Rising employee benefit costs are no longer a secret. Cities are going bankrupt in large part to excessive employee benefit and pension costs and even with this staring City and public agency governance squarely in the face (punching them in the nose more accurately), failure of our City Council and Water Boards to make the radical changes necessary to save taxpayers from financial ruin continues to show the lack of leadership we elect these people for.
One only needs to look at health care costs as an example of an easy change to make that goes unchanged year after year. The City of La Mesa pays 95% of its employee’s health care premiums and if spouses and dependents are added, it covers 85% of the total costs. This has resulted in an increase of City paid premiums of over $600,000 per year in the last five years when comparing Jan 2008 to Jan 2013. That’s right, the annual City medical premium bill is currently $2,542,168. Employees, less than $400K
Even worse is the Helix Water District which pays 100% of not only the employees share of Health Care premiums but also 100% of the premiums for their spouses and dependents. That's right, employees pay zero towards health care and are offered premium coverage programs. A more fair method if rate payers have to pay 100% would be to offer employees a basic plan and let them pay the difference between a basic plan and premium plan if they wanted it. Today, rate payers pay over $1.64 million annually in "additional" premiums costs in 2013 than they did in 2008 for a total premium in 2013 of a little over $3.4 million. So much for Obamacare reducing medical premium costs. Memo to the Water Board. It is not just the cost of water that makes our rates rise!
Now the real killer, pensions. Finally, a clear and concise explanation of the pension mess and its history is found in an article by Steven Malanga called the Pension Fund That Ate California http://www.city-journal.org/2013/23_1_calpers.html. It is a bit of a lengthy read but well worth it to understand why things need to change and change fast.
If our elected officials in our Cities, Counties and Agencies (yes you HWD, Padre and Otay Water Districts) would actually represent us, the people who put you office to watch over our tax and rate dollars, we might be able to get back on track with a possibility of surviving the long term. We, the people call on you all to man and woman up, grow a pair, buy new backbones or figure out whatever it takes to reform the current unsustainable employee pensions and benefits to something reasonable and more in line with the private sector.
We the tax and rate payers demand change. A good start would be if paying 100% of employee health care, then the employee pays for the spouse and dependants or the City splits the premium 50/50 with the employees if covering employee, spouse and dependants. With regard to pensions, immediately scrap the current unsustainable system and convert to a defined contribution type plan where returns are not guaranteed and employees contribute a greater share to their own pensions. Without this, La Mesa’s $34 million unfunded pension liability will continue to grow and sink the City. Finally, outsource as much as possible to avoid the long term legacy costs of employees. It works for Sandy Springs, GA. It can work for La Mesa.
The City and Agencies must make these changes as expenses are not going down and revenue is not going up enough. There is no more room for more car dealers or additional retail to add sales tax revenue. More people are buying online and the idea we will see revenues of the past is a pipedream. The only solution for Cities and Agencies to pay the bills is to raise taxes and rates.
I don’t want to hear how you have the best employees. All I see are potholes, budget problems, out of control costs, increased taxes and water rates and unfunded liabilities. Time to step up and do the job you were elected to do. MANAGE!!!!