Hall Park Bonding? Encinitas Staff Thinks, "Oh Crap!"

Why would the city consider cannibalizing top priority, previously funded projects? What kept our "borrow and spend" council from just borrowing the whole enchilada?

Encinitas will be borrowing up to and at the edge of its cushion. A cushion granted by the fact it is a young city, not because of frugal financial stewardship. The cost of the new debt service will make it harder to find money to give raises to staff and will put us at greater risk of being more like Long Beach.

For a decade Long Beach "haters" and "whiners" proposed pension reform as a means of blunting the eventual impact of poor LONG-TERM ( > 6 years) financial decisions. 

Here in Encinitas, "whiners" opposed massive retroactive pension increases (also opposed by Council Member James Bond) has contributed to the increased cost and underfunding of the city's pension fund.   "Whiners" have called for fair and conservative pension accounting, so our generation does not leave the next generation with a burden so large that it will be paid back by ruining Encinitas.

Instead of protecting the future, the City dug in deeper, with a 15%  pay raise (over 4 years) for all staff, right through the Great Recession (Y-Stocks, Bond, Maggie, Barth), and the recent adoption of Orwellian "Pension Reform", where the City Council (5-0) approved a small increase in amount staff contributed to THEIR share of the pension contributions, but offset that contribution with a raise! This increased staff's lifetime pension payout while flatlining their current take-home pay. This did nothing to address the structural or ethical issues with the Pension system.

This all went down during a stretch of time where Encinitas city staff were already nicely compensated, plus had every other Friday off, many with "flexible" schedules. Over much of the same period, other cities have been cutting back on salaries and positions. 

Where does Long Beach fit in to this? Long Beach is a pretty good example of what happens years and decades after making poor long-term financial decisions. 

From the LA Times:

Faced with a $17.2-million budget shortfall, Long Beach Mayor Bob Foster called Wednesday for consolidating departments and outsourcing services, and pledged to push for pension reform against a union he called "intractable."

In releasing the city's proposed budget for the next fiscal year, Foster said that a number of positions would be eliminated through attrition but that Long Beach would still face layoffs given the stagnant economy and considerable pension costs, which officials say account for 20% of the payroll.

He applauded police and fire unions for agreeing to pension reforms in late 2011, a savings of about $6 million that officials say reduces the shortfall. But the mayor singled out the International Assn. of Machinists for what he said has been an unwillingness to accept similar concessions.

For two years, he said, the city has tried to negotiate reforms with the union, which represents the majority of non-public safety employees. "Each year of delay costs our residents $12 million in services and much more in future unfunded costs," Foster said. "If IAM continues to be intractable, I will place a pension measure on the ballot."
A machinist union representative could not be reached for comment Wednesday.
Anemic tax revenue and spiraling labor costs have put a squeeze on municipal budgets throughout the state, pushing at least three California cities to seek bankruptcy protection and sending others to the financial edge. That has emboldened political leaders to become more openly critical of employee unions as they try to stave off insolvency with wage and benefit cuts.

  

Pension reform comes to Long Beach AFTER the crisis hit. Why can't we be more like other cities that think ahead? Even Carlsbad took on mild pension reform before they had a crisis.

Encinitas' borrowing (again) to build the park moves Encinitas staff closer to the hot-seat. Let’s hope that when the crisis happens, senior labor leaders and the council don't screw junior staff members or young people just entering the job market. Many of these young people would be HAPPY to work hard for fair compensation. They know first hand that we are entering the age of the real economy and will be burdened by generational debt.