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Old Mendocino County Courthouse Around 1915

California County Pension Debt

 

Mendocino County's Pension Debt



Impact of the Pension Debt:

Pressure to Raise Taxes and Fees



Mendocino County's Unfunded Pension Debt


Choices -

Five Main Impacts

Local Taxes Consumed

Staff Cuts

Public Service Cuts - Failing Roads

Pressure to Raise Taxes & Fees

Loss of Local Control

 

It's Not a (Fill In the Blank) Tax - It's a Pension Tax!

As more and more of the County's local tax base is consumed by rising unfunded pension debt payments there will be increasing pressure for officials and employee-retiree organizations to try to raise local taxes and fees.

SEIU Pension Tax - The Politics of Denial

In 1996 the County borrowed money by selling Pension Bonds because of a $45 million Pension Fund deficit. Six years later they borrowed another $76 million to eliminate a new deficit. Then in the summer of 2010 the Pension Fund deficit was back with a vengence - about $135 million.

The new $135 million Pension Fund deficit was on top of $85 million still owed on the previous Pension Bonds which are simply restructured unfunded Pension Fund deficits. So the County's total unfunded pension debt was $220 million.

It's not denial! I'm just very selective about the reality I accept. County officials needed to stop denying the extent of the County's own financial management failures and those of the Retirement Board. They needed to confront the failures, figure out what was really wrong - and fix it.

But at that moment the largest union among County employees - Service Employees International Union (SEIU) - brought the County an opportunity they couldn't refuse. They had paid for polling (a rarity in our small spread out population County) to determine if the voters would pass a 1/2% 10 years sales tax increase "to preserve vital public services during these terrible economic times (that aren't our fault)". According to their polling such a measure would easily pass. And SEIU was prepared to provide money, access to "professional" campaign resources, and dozens of members of the local to do the footwork necessary to win.

The County Board of Supervisors voted to put SEIU's proposed initiative on the November 2010 ballot as "Measure C" - proposed by the County.

For many of us who had been warning of the disaster ahead caused by unfunded pension debt this was the last straw. It was "Strike Three" after the two previous Pension Bonds! We immediately organized the No on C campaign.

We coverted Measure C in the minds of a majority of voters into a "Vote of No Confidence" regarding the profound failure of Mendocino County officials to do their financial duty to the People and a protest against the independent Retirement Board that is not accountable to the People yet it has the power to impose this massive debt on the People with impunity.

The Voters Didn't Speak - They Screamed!

Measure C lost more than 2 to 1 - 30% yes - 70% no. It was the largest loss of a County-sponsored ballot measure anyone could remember.

You can see more about our No on C Campaign - the voter analysis that was the basis for our campaign strategy, our ads and other communications, and more by clicking here.

Library (Pension Debt) Tax - Shouldn't Have Been Necessary

One year later advocates for the county library put a 1/8% increase in the Sales Tax to provide support for the badly underfunded county library system. The measure passed and raised about $1.7 million for the library in 2015.

We didn't oppose this measure, although frankly the same logic applies. The blunt truth is the library tax is indeed really a pension-debt tax. It's a wolf in sheep's clothing.

Speaking only for myself - not for the hundreds of other reformers in Mendocino County - I personally strongly support public libraries. To me they are a necessary institution for an educated and enlightened society. But the reality is the People already paid that $1.7 million for the library. It was diverted to be part of the $16 million Mendocino County paid in 2015 for unfunded pension debt that isn't supposed to exist.

That's what will happen more and more. Tax measures will be put on the ballot to fund specific public services and infrastructure. They will be "sold" as necessary to provide "vital public services". Opponents will be "branded" as opposed to that vital service - libraries, mental health services and facilities, roads - whatever.

Proponents will quote Supreme Court Justice Oliver Wendell Holmes, Jr. - "Taxes are the price we pay for a civilized society". But - wait a minute. We're already paying taxes to do those things. Why aren't our taxes funding what we expect them to fund?

The truth of these future proposals to increase County taxes is "Taxes are the price we pay for official failure".

Reform First - Not More Taxes

The People should not even consider raising County taxes until County officials:

  • Identify the repeated massive failures of financial duties in the past and explain them to the People.
  • Commit to a credible plan and take solid irreversible steps to reform:
    • how our County manages and accounts for Our Public Money, and ...
    • how the County's retirement benefits are structured and governed so that no more debt will be created while also providing county retirees with decent and fair retirement security.
  • Lay out and implement a credible plan to fairly restructure the debt that was created by huge past failures of duty by County and Retirement financial officials.
 
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