by Webmaster

It’s Time to Take Action on Public Employee Pensions

Last week's Wall Street Journal opinion piece by former Mayor Richard Riordan and Alexander Rubalcava stirred up a hornet's nest. Their sharp criticism of Los Angeles Mayor Antonio Villaraigosa and the City Council regarding the public pension crisis was quickly followed by City Hall's strong rebuke of the financial assumptions and a listing of actions currently underway. The din created by this debate about numbers should not drown out the serious discussion our City must have about the future of our public pension system.

Since the fall of the stock market in 2008 and early 2009, it has become clear that our City's pension obligations cannot be sustained with a business-as-usual approach. Our civilian and public safety pension systems are massively underfunded, and if left alone, will annually require a significantly larger slice of the City's general fund and an eventual call for higher taxes.

Elected officials in California and across the nation have been reluctant to address the growing public employee pension obligations head-on. They have either refused to acknowledge the problem's severity, or have been unwilling to challenge the politically powerful public employee unions who have vowed to protect collective bargaining victories won when the economy was better and more tax revenue was flowing into government coffers. For the most part, taxpayers are just now beginning to realize that a crisis exists as they watch services they care about being cut — in part to fund pension and health care obligations for retirees.

So, where do we go from here? First, the City's administrative staff and elected officials should sit down immediately with the collective bargaining units to discuss pension changes that could be implemented in time to make a difference in the 2010-11 budget.

Secondly, the Mayor and City Council should create a pension reform task force based on the successful model used in San Diego. The mission is simple: to develop thoughtful and meaningful recommendations for long-term, structural changes that will keep our public pension system solvent without diverting money from every other City department budget or asking taxpayers to contribute more money each year.

Like San Diego's model, the task force should include individuals who have experience with finance and pensions, taxpayer advocates, and representatives of both current and retired City employees. It should operate publically with maximum transparency and accountability and develop a set of recommendations in time for the Mayor's 2011-12 budget proposal.

The crisis we face must be a call to action for reasonable people to sit down and find a lasting solution. It requires residents, labor, business and City officials to pledge a commitment to work together toward of the goal of long-term fiscal stability for the City of Los Angeles.

Los Angeles and California deserve bold and creative leadership in solving the public employee pension crisis. It's up to all of us to make sure we deliver.

And that's The Business Perspective.