On Pensions, More Experts and Local Officials Sound the Alarm
Local administrators and financial experts continue to warn of a looming fiscal crisis for California’s municipalities, driven in large part by skyrocketing pension costs. South Lake Tahoe’s Nancy Kerry and Lodi’s Steve Schwabauer did so in April. The latest Paul Revere is Modesto’s Acting City Manager Joe Lopez, a member of the League of California Cities pension task force.
Lopez recently laid out the sobering facts about Modesto’s own situation for city leaders. Pension costs are expected to nearly double over the next eight years in Modesto.
“For every one police officer,” said Lopez, “three-quarters of the next police officer is a pension payment. That is a very scary place to be.”
The system is unsustainable in its current form, he added. And if major changes aren’t made soon, we could see a wave of bankruptcies.
The situation is particularly dangerous given that California is overdue for an economic downturn. If and when one hits, countless cities may be unable to cope.
“The only question is when will the next recession hit, and how many California public agencies will be forced to consider municipal bankruptcy as their only option to avoid financial collapse?,” writes public policy expert David Kersten.
Read more about the growing number of public administrators and financial experts sounding the pension alarm here.