Tag Archives: Bob Malowney Chico Area Recreation District

Letter: Your tax hike went to raises, pensions

1 Jan

I saw in my stats that somebody read this old post – and I realized, it was worth a re-run. 

In 2012, Chico voters rejected Measure J, the cell phone tax proposed by council member and former mayor Ann Schwab. I didn’t take a poll, but something I heard from people when I spoke to them about it was outrage – “what does the city of Chico have to do with my cell phone service?”

Good question. Answer: NOTHING, it was just an outright grab into your wallets.  I hope people are still asking good questions, because what Joseph Neff is saying here, in a 6 year old letter, is still true. The majority of our budget goes toward salaries, benefits, and now, the employees’ pension liability.

http://www.chico.ca.us/finance/documents/2019-20CityAnnualFINALBudget.pdf

Below Joseph Neff reminds us, even well paid private sector positions do not usually include pension, but we are all forced to pay outrageous benefits to public employees.  And he offers a solution – I bold-faced the last paragraph, cut it out and send it to Chico City Council, and then you might want to send a copy to your county supervisor. 

This letter still stands, so I’m running it again. Thank you Joseph Neff, wherever you are.

Letter: Your tax hike went to raises, pensions

Chico Enterprise-Record

POSTED:   12/06/2013 10:41:12 PM PST

Conservative voters realized that Gov. Jerry Brown’s sales tax increases would not be used to benefit taxpayers but to provide lawmakers a raise and to protect the golden pensions of public employees.

As a 45-year career employee with bachelor’s and master’s degrees in engineering and an MBA, my two private-sector pensions are $15,000 yearly. Only two of six career employers had pensions during the past 50 years of plant closures from union strikes, global competition and company moves to right to work, more business friendly states.

None of my wife’s 30-year employers, including 11 as a teacher and 20 as either a degreed hospital medical records administrator, or as an advanced degreed nuclear medicine technologist supervisor, had pensions. Only one had a 401(k) plan. That is typical of the private sector for degreed private sector employees since the 1950s.

Public employee pensions should be halved to civilian levels, delayed to age 65, never adjusted for inflation, and based only on the first $50,000 of pre-retirement income. A $25,000 maximum annual public employee pension would be fair since savings and Social Security will provide the needed additional two-thirds of retirement spending.

— Joseph J. Neff, Corning

Parks not pensions

18 Dec

Busy little bees. 

Chico Area Recreation District has submitted Measure A, a parcel tax. Measure A will add an initial CORRECTION: $110 a year to your property taxes, increasing each year with inflation. I had to look up the rate of inflation – right now it’s 1.8%, up from 1.7% last year, and expected to go to 1.9% in 2020. 

This is what my dad called “rabbit math.” Not only does the “base” ($85) go up every year, but the percentage by which the base goes up goes up every year. Next thing you know you got a basket of rabbits on your prop tax bill,  eating your money like lettuce.

I was in 4-H as a kid, I had rabbits, so I get it. This is actually worse than rabbit math – momma rabbit can only have so many babies at a time. It’s the number of momma rabbits that makes for the increase – that would be the initial value, going up incrementally. But this tax will not only add momma rabbits every year, it will increase the number of babies momma rabbit is able to have – the percentage of increase goes up every year.

I hear a voice in the back of my head – “evil never sleeps...”

I don’t hate taxes – taxes are how we all share the cost of stuff we need as a community. We need roads. God in Heaven we need sewer. We need cops and fire. And, given the amount of money we pay into the pot, we sure as hell deserve  better parks. 

We don’t need over-priced bureaucrats who give themselves raises and raid road, sewer and park funds to feather their retirement nest. 

Repeat after me – No Shirt, No Shoes, No Dice... meaning, “pay your own pensions or forfeit.” There it is. Learn it. Know it. Live it. 

 

“Fungibility” – moving peas under walnut shells

14 Dec

My husband constantly reminds me that the new revenues brought in by tax increases just free up existing funds to be spent on pensions and benefits. Dan Walters has a word for this deception – “fungibility” – “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.”

Walters calls this a bait-and-switch approach to getting voters to raise taxes on themselves – they offer you a carrot – oh yeah, ice rink – to take your eyes off their pension deficit. The city of Chico, for example, has been taking money out of various funds and placing it in the General Fund, from which they can transfer it anywhere they want. And they’ve established TWO pension “trust” funds – “CalPERS Unfunded Liability Reserve Fund (903) and the Pension Stabilization Trust (904).

From budget policies 2019-20

“CalPERS Unfunded Liability Reserve Fund (903)
Fund 903 has been established to accumulate funds for the annual payment of the CalPERS unfunded liability payment for the City. The targeted reserve amount is equal to the estimated unfunded liability payment for the subsequent year due to CalPERS. In accordance with GASB 54, this fund balance is committed.”

“Beginning in FY2017-18, each department will set aside a set percentage of payroll costs to fund the annual payment of the CalPERS unfunded liability. A target reserve of 10% of the annual unfunded liability expenditure will be retained in the fund.”

From 2019-20 draft budget – page FS 75, Attachment A, Fund Summaries CALPERS UNFUNDED LIABILITY RSV FUND

In fiscal year 2017-18 they moved $7,323,978 into the Unfunded Liability Reserve Fund – $3.9 million from the miscellaneous employees payroll, and $3.2 million from public safety funds.  In 2018-19 they took $8,358,417.  The city manager’s recommendation for 2019-20 is $9,615,778. 

The Pension Stabilization Trust is a separate fund – The City Council established a Pension Stabilization Trust under Internal Revenue Code
Section 115 on June 19, 2018. The irrevocable trust is restricted for use to pay future CalPERS retirement contributions. The investment model strategy for the Trust is conservative. A conservative investment model is defined as a strategy that does not exceed an investment allocation over 20% in equity securities with the remainder investment allocation in fixed income securities. The model strategy may only be modified by the City Manager with City Council approval.

Fund 904 – Pension Stabilization Trust shall account for the financial activity of the Trust. Trust accounting will be provided at least quarterly as part of the monthly monitoring reports provided to City Council.

Correct me if I’m wrong, but what I see is not only a fund through which they take from other funds to pay down their deficit, but another, separate fund that also takes money from other funds – to be invested on behalf of the pensioneers. 

Here’s something scary I ran across in the budget policy documents – the city manager can approve up to $100,000 transfers without council approval.

Transfers Between Council Approved Capital Projects (Different Years – Rescheduling Projects) – Projects are approved over a ten-year period by Council. Each budgeted project has been appropriated an amount that may include funding from multiple City Funds. Appropriation transfers between capital projects scheduled in different years requires approval of the City Manager and City Council based the following authorization amounts:

• Up to $100,000 – City Manager;
• Over $100,000 – City Manager and City Council

Now, ask yourself Pollyanna – why are the road, sewer and park funds bottomed out? 

Because, as Walters reports, pension costs, especially for public safety employees, “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%.”  And, city management, as you see above, is allowed to dip into funds as they wish, transferring the garbage tax money from the Road Fund to the General Fund last year, as noted in the budget. From the General Fund they can transfer as much as they want into the Unfunded Liability Reserve or the Pension Stabilization Trust, as long as it’s in increments less than $100,000.

When Brian Nakamura came on as City Manager in 2012, he reported two deficit figures – one about $168,000,000, the other around $194,000,000. I think the  first figure was the pension deficit figure, and the second was the total deficit for pensions AND benefits. Today the city finance manglers report a total deficit of around $130,000,000. How do you think they paid that down so fast? 

Here’s Walters on the subject:

Dan Walters: It’s a bait and switch on the state’s public 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.

Last year, 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.

It also warns that the payments will continue to rise well into the next decade as the giant trust fund tries to recover from dramatic investment losses in the Great Recession, adjusts to lower earnings projections and handles a surge of baby boomer generation retirees claiming benefits.

“The greatest risk to the system continues to be the ability of employers to make their required contributions,” the new report declares, adding, “It is difficult to assess just how much strain current contribution levels are putting on employers. However, evidence such as collections activities, requests for extensions to amortization schedules and information regarding termination procedures indicate that some public agencies are under significant strain.”

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%.

However, as much as they complain about CalPERS forever dunning them, California’s local officials are largely unwilling to directly ask their voters for more taxes to pay pension bills.

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.

We saw a wonderful example of fungibility last year in Sacramento, where voters were persuaded to raise local sales taxes on the promise of civic improvements by an amount that closely matched increases in the city’s obligations to CalPERS.

We may be seeing another in Oakland next year.

The Oakland City Council is placing a “parcel tax” — a form of property tax — on the March ballot to improve parks, recreational and homeless services and stormwater drainage. The tax, $148 annually per real estate parcel, would generate an estimated $20 million a year.

As it happens, however, the most recent CalPERS report on Oakland’s pension obligations reveals that they will increase from $194 million in 2020-21 to $226 million by 2025-26, which would more than consume the revenue from the parcel tax.

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?

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.

Bait and switch is more politically expedient.

Linda McCann: Wake up people, you should be concerned as another hand wants to slip in your pocket to remove your cash!

11 Dec

It’s official – I got my “free” subscription from Mike Wolcott and now I know – the only good part of the tired, old and fuddled Enterprise Record cat box liner is the letters section. Thank you Linda McCann for tipping us to the latest assault on Prop 13.

 

I read with interest and concern the article in the December 6 Chico E-R regarding AB 48, or as it’s been dubbed Proposition 13.   OK I get that,  a proposition to put to a vote a bond issue to raise money for our schools. However there’s one sentence that is of great concern to me as it should be to all home owners protected under the 1978 Proposition 13.

The article states and I quote, “AB 48, Proposition 13 is not to be confused with the 1978 Proposition 13 which some education groups hope to overhaul in November to raise revenue for cities and schools.”

Wake up people, you should be concerned as another hand wants to slip in your pocket to remove your cash!

— Linda McCann, Paradise

Here’s the legislative digest entry:

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB48

This is a proposal to lower the voter approval for bonds from 2/3’s to 55 percent. This is not democracy, it’s overpaid school administrators sticking their hands in our pockets to pay for their outrageous pensions. In Sacramento, one school district is tanking because of a 15% raise they gave their already generously compensated teachers. 

Do they really think we’re stupid enough to fall for this trick? Calling a bad proposition “13”? Are we that dumb? Don’t wait until after the election to find  out – tell your family, friends and neighbors not to fall for this trick. Write a letter like Linda McCann. 

Just think, what if Paul Revere had thought his actions didn’t matter?

Jen Sidorova: Why millennials should care about government pensions

25 Nov

Here’s something hopeful – Bob sent this piece from Market Watch, written by a young person. 

https://www.marketwatch.com/story/why-millennials-should-care-about-government-pensions-even-if-they-dont-have-one-2019-11-21

Jen Sidorova explains the pension crisis and why young people should be concerned. 

“Governments with underfunded pensions need to come up with the money somehow, and the most obvious way is to raise taxes. What this means for millennials, who are already the largest generational group in the workforce, is that more of their tax dollars could be diverted to paying down public pension debt instead of paying for public services. All the funds that should have otherwise gone toward schools, roads and state parks, could be redirected to cover underfunded pensions for employees who stopped working 10 or 20 years ago. So, pension debt will affect all millennials, even those outside public sector jobs — because everyone’s a taxpayer.”

That last line, “everyone’s a taxpayer,” seems to escape certain groups – like renters, and young voters who still live at home or are supported by their parents. Young people have to stop saying “No worries” and start worrying about this mess before it’s just a fact of their lives. 

Sidorova explains the two-prong fork – not only will young people live with crapped out infrastructure and higher taxes, if they go into the public sector – like my son and many of my friends’ kids – they will not enjoy the same level of pay and benefits generously lavished on their predecessors. In fact, their contributions go directly into the pockets of retirees they never even knew.

“Currently, state and local pension contributions make up about 26% of the total payroll costs. According to my analysis of the PPD, in states like Illinois and Kentucky, the government’s contributions exceed 50 percent of the total payroll costs of their largest pension plans — a consequence of enormous unfunded liabilities. All the money that could’ve gone toward increasing salaries and improving work conditions now goes toward paying pension debt. That means young workers are missing out on benefits and pay raises in the short term. For state employees, given the constitutional protection of pensions, salary freezes are another likely consequence of growing pension debt.”

Here she talks about solutions,

“As these systems try to find solutions, it’s crucial they focus on reforms that ensure paying down debt as fast as possible, adopt more conservative actuarial assumptions about investment returns, and introduce financially sustainable retirement plan offerings, as those could go a long way to ensure retirement security of the millennial labor force.

what she doesn’t talk about is who should pay down the debt. I believe the workers should assume much higher shares, or accept the loss of their pensions and go with 401ks. But that would take strong, publicly supported politicians, and I don’t know where we will find those people. What I do know is, neither our city councilors not the CARD board have the guts to do this. In fact, Tom Lando, who has been with CARD for a few terms now, is the city of Chico’s biggest current pensioneer.

https://chicotaxpayers.com/2012/01/30/heres-why-lando-wants-to-raise-your-sales-tax/

LANDO, THOMAS J CHICO $11,236.48/mo $134,837.76/yr

That’s a nine year old post, they get cost of living increase every year. Here’s an up-to-date table from Transparent California.

https://transparentcalifornia.com/pensions/search/?q=Thomas+Lando

Wow, cost of living increases more than $1,000/year, for some people, because Lando’s pension has gone up by about $16,000 in 13 years, to $150,671.00  And he serves in various interim positions, which come with more salary – for example, he was the interim director of Feather River Recreation District, and then the interim city manager of Oroville for a couple more years. 

https://www.chicoer.com/2018/03/21/tom-lando-appointed-interim-oroville-city-administrator/

He took a smaller salary – “not to exceed $30,000” – so what? How many of us would like to pocket another $30,000, in addition to the $150,000/year we already get? For nothing. 

This is so  ridiculous – people have to wake up.

It’s up to us to vote for better people. In the mean time, we need to get the word out to young people about how they can change their own futures for the better.