Miguel Santana, L.A. City Budget Honcho, Issues Dire Warning Over Exploding Pension Costs
The city of Los Angeles' budget honcho warned this week that municipal pension spending could end up taking up one-third of City Hall's annual costs if the retirement benefits aren't brought under control.
"It's expected to grow to one-third of our budget in the next five years,'' said administrative officer Miguel Santana. "Ten years ago, it was less than four or five percent, but by the next five years, it's going to be closer to 33 percent.''
To put that in perspective, public safety services -- police and fire -- take up more than 70 percent of the city's budget today. Cops alone take up nearly 50 percent. If pension costs keep ballooning it would leave room for no other spending -- libraries, street maintenance, trash pick-up, gang reduction, council staffs, parking enforcement ...
This is serious.
The city dodged a bullet in July when, through some miracle, the council erased a deficit that reached more than $500 million on paper. That balancing act, however, isn't finished as healthy revenues (in what seems to be a stalling economic recovery) and union concessions don't seem to be cooperating as well as they did on the spreadsheet.
Santana's warnings echo those of former Mayor Richard Riordan, who famously predicted bankruptcy for L.A. if City Hall doesn't get what Fox 11 News calls "Cadillac pensions" to a more manageable Subaru level. As it is there are retirees who can make nearly as much as they did in retirement as full-time employees.
Former Los Angeles Police Department Deputy Chief David Gascon, for example, takes home more than $200,000 in pension cash as a city retiree.
The cost of health-care has gone up 10 percent a year over the last decade, Santana said.
But the real inflation has come at the hands of politicians eager to please their union backers with sweetheart pension deals that end up costing taxpayers dearly.
"The current plan that we have today isn't sustainable for any of us,'' Santana said. "At the end of the day, we become a system that is basically providing for pension costs and for healthcare costs, and the only way of meeting that is through more layoffs, more furloughs.''
Even Barbara Maynard of the Coalition of Los Angeles City Union admitted there's a problem in the form of "pension spiking," when an employee gets promoted or receives a big raise in the year or two before retirement, thus getting a larger pension based not on their average career pay but on those last, inflated paychecks.