As pensions break the bank, Californians face more tax hikes
By THE EDITORIAL BOARD | opinion@scng.com |PUBLISHED: February 24, 2020 at 5:32 a.m. | UPDATED: February 24, 2020 at 1:00 p.m.
The highest annual pension paid last year by the California Public Employees’ Retirement System (CalPERS) went to one of the managers of the pension fund itself.
Curtis Ishii announced his retirement in 2018 from his position as managing investment director for global fixed income. Last year, he collected a pension of $418,608, almost $50,000 more than the $372,280 pulled down by the previous title-holder, former Solano County administrator Michael Thomas.
The figures come from Transparent California, which has just released 2019 pension payout data. Transparent California’s Robert Fellner says Ishii is the first CalPERS pensioner to “legitimately” break the $400,000 mark. A retired Vernon city manager was collecting $551,000 until CalPERS declared that his pension was illegally “spiked.”
There’s no allegation of pension spiking against Ishii, 64, who spent his 40-year career at CalPERS and managed a portfolio that included $80 billion in fixed-income investments and another $30 billion in currency and other types of lending and credit programs. During the 2017 fiscal year, according to state payroll data, Ishii earned total compensation of $805,132, of which $397,635 was a salary. TOP ARTICLES4/5READ MORESchedule and ticket info for CIF-SS boys and girls soccer championshipsFriday and Saturday
Taxpayers might wonder how a public employee can be paid a salary of $397,635 in 2017, retire in 2018 and take home an annual pension of $418,608 in 2019.
Transparent California reports that 35,598 CalPERS beneficiaries collected six-figure pensions in 2019, 15% higher than the previous year and up 143 percent from 2012.
Oakland led the list of cities with the most retirees collecting pensions of $100,000 or more, a total of 740. Two Southern California cities, Long Beach and Anaheim, took the second and third spots with 533 and 431, respectively.
In the March 3 primary election, Oakland is asking voters to approve Measure Q, a 20-year parcel tax of $148 for single-family properties and $101.08 per unit for multi-family buildings. Long Beach is asking voters to approve two tax increases: Measure A, which would permanently continue a temporary 1% sales tax increase that is set to expire in 2027, and Measure B, which would raise the city’s hotel bed tax from 6% to 7%. Anaheim already taxes hotel guests at 15%.
None of these taxes are labeled, “For Pensions.” But if the cities didn’t have to pay so much for pensions, they’d have more money to pay for the needs they’re now trying to meet with higher taxes.
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This crisis is only going to get worse as even more longtime employees retire and collect on the overpromised benefits that state lawmakers recklessly increased in 1999. At the time, with the stock market in a tech bubble, CalPERS claimed the higher pension payouts would not cost “a dime of additional taxpayer money.” That was almost immediately wrong and quickly catastrophic.
Intensifying the problem for taxpayers is a series of court decisions establishing the “California rule,” which prohibits changes to the pensions that are promised to workers on their first day of employment, unless a compensating benefit, such as a wage increase, is offered.
The people who pay the taxes are living in a different world, one in which defined-benefit pensions and post-employment health benefits rarely, if ever, exist.
A world in which public pensions break records every year and taxes are endlessly raised is the one that can’t continue to exist. This is not sustainable.
