By Andrea Seastrand | With unemployment is at its lowest point in a decade and a stock market at all-time highs, this is not a time when we would expect to see California local governments like the city of Oroville flirting with bankruptcy.
Today, we stand years removed from the worst part of the Great Recession when governments across the country were forced to make drastic cuts to public services due to the collapsing Inflatable Pub For Sale economy. However, local governments will soon be facing similar difficult decisions about layoffs and cuts to vital services but for a very different reason: public employee pensions.
The ticking time bomb of unfunded pension liabilities — the difference between what has been set aside and what will need to be paid to public workers when they retire — is creating one of the biggest financial threats to ever hit local governments across California.
Pensions are paid for by contributions from public employers, employees and investment income. However, some bad bets by the state’s two main pension funds, CalPERS and CalSTERS, and a rapid expansion of pension benefits in the late ‘90s has left us with the current situation where public employers must now ramp up their payments to make up the difference. That means taxpayers will be getting the bill.
This problem is hitting us right here at home and is bringing local cities and agencies to their knees.
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[Andrea Seastrand is a former U.S. Representative for California's 22nd House District, a longtime grassroots activist and is currently president of the Central Coast Taxpayers Association. Her column runs in the San Luis Obispo Tribune every other Sunday.]