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City proposes using tobacco settlement toward pension deficit

The City of San Diego is grappling with labor unions today over a proposal to pay 100 million dollars into the pension system, using tobacco settlement money as collateral. KPBS reporter Alison St John has more.

The city is scraping the bottom of the barrel to find ways to boost payments into the depleted pension fund. Both the mayor and his chief financial officer Jay Goldstone admit that borrowing to plug the pension deficit is risky, bearing in mind rising interest rates. However mayor Sanders says he is obliged to find a way to use extra money city employees have agreed to pay into the pension fund to leverage borrowing.

Sanders: "If we do not begin leveraging the employee pickup, there's a chance we might have to refund money to the employees, so you can see the consequences of doing nothing today are quite severe."

Tobacco settlement money will only be used to secure the loan. Representatives from the police and fire unions say the plan is not aggressive enough . They say the city should sell off land to catch up on pension fund contributions skipped in previous years. A decision is expected today. Alison St John, KPBS News.

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