Tuesday, January 17, 2017

Pension Tsunami round up

Los Angeles is one of the top five nearly bankrupt cities.  The author see them spending faster than revenues, they will be at the debt markets.
LA WATCHDOG--In August of 2015, the City of Los Angeles announced what turned out to be a budget busting contract with the Coalition of City Unions that represents the City’s 20,000 civilian workers.  According to Mayor Eric Garcetti, this agreement “prioritizes service delivery and strengthens our long term fiscal health.” To the contrary, this back room deal contributed to the City’s never ending Structural Deficit (where personnel costs increase faster than revenues) and blew a gaping hole in the 2020 budget, turning a projected surplus of $68 million into $101 million deficit. 

Prison guards are expensive.  But California has been the dumping ground for the East coast for too long.
California under Governor Jerry Brown’s third and four terms continues to reduce its prison population, a welcome reversal of the steep population increase resulting from determinant sentencing legislation Brown signed in his first term. According to the governor’s proposed budget for FYE2018, the state prison population will have dropped an impressive 21 percent since FYE12, from 163,000 to 128,000 inmates.But compensation costs per inmate grew 31 percent over the same period:.

I did the number on pension costs, they were rising 4.6%/yr over the period, twice he growth rate. Jerry is dumping employees from the state payroll as fast as he can, trying to avoid employee costs.

If we take a dive, the state budget will skoot by, maybe. But county budgets have been on a school borrowing spree like no other, and student populations are not rising. Add that to the 4% rise in employees costs, a flat sales tax base and we have a problem.

So, let's not take a dive.

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