How California cities hide pension payouts behind new tax hikes
San Jose's upcoming Measure E says it's all about subsidized affordable housing, but the reality is future councils may spend its proceeds on exploding pension costs. Robert Fellner, of Transparent California, explains how cities hoodwink voters.
Soaring public pension costs are driving a wave of tax hikes across California, but many officials are reluctant to admit it. Instead, voters are being told that higher taxes are needed to fund services like parks and public safety or other items that enjoy similarly positive poll-tested support.
The latest example of this ruse is in Oakland, California, where voters are being asked to approve a property tax hike with the ostensible goal of raising an extra $20 million annually for the city’s parks department. A closer look at the city budget, however, makes it clear that exploding pension costs are the real reason the city needs more money.
Oakland’s retirement costs have more than tripled over the past 10 years and currently consume nearly $1 out of every $5 in general fund spending. Annual costs are projected to hit an all-time high of $235 million in 2024 — a $77 million increase from last year, which will easily consume the entire amount raised by the proposed tax hike and then some.
Most of this cost provides no benefit to taxpayers or current city workers. It is spent instead on the benefits of those already retired — which explains why officials prefer not to mention rising pension costs when describing the alleged need for higher taxes.
Taxpayers aren’t just being misled about the role pensions play in the push for higher taxes. They are also being kept in the dark about how the system works, particularly when it comes to so-called disability pensions for police officers. In 2014, the San Jose Mercury News found that Oakland was awarding police disability pensions at a rate far higher than those of neighboring cities. Astonishingly, more than half of all retired Oakland police officers are receiving industrial disability pensions.
In addition to being tax-free, these benefits are especially lucrative and thus especially costly to taxpayers: They are payable immediately — at any age.
Most taxpayers, however, would be surprised to learn that they are required to fund disability pensions to those in “excellent physical condition” working in a similar job elsewhere — given that state law suggests the opposite.
Rising pension costs are behind Oakland’s alleged budget crunch and the accompanying push for higher taxes. Voters deserve complete and accurate information about those costs, including how much it costs to fund disability pensions for able-bodied employees who are simultaneously collecting full pay and benefits for performing the same job elsewhere.
Read the whole thing here.
Robert Fellner is executive director of Transparent California — a government watchdog dedicated to increasing transparency in government.
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