Unless you’re totally oblivious to regional news, you’ve by now
heard the big news: The Bay Area city of Vallejo, population a
little more than double that of Gilroy, is going broke.
Burgeoning public safety benefits are fast becoming a huge burden
Unless you’re totally oblivious to regional news, you’ve by now heard the big news: The Bay Area city of Vallejo, population a little more than double that of Gilroy, is going broke.
Hundreds of media organizations have, of course, descended on Vallejo to report on something the Dispatch has been harping on for more than a decade – the exponential and outrageous burden being placed on communities by burgeoning public safety benefits.
Consider these bankruptcy-related messages:
Police and firefighter union contracts are breaking the bank
MediaNews: With the city of Vallejo on the brink of bankruptcy, 20 police and fire employees in the past three days have submitted their retirement papers and more are expected to follow, officials reported.
The sudden exodus of public safety employees has officials worried about how well the departments will be able to serve the city.
Channel 10 News: The Solano County city of about 117,000 has a $6 million budget deficit and is projected to run out of money by the end of March, says City Manager Joe Tanner.
Efforts to re-negotiate police and firefighter union contracts have broken down …
Some cutbacks have already been instituted: only emergency 911 calls will receive an immediate response; trees are not being trimmed and park maintenance services have been reduced. City officials are considering layoffs and rotating closures of fire stations and libraries.
Vallejo Times Herald: Bankruptcy is certain to spark fresh debate about the cost of unfunded employee benefits, and the impacts on bond holders.
As of December, the city had accrued a $135 million liability for the present value of retiree benefits earned by active and retired employees. Further, there is a $6 million added cost as current employees continue to vest and earn future benefits, the city said.
“If bond holders are hurt by a bankruptcy, then future lenders will probably put constraints on elected officials’ ability to make promises while in office that must be paid after they leave,” said CPA Marcia Fritz, vice president and treasurer for California Foundation for Fiscal Responsibility, which advocates for pension reform.
“It’s almost a relief that it’s finally coming to this in Vallejo because it will be an example of what happens when you’ve got a lot of people with their fingers in the cookie jar,” she said. “I saw this coming years ago.”
… Experts agree one thing is certain. If the city cannot pay its employees because the general fund is dry … City Manager Joe Tanner must instruct all employees to stay home.
Alan Davis, attorney for the police and fire unions whose leaders are negotiating with the city to erase an immediate $6 million shortfall, declined comment. The unions represent employees whose salaries total 80 percent of Vallejo’s general fund.
It’s not if Gilroy will face these same circumstances, but when
Unfortunately, the question for Gilroy is not if the city will face these dire circumstances, but when? In our town, the driving evil is binding arbitration for police and fire employees – passed by unsuspecting voters – and used by the unions to demand more and more lucrative benefits such as the 3 percent at 50 retirement plan. That works like this: Compensation for a retiree above age 50 with 30 years of service equals 90 percent of the average monthly pay rate for the last employment period of either 36 months or 12 months, depending on the employer’s contract with CalPERS.
The burden of these plans is growing by leaps and bounds, and it’s an unfair burden on our city.
Council members (dare we say gutless) fear the union smackdown at the polls and so, the city train heads for a financial head-on as we merrily try to build more retail to mask these unrelenting obligations.
Perhaps new City Manager Tom Haglund can put together a Gilroy bankruptcy intersection chart showing when we’ll run out of cash. Maybe that will wake our local leaders up.
Act now:
Send an e-mail to Mayor Al Pinheiro at: Al*********@ci.us
To understand how 3 @ 50 works, go to:
