Feature Stories
Pension Reform Now
by Randy Gordon
It is a public policy priority of the Long Beach Area Chamber of Commerce in 2010 to support responsible public pension reforms for the City of Long Beach. Specifically, the chamber is committed to seeking ways to balance current and future obligations for public employees, find solutions to the ongoing cost increases of public pensions in order to maintain the delivery of services that businesses and residents deserve, prevent the potential bankruptcy of our city and educate our local business community on the hazards of an out of control pension system and what it means to the City of Long Beach and the business community in the future.
Earlier this year, during Councilmember Gary DeLong’s campaign for reelection, he was a candidate who publically acknowledged the mess our public pension system is facing and was willing to offer a solution. DeLong staked his reelection on the issue which many believed was political suicide. He was reelected with over 61% of the vote.
One of the main reasons why DeLong was able to talk so bluntly about the public pension disaster was because he was not endorsed and financially supported by local public employee unions like many of his colleagues on the council who chose not to make it an issue in their elections.
Fast forward to a few weeks ago when Councilmember DeLong turned his words into action by proposing a Charter amendment that will prevent future city councils and city management from giving away the farm through increasing pension benefits by requiring pension increases be approved by a vote of the people. Additionally, DeLong’s proposal will reduce “pension spiking” by requiring that public employee’s pensions be based on an average of the last three years of employment.
The fact remains that there is nothing the city can do about the current pension obligations that are terrorizing the general fund. Quite frankly it is currently against the law to reverse past pension increases. However, DeLong’s proposal is a way of preventing future city leadership from giving into the public employee pressure. And that is the right step towards ensuring we do not get into this mess again.
Mayor Bob Foster also proposed a solution that is worth exploring by the City Council. Foster announced his idea of creating a new pension tier for new public employees that would, according to the Press Telegram: “give police and firefighters 2 percent of their salary for each year of employment with retirement at 55, while other employees would get 2 percent per year at age 60.
“Furthermore, instead of giving employees their contractual pay raises, which are valued at $11.3 million in the next year, all raises over the next few years would be credited to the employees’ total pension payments. In effect, the employees would technically pay the full 8 or 9 percent employee share, but the extra cost would be paid by the city in lieu of actual raises. Once that payment level is reached, workers’ salaries would be frozen indefinitely under Foster’s plan."
In the end, the impact to the Long Beach business community will be the greatest if nothing is done. The business community generates the general fund revenue that pays for the pensions in the first place. Less general fund revenue to support a high quality of life by funding essential services gives businesses another reason to either leave Long Beach or not invest here at all.
Continued public pension pressures on the general fund will devastate our local economy unless something is done now.
How can you help? Call your city councilmember today and demand pension reform.
The DeLong plan fixes the future. The Foster Plan appears to provide immediate relief for the present. Both proposals are a step in the right direction to bring responsible public pension reform to the forefront for debate and hopefully for approval
...and that’s Strictly Business.
Randy Gordon is president and CEO of the Long Beach Area Chamber of Commerce
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