Blog / The Business Perspective
What Happens When City Retirees Outnumber City Employees?
March 8, 2011
by Gary Toebben
Today is Election Day and we encourage all registered voters to go to the polls. Tomorrow, we encourage those same registered voters to vigorously press on incumbents and newly-elected office holders that reducing the publics' cost of pensions and health care for retirees should be the top priority in balancing the 2011-12 budgets that will go into effect on July 1, 2011.In the City of Los Angeles, the budget deficit for 2011-12 begins at $350 million fueled in large part by the rapidly growing cost of pensions and health care for retirees. Last week, Mayor Antonio Villaraigosa called for two significant reforms to keep the problem from getting worse. He called for raising the retirement age for non-sworn city employees to 65 and he urged the members of the Fire and Police Pensions Board to reject a 7 percent increase in the health care subsidy given to public safety retirees. The current health care subsidy for fire and police retirees is $1,025 per month and the 7 percent monthly increase would add another $4.8 million dollars to the City's budget deficit. The Chamber and other business and community organizations joined the mayor in support of both proposals.
On Friday, the Fire and Police Pensions Board ignored Mayor Villaraigosa's plea and thus added another $4.8 million to the City budget deficit. Put another way, the Fire and Police Pension Board forced the mayor and City Council to cut another $4.8 million in city services like street maintenance, libraries, parks and police and fire protection.
The City of Los Angeles has more than 30,000 retirees, nearly equal to the 32,000 employees on the active payroll. The City's current pension plan coupled with annual cost of living increases for pensions and health care, make it impossible for the City to overcome its structural budget deficit without eliminating the public services that citizens pay taxes to provide.
Time is running out for Mayor Villaraigosa, the City Council and the taxpayers who are getting less and less in actual public services for their hard earned tax dollars. Three years of debates over layoffs, furloughs and spending cuts have yet to make a dent in the real problem, which is the unsustainable cost of pensions and health care for a retiree population that will soon outnumber the active employees serving our City.
The anger is palpable and justified. The Chamber's Government & Civic Issues Council met with the L.A. Neighborhood Council budget committee leaders last week and we found complete agreement on this issue. Business and neighborhood leaders know that the next few months will be a watershed moment for Angelenos. It's an opportunity to reshape our City budget so that it works for all of us in the long-term.
And that's The Business Perspective.
Comments
Gary haven't you ever heard of the CRA-Los
Angeles is broke because too much money is allotted to the agency.City employees don't make lavish pensions but 4% health care is
necessary so they can keep health care coverage
and help the city too.Also DWP ahould get treated the same-not better than other city
services. Let's work on a solution-not a witch hunt
Angeles is broke because too much money is allotted to the agency.City employees don't make lavish pensions but 4% health care is
necessary so they can keep health care coverage
and help the city too.Also DWP ahould get treated the same-not better than other city
services. Let's work on a solution-not a witch hunt
Posted by: Donna Pearman @ 12:32:00 pm
I'm in total agreement. Public servants are well paid, and their retirement benefits are at a level that's unmatched by many, including private employees. The city leaders must find the courage to tackle the problem before we're all paying taxes to support the city's retirees.
Posted by: Carolyn @ 4:42:00 pm
Well said Gary! Right on the mark. No offense to the retirees, someone made them promises that cannot be delivered on. I completely agree with the position the Chamber is taking. Thank you
Posted by: Don Pierro @ 4:22:00 pm
That's right, Gary, stick it to the workers. Don't even think about raising revenues from rich people and corporations. Come to think of it, maybe you should consider running for Governor of Wisconsin. There's going to be a job opening there very soon.
Posted by: Morty @ 3:44:00 pm
The City has contributed to the pension system because the asset value of the system has gone down. A better fix would be to have a flexible contribution scale that required contributions by active employees, sufficient to pay actuarial costs.
Posted by: Anonymous @ 11:24:00 am
Absolutely. When are they going to wake up and realize that they're sinking their own ship?
Posted by: John @ 10:42:00 am
Well said, Gary! Right on the mark.
Posted by: Brian F. Barry @ 9:49:00 am
Great Perspective, I completely agree with the position the Chamber is taking and I know my dad would be happy that your voice is reaching far beyond Los Angeles by way of the weekly blog he created. I look forward to reading more and take care.
Posted by: Gerald Hammer @ 9:39:00 am
Right on point on a crucial issue. Same problem with State of California and Govenor Brown needs to face up to it.
Posted by: Robb Scoular @ 9:17:00 am
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