SAN FRANCISCO: Mayor Ed Lee pushes "long-term reforms" for pensions

SFGate: City Insider ^ | 1/25/11 | John Coté

[SmithL]

Here's one advantage to being a caretaker mayor: You can make tough decisions without worrying about their repercussions at the ballot box.

That's exactly what Mayor Ed Lee has in his quiver as he prepares to make the difficult calls to balance the budget for 2011-12, which now has a $380 million deficit because of a recent $20 million increase in projected pension costs.

"I have an opportunity to actually make some long-term reforms, reforms that will last," Lee told The Chronicle's editorial board on Tuesday. "I'm not speaking about any particular politician, but what I generally have felt is that there had been some temporary solutions in the past."

That was the routine criticism of former Mayor Gavin Newsom's budgets from his adversaries on the Board of Supervisors' left wing. Newsom then pointed to the fact that he produced balanced budgets for seven years straight.

So what budget problems need a long-term solution? Pension costs, for one.

[Liz]

San Francisco’s Insolvency / City Journal
1 Dec 2010 | Steven Greenhut
FR Posted December 21, 2010 by Lessthantolerant

San Francisco’s public-sector unions have been gloating following last month’s defeat of Proposition B, which would have required city employees to boost contributions to their generous pension and health-care benefits. The unions’ multimillion-dollar campaign—featuring a TV ad with a mother (presumably a city worker) unable to pay for her son’s medical visit—defeated the initiative by a solid 57 percent to 43 percent margin. But Prop. B’s sponsor, Public Defender Jeff Adachi, is in a stronger position than ever, thanks to another bout of bad news for the city’s economy.

On November 17, Moody’s Investors Service downgraded the city and county of San Francisco’s general obligation bonds, from Aa1 to Aa2. It’s not a dramatic change, but the downgrading will increase the city’s borrowing costs. It reminds us that the benefit-related debt problem isn’t going away just because the city’s political establishment and voters would like it to. Moody’s was clear that the failure of Prop. B was one of the key factors in its decision. Pointing to San Francisco’s remaining FY 2012 budget gap of $394 million, Moody’s wrote: “There are no indications that there is the political will or practical ability to bridge this still very large gap in a structurally sound manner.

In fact, in the recent election voters defeated Proposition B which would have required city employees to contribute more towards their pension and health care benefits. While the city did not count on these revenues for the current year budget, it appears clear that there is no political pressure to cut programs and services in order to achieve structural balance.”

Prop. B’s passage would have brought in $120 million per year to the city, which would have gone a long way toward closing the deficit chasm—and sent a message to the investment community that San Francisco and its voters have the will to do what nine other municipalities across California did on Election Day: begin to control benefit costs that are draining municipal budgets. In San Francisco, Adachi warns that unless something is done, fiscal calamity looms, given the city’s massive budget deficit and the expectation that pension and other benefit costs will grow by $130 million in the coming year.

Adachi echoes a San Francisco grand jury report from earlier this year warning that pension and health-care costs will soar from $413 million to more than $1 billion in the next five years. “It will cost the city millions of dollars more to borrow,” Adachi tells me during an interview in his office. “We’re beyond little fixes—the only places to go are mass layoffs and increased fines.” Adachi, a well-known Democrat with possible mayoral ambitions, made the progressive case for pension and health-care reform.

Without reform, he warned the city’s mostly left-leaning residents, the government programs they truly care about—such as after-school programs and parks—will be slashed in order to fund often six-figure pensions for retired employees, many of whom stop working in their early fifties. --SNIP--

[fifedom]

Good luck with pensions. The unions are solidly in control of this insane asylum. The voters turned down an initiative to start controlling the costs. They deserve all they are the grief they are going to get.