Pleitez on Pensions
Skyrocketing pension costs and CA city bankruptcies means LA's budget will feature prominently in any policy discussion. In yesterday's Los Angeles Times, Steve Lopez asked some of the Mayoral candidates: what would you do about pensions? Here's some of Emanuel's thoughts on the issue, which he shared with voters at the Candidate Forum last week:
The City’s pension obligations are indeed a mess. We can’t wait even until “next year” to address it—we need to take action as soon as possible. It’s unfortunate that Mayor Villaraigosa has not been able to do more to fundamentally reform our retirement system. That’s why it’s great to see former Mayor Riordan and other concerned citizens bring a proposal to City Council last week, a proposal that raises the retirement age and caps the City’s obligations.
It’s a step in the right direction. But we need to do more. We need to rethink completely how we plan for and pay out our retirement benefits. For years the City has projected a rate of return on pension investments above any historical norm. And now people live longer, and will continue to do so at a faster rate, while health care costs continue to rise faster than anyone expected. Thus we need a new model to design a system that works for both City employees and taxpayers. Until we completely reassess how our retirement systems work—its expected pay out, for whom, for how long, and with what revenue—we won’t have the City’s finances on sustainable footing. And until we move to a defined-contribution plan, one which limits the City’s risk exposure in downturns, we cannot be sure we will be able to avoid this mess again.
I also think the voters should have a say. Voters want answers, and voters want a solution. As one of the first questions asked at last week’s Candidate Forum in Boyle Heights, pension reform is on voters' minds and we must act now. In San Jose, 70 percent of voters agreed that current city employees should contribute more, and new employees should receive less. And in San Diego, two-thirds of voters agreed that a defined-contribution plan made sense. A ballot initiative can help bring part of the immediate reform we need. In addition, the next Mayor needs to put political or career interests aside and take no option off the table. Even if it means bankruptcy, he or she must be willing to make tough decisions rather than propose band-aid solutions to the problems this City faces.
To see this and other answers to questions posed at the Candidate Forum, visit: http://www.youtube.com/channel/UCrQAAbB3NcOvsJnio10bPhQ