Next Tuesday city council will hear a presentation on a Pension Obligation Bond. They are trying to slide it under the wire as “restructuring debt,” which is really deceptive – they don’t mention the part where they take on millions in NEW DEBT. This is really dirty and sneaky, and you need to let your council members know, you know what they’re up to. You can contact them directly through the clerk’s office – debbie.presson@chicoca.gov – or you can go to Chico Engaged. I’d recommend both.
Here’s the link to the agenda:
https://chico-ca.granicusideas.com/meetings/351-1-slash-5-slash-21-city-council-meeting/agenda_items
And here’s the POB presentation:
I also wrote a letter to the editor. Staff is trying to get this thing done within the next two meetings, let’s stop it in it’s tracks.
Also, get a load of Coolidge’s request for a “streets bond”!
Here’s my letter about the POB:
January 5, Chico City Council will consider Pension Obligation Bonds. Staff calls it “restructuring pension debt/Unfunded Actuarial Liability”, but it’s really millions in new debt. A new twist on the old Shell Game, Staff will invest borrowed money in the stock market, hoping to make enough to pay both the pension debt and the new debt. If their investments fail, the taxpayers will be forced to pay not only the pension debt but the new bond debt, at the expense of city infrastructure and basic services.
Over the last couple of years, surveys, letters to the editor, and comments on social media have demonstrated two main concerns: lack of law and order, and lack of maintenance to public infrastructure. While Staff has claimed they don’t have enough money for either, they’ve continued to appropriate more money each year from city departments into the Pension Stabilization Trust – this year, $11.4 million, roughly 20% of tax revenue.
Furthermore, even with 10’s of millions a year paid through payroll and the PST, the UAL has still grown, up from $126,000,000 only a few years ago to $146,000,000. Staff has recently revealed another $140,000,000 interest. This is the result of insufficient contributions from employees, and poor returns from CalPERS investments.
The Government Finance Officers Association says POBs are dangerous without a plan to manage pension costs. Instead, our city has increased pension costs through new hires and overly-generous salaries, without demanding more from Staff.
The GFOA also determined POBs were the cause of bankruptcy in San Bernardino and Stockton.
Juanita Sumner, Chico CA
Chico Taxpayers Association 