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CSPP
State officials won't tackle pensions even though debts push cities to the brink
What has happened in San Bernardino was painful to watch. As an article by Steven Greenhut at California Watch describes, all bankrupt cities that were "on the brink" are still teetering on that brink, with taxpayers facing higher taxes and service insolvency. Vallejo, Stockton and San Bernardino have not come anywhere near recovering and there is little to no hope in sight.
You might remember that we followed this case closely and were hopeful that the city would restructure it's pension debt, using the tools provided in Judge Christopher Klein's ruling in the earlier Stockton bankruptcy case. Stockton did not use that tool, nor did San Bernardino.
Another interesting point in this article is the measure of a city's wealth and how that affects taxpayers who live in more affluent areas. If the resident taxpayers are considered "wealthy", the governing entity's ability to kick the can further down the road becomes a matter of common practice. The credit ratings are good because the tax base is able to absorb costs - or so the story goes.
When Marin County supervisors or your local council members tout their credit rating, take a bow.
The California State Legislature has made it clear that reform measures are not on their agenda, period.
This indeed now rests with the California Supreme Court to decide. Does this state remain under the crushing control of the "California Rule", or will they heed the decision of the Appeals Court in MAPE v MCERA:
"...while a public employee does have a “vested right” to a pension, that right is only to a “reasonable” pension—not an immutable entitlement to the most optimal formula of calculating the pension. And the Legislature may, prior to the employee’s retirement, alter the formula, thereby reducing the anticipated pension. So long as the Legislature’s modifications do not deprive the employee of a “reasonable” pension, there is no constitutional violation."