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Taxpayers in the northern California capital region wonder why their roads remain full of potholes, fire stations close down, and overall services decline. As Brad Brannan of the Sacramento Bee explains, this happens because of “rising pension costs.” An employee of the Sacramento Metropolitan Fire District can retire after 30 years, at the age of 50, with 90 percent of her salary for life. Those retirees bag an average annual pension of some $90,000, nearly $30,000 more than the state’s median annual income of $64,500. So no surprise that the district pays out $34 million in retirement costs, an increase of 26 percent from a decade ago. This works out to 42 cents for every dollar of employee salary, a jump of 25 percent from two years ago. Brannan has also calculated this ratio for cities in the region.
The city of Folsom spends 47 cents on pensions for every payroll dollar. Galt spends 46 cents, Davis 45 cents, and Sacramento 39 percent. In South Lake Tahoe, where pension costs amount to 34 cents for every payroll dollar, the city “deferred needed repairs for years,” as Brannan explains. Government union mouthpiece Steve Maviglio, who once bagged $165,000 a year as a spokesman for Assembly Speaker Fabian Nunez, believes it’s all justified because government employees didn’t get the raises they wanted during the recession.
As we noted last year, CalPERS boss Rob Feckner believes all is well and that government pensions are “a powerful financial engine,” generating “nearly $27 billion in economic activity every year, stimulating business growth, generating tax receipts and supporting more than 360,000 jobs in our local communities.” Former San Jose mayor Chuck Reed, however, cited shortfalls of more than $100 billion, and Dan Walters of the Sacramento Bee flagged unfunded pension debt of “at least $300 billion” and as much $1 trillion with lower earnings assumptions.
So the pension crisis is going to get worse and services will continue to decline as local governments fork over more money to retirees, many in their fifties and bagging nearly $100,000 a year. A sweet ruling-class deal for them means a bad deal for taxpayers.