In good news/bad news for Stockton, CalPERS, the state pension system, says it enjoyed its best investment returns in a decade.
Good news because if CalPERS makes lots of money off its investments, it may not have to hike the bill to cities to fund pensions.
Bad news because, as this SacBee story says, CalPERS may hike the bill anyway.
The pension giant may hike the bill to Stockton and other cities because it is in a deep hole. It does not have the money to cover the pensions cities must pay down the road. It is in a hole because of the mid-2000s market crash, and because the pro-labor hacks at CalPERS sold cities on the 3 pecent at 50 enhanced retirement plan by grossly understating its true costs.
CalPERS will vote on a rate hike next month.
Stockton’s whole recovery and public safety hinges on CalPERS’ action. If CalPERS demands more — and more — money, it will subvert the city’s financial projections, which budgeted X amount of money for pensions, and start eating into the revenues from tax Measures A and B, which fund cops and debt repayment.
Debt repayment must go on; police will have to be sacrificed.
The answer to this dilemma is pension reform. San Jose Mayor Chuck Reed is promoting an initiative. But the news of CalPERS’ windfall may take the wind out of his sails.
Not to be a pessimist, but it sometimes seems fortune favors Stockton’s enemies. A surge in the stock market may undermine desperately needed pension reform; a drought is strengthening the case for a peripheral tunnel.