If local governments don’t get their pension costs under control, the public might take matters into its own hands and put unreasonable controls on a statewide ballot, county supervisors agreed Tuesday.
Supervisor Frank Mecham warned of possible “Draconian” statewide initiatives as he and his colleagues tackled the county’s fiscal future at a strategic planning session. Other supervisors concurred and gave the staff general guidelines for dealing with the problem locally.
Among those guidelines is a two-tier pension system, whereby new employees would receive lesser benefits than those already employed.
Board Chairman Bruce Gibson called the program inevitable. He called pensions a “major, major problem,” not only in San Luis Obispo County, but across the nation.
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Officials said the county’s unfunded pension liability is $299 million, primarily driven by investment losses in the pension trust because of the drop in the stock market.
Pensions are subject to employer-employee negotiations, and supervisors directed their administrators to work with county unions to find creative ways of dealing with the mushrooming problem.
Employee unions across the state negotiated favorable contracts, including generous pension benefits, during the boom years in the early part of the decade. Now with the economy in recession, local governments are having trouble paying those bills.
At the state level, a group called the California Foundation for Fiscal Responsibility is planning to put pension reform on the 2010 ballot through a measure that would, among other things, raise the retirement age for public safety employees from 50 to 57-58, and tinker with retirement formulas.
Dubbed a “gloomfest” by Supervisor Adam Hill, the Tuesday meeting gave supervisors a chance to listen to their top officials tell how finances look for the fiscal year 2010-11.
The view reflected the dark and stormy weather outside, County Administrator Jim Grant said.
The county faces a $24 million budget gap in the General Fund for 2010-11, Dan Buckshi of the administrative office said. That follows deficits of $18 million and $30 million in the past two fiscal years.
The total county expenditure forecast for 2010-11 is $394.9 million, according to Buckshi. The forecasted revenue is $370.6 million, leaving a projected gap of $24.3 million. Next fiscal year represents “part three of the five-year pain management plan,” Buckshi said, and the long-range forecast is not upbeat either.
The numbers are volatile, he warned, in large part because of the dysfunction of state government. State and federal money makes up 40 percent of the county budget.
“The partisan divide in Sacramento is so vast,” Buckshi wrote in his staff report, “that many feel the situation has become hopeless.”
The county has dealt with its shortfalls in the past two years through a series of moves, including hiring freezes and delayed compensation for many county workers. However, the worst is yet to come, Grant said.
“The intent of the hiring freeze,” Buckshi wrote in an e-mail, “is to allow for position reductions through attrition (i.e. minimize layoffs).”
“At this time, the county is not planning to implement mandatory furloughs,” Buckshi added. “However, if conditions worsen, they may be considered in the future.”
In addition to exploring a two-tier pension system, whose effects would not be seen for many years, supervisors instructed department heads to continue to budget for hard times.
They also asked for more cooperation from both the Sheriff’s Department and the Deputy Sheriffs Association. The latter failed to delay any salary or benefits this year, as other county unions did.
The Sheriff’s Department failed to provide sufficient rationale for expenditures, which were proportionally greater in the past two years than other departments, Gibson said.
The Sheriff’s Department and other public safety departments — probation, fire, and district attorney — account for 44 percent of the county general fund, up from 36 percent two years ago, Buckshi said.
Gibson said he wants to see the rationale for that, adding that the sheriff has been “resistant” to providing information.
Supervisor Katcho Achadjian said he was “not alarmed” by the sheriff’s budget, adding that out-of-county gangs are recruiting in Paso Robles and Nipomo. He said he never wants the county to get to the point “where we’re going to play catch-up with crime.”
Mecham agreed, but said he wants to see the sheriff’s numbers so he can make an informed decision. “Details are important,” he said.
Achadjian predicted that the sheriff “will come to the table with a different approach.”“I certainly hope so,” Gibson said.