The deterioration of San Bernardino, Calif.'s public finances to the point where city
officials are willing to declare bankruptcy could be the prologue to another
fight over public employee benefits.
Pension costs are not the only source of San Bernardino's financial ills.
The city's own financial analysis blames weak revenues, deficit spending and
accounting errors for a $45 million deficit.
Whoever deserves the most blame for cities' poor financial health, public
employees' pensions have received increased scrutiny as San Bernardino and
other local governments in the Inland Empire, Los Angeles area and the rest of
California have struggled to stay in the black since the Great Recession.
To some, pensions must be cut in order to preserve key government
services without raising taxes in the midst of a weak a economy.
"You're going to ask people, if they're making $20,000, $30,000, $40,000
a year, if they're going to pay more taxes, which aren't going to be enough
probably? If they're going to pay more taxes for public employees?" San
Bernardino Councilman Fred Shorett asked.
On the other hand, the leaders of employee unions say they should protect
existing retirement agreements and respond that politicians are targeting
pensions to avoid accepting responsibility for wasteful spending.
"You sit down and you bargain the best you can through that process, and
to have us get blamed or accused that we ask too much, we sit down and we
assume the city will not give something they can't afford," said Steve Turner,
president of San Bernardino's police union.
Bankruptcy is a rare move for cities, but San Bernardino is not alone in
having to deal with the combined pressures of growing retirement costs,
shrinking revenues and the public's unwillingness to pay higher taxes simply
to protect existing services.
Elsewhere, California municipalities have taken steps to curtail the
generous pension plans that became the norm for California governments in the
early 2000s.
That process has generally happened through bargaining, with various
degrees of conflict between city managers and employees.
A more recent tactic, though still uncommon, is for officials to bypass
negotiations and ask the voters themselves to change pension rules.
That happened in June when San Diego and San Jose voters approved ballot
measures to cut retirement benefits. The measures, however, have been
challenged in court.
San Bernardino County voters may see at least one pension reform measure
on their ballots in November. Supervisors Janice Rutherford and Neil Derry
each have proposals to put on the ballot.
Rutherford's plan includes a provision to require voter approval for any
future increases to county employees' pension benefit formulas.
Derry's would increase new county employees' retirement ages and require
current and future employees to contribute some of their wages to their
pension plans.
His office reports the San Bernardino County Employees Retirement
Association fund is short $1.7billion and risks insolvency without immediate
changes.
"If you don't do it early on, by the time you do it later on, it will be
too late," Derry said.
Derry acknowledged that he voted for pension formula increases as a San
