nobody asked me. Given the kind of people that are running CalPERS, they probably would have put the whole wad on Santa’s Little Helper.

Way back then, the League of California Cities started telling city managers all over the state to use the Unfunded Pension Liability as a stick on the voters, try to get them to pass tax increases. Walters reports, “Last year (2018), the League of California Cities issued a report declaring that ‘pension costs will dramatically increase to unsustainable levels.’”

The California Public Employees Retirement System (CalPERS) confirms that projection in a new report.

The report reveals that mandatory “employer contributions,” including those from the state and school districts, as well as local governments, rose from $12 billion in 2016-17 to $20 billion a year later.“

Employer? That’s the taxpayers, who were lied to again and again. I haven’t seen the budget lately but you will find the pension funds are steadily eating the General Fund. Measure H goes into the General Fund, with no restrictions on spending.

Dave, ask your wife to look at the budget, and tell us where all that Measure H money is really going. Tell her to watch those walnuts, cause those peas just keep disappearing. Our pension deficit has continued to skyrocket since Measure H. Ask Tom Van Overbeek. Here’s what Walters reported way back in 2019.

“Pension costs for “safety employees,” police officers and firefighters mostly, are rising especially fast. They now average about 50% of payroll and are projected in the new report to top 55% by the mid-2020s. A few cities are already nearing or reaching 100%.“

Walters asked back in 2019, “So why don’t city officials just own up and publicly acknowledge that pension costs are driving their budgets into red ink and ask voters for more tax money to cover them?

And then he answers himself – “They — and the unions that finance tax increase campaigns — clearly fear that being candid would backfire. If voters knew they would be paying more taxes to support pension benefits for city workers that are probably much better than they have themselves, they might refuse to go along.“

Yes, the unions have bought our local elections. So they pitched Measure H as a general measure, only requiring 50%+1 of the voters. Just like agencies all over the state, they made vague promises about better roads and public “safety”.

“Hundreds of local tax increase measures were placed on the ballot last year and hundreds more are likely to be proposed next year, but almost universally they are billed as improving popular local services, such as “public safety” or parks.

It’s where the concept of “fungibility” kicks in. If a city’s voters can be persuaded to raise their taxes for parks and recreation, for example, it effectively frees up more money to pay its pension bills without acknowledging that motive.” That’s what you call BAIT AND SWITCH.

And that’s where Measure H is going. Look at the signs on the road work you are seeing around town – they have to be honest – most of the money is coming from state grants, including wildfire disaster relief money they got from the Camp Fire and the Park Fire.

This year’s projected payment toward the UAL is over $16 million. Where does that money come from? Follow the walnuts.