A top CalPERS official helpfully explained to a federal bankruptcy judge on Wednesday why Stockton’s decision to cut everything but pensions was the right one.
David Lamoureux painted a grim picture of a devastated Stockton should the city cut pensions. “Lamoureux acknowledged retirees could suffer benefit reductions, current employees would have a strong incentive to quickly pursue jobs elsewhere, and prospective employees would seek jobs in other municipalities,” the Record story says.
Echoes the SacBee story, “Lamoureux said Stockton couldn’t reduce its pension contributions without facing dire consequences: Its pension plan would be terminated, and unless it paid an exit fee of several hundred million dollars, its employees and retirees would likely suffer scaled-back benefits. The rest of the CalPERS system could be affected as well, with state and local agencies conceivably having to contribute funds to pay for the city’s benefit plan.”
That’s a new angle: that other municipalities would have to pungle up to fund Stockton retiree pensions.
I doubt Lamoureux or anybody at CalPERS really cares about the hiring problems that could ensue in Stockton’s City Hall should pensions here be cut. CalPERS is seconding the city’s argument only to safeguard its ever-fattening pensions. If they really cared about this city, or any city burdened by pensions, CalPERS would have pursued a whole different set of fiscal policies.
But after paying lip service to Stockton’s needs, Lamoureux will return to a system becoming an increasingly heavy millstone on Stockton, and cities across the state.