Steve Young

Issues - PENSIONS (2/5/20)

Governments at all levels are struggling with the growing cost of pensions. Benicia is not unique in needing to face up to this fiscal challenge. In the current fiscal year, we will pay nearly $8 million for pensions. That annual cost increases to $12 million over the next ten years before leveling off. Our net pension liability is currently $64 million. Our current General Fund is approximately $45 million/year (does not include water and sewer which are kept in a separate fund).  If our General Fund budget increases only at the rate of inflation, our pension obligations will consume an increasingly large share of our budget.

There are no easy answers. The pensions have been granted to our Public Safety and classified and management employees over the last two decades, through labor negotiations with their unions. Pensions cannot be reduced or negotiated away. Recent state legislation established a two tier system at CalPers, where more recent hires have a somewhat lower pension benefits. 

Meanwhile, we must maintain our financial stability while continuing to deliver the essential services our community expects. Towards that end, we need to continue to seek new revenue and use prudent financial practices so we can meet our pension obligations while continuing to provide a high level of service.

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