by CalWatchdog Staff | July 24, 2012 7:27 am
July 23, 2012
Katy Grimes: A fourth California city is on the verge of bankruptcy. What a surprise. Yawn.
The news that Compton is about to file for federal bankruptcy protection is not surprising. But news that Santa Monica may also file, is.
Sadly, this is probably just the fourth in a long line of insolvent cities and municipalities preparing to file for bankruptcy.
Don’t say we didn’t warn you about the consequences of gross mismanagement, corruption, legacy building, criminal negligence, and incompetence of public officials.
While some in the media have been blaring the warning bells, most elected lawmakers have been practicing public denial and distancing themselves from culpability.
But heads will roll if pension checks bounce, or aren’t issued, or bond payments aren’t made.
Take Stockton… please.
Ed Mendel at Calpensions writes, “A Stockton bankruptcy proposal does not cut pensions, but the city wants to eliminate $197.5 million in pension bond payments over the next 25 years, a plan opposed by the bond insurer that would be stuck with the tab.
The bankruptcy proposal would end pension bond payments from the troubled city general fund, which pays for most programs and is deep in the red with a $26 million deficit that could balloon if employee lawsuits overturn emergency pay cuts.”
“Stockton issued $125 million worth of pension obligation bonds in 2007 to cover an ‘unfunded liability that was largely created by enhanced retirement benefits in the late 1990s and early 2000s,’” Mendel reported.
“The city proposal said $124 million remains to be paid. With interest, the city is scheduled to spend $239 million paying off the bonds by 2038, about 62.6 percent from the general fund and 17.4 percent from special funds.”
But the clincher is not just what Stockton pays now–“the annual city payment to the California Public Employees Retirement System, listed as $16.8 million, is expected to jump to $22.3 million next year and nearly double to $30.2 million in fiscal 2020-21.”
Read the entire story HERE — Mendel is the best when it comes to understanding pensions, and pension debt. As more California cities file for bankruptcy, it will be very interesting watching how they manage pension debt.
Source URL: https://calwatchdog.com/2012/07/24/ca-chickens-coming-home-to-roost/
Copyright ©2021 CalWatchdog.com unless otherwise noted.