Economy

City of San Diego Pension Debt Now Over $3 Billion

Written by Thomas Geiser

In 2007, San Diego’s pension debt was $1.2 billion. This may not sound like much, but for a single city in California, this is an astronomical sum of money. This debt was caused by rapidly growing pension plans approved at a state level that have been snowballing out of control for years.

Now, in 2020, the pension debt in San Diego has passed $3 billion. That is an increase of 250% over the course of 13 years. This growth is untenable, San Diego simply cannot sustain such a large debt. The problem is that it is hard for fiscally responsible politicians to run on a platform of pension decreases. It shows a lack of support for the hardworking men and women in uniform who risk their lives each day to protect us: policemen, firefighters, and so on.

It does not help that the local Democrats fight hard against meaningful pension reform with support from powerful unions. They are more concerned with the immediate results, popularity, and support they receive from supporting pension increases than they are with the long term financial consequences of unrestrained spending and debt growth. This year, San Diego’s annual pension payment will be $365.6 million, which is $15 million more than last year and $11 million more than was projected.

The San Diego City Employees’ Retirement System board has the nerve to claim that the debt is so large because they are the most responsible and realistic pension board in the state. The debt is a projection of how much the city owes retired employees long term, minus the amount the city has set aside to settle those debts. The board has changed its estimates to account for employees living longer and requiring more pension payout. This by itself is not a problem, it’s accurate and responsible to account for longer lifespans in this day and age, but it’s not a solution to the ballooning debt.

They are managing a problem without addressing the root cause, per usual. The city’s pension debt is projected to increase again next year. As long as these pensions stay at the same rate, San Diego will never be able to pay off its debt. Before this year, it was projected that the debt would be paid off by 2034, but if it continues to grow at its current rate, the pension debt in San Diego will more than double by 2023.

Simply managing the debt is not enough to solve the problem. Changes need to be made to the pension program itself if the issue is to be solved. The changes may not be popular, but Republicans and Democrats alike should be looking to the future, making fiscally responsible plans for the long term benefit of San Diego.

It’s the responsibility of these elected officials and their constituents to prepare San Diego for the next generation. Fiscal responsibility should not be a partisan issue, but a common cause for local government to work towards.

 

Featured Photo by GotCredit via Flickr