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Mayoral Candidates Spar Over City Bonds For Pension Debt

Verbal sparring in San Diego's mayoral campaign broke out today over whether the city should take out bonds that would amortize its $2.2 billion pension debt, which would spread payments over a longer period of time but reduce the annual cost.

Backers of the pension reform initiative passed by voters in June, including Councilman Carl DeMaio, criticized a plan proffered by his mayoral opponent, Rep. Bob Filner, D-San Diego, during the primary campaign to take the pension debt to the bond market.

At a news conference, they said the plan would cost taxpayers $335 million more than simply paying down the debt on schedule.

"Taking out another credit card to stretch out payments on the city's pension debt and racking up hundreds of millions in additional interest is exactly the kind of risky move that got City Hall into the pension mess to begin with,'' DeMaio said.

In response, Filner said he dropped his pension bond plan already.

The idea is no longer necessary, thanks to savings from a five-year freeze on the type of pay city workers can use to later calculate their pension payouts, Filner said. That's one of the provisions -- called "pensionable pay'' -- in Proposition B that has yet to be implemented.

"These people apparently haven't been following the campaign,'' Filner said. "Two months ago I committed to implementing the five-year pensionable pay freeze -- a provision only I can implement through collective bargaining -- which will reduce the city's unfunded pension liability by nearly $1 billion, and which eliminated the need to consider pension obligation bonds.''

Lani Lutar, executive director of the San Diego County Taxpayers Association, said Filner has previously flip-flopped on pension reform.

Comments

Avatar for user 'laplayaheritage'

laplayaheritage | October 8, 2012 at 4:10 p.m. ― 1 year, 6 months ago

http://www.voiceofsandiego.org/government/article_d908fefa-daa7-11e1-b11c-0019bb2963f4.html

"Monday, July 30, 2012

Filner said that June’s passage of Proposition B, a pension initiative, made borrowing money through what are known as pension obligation bonds no longer necessary. Here’s the full statement from his campaign, which was released late Monday (emphasis added):

During the Prop B campaign, I suggested that pension obligation bonds be looked at as a way to reduce the city's unfunded liability. San Diego County has utilized them several times, retains the highest bond rating in the state, and is widely considered to be the best-managed government entity in the region when it comes to finances.

However, voters have now approved Prop B and I have committed to implementing the will of the voters, so consideration of pension obligation bonds is no longer relevant. The most important issue now is realizing the nearly $1 billion in savings that results from successfully implementing a five-year freeze on pensionable pay for city workers, and I am the only candidate who can deliver on it."


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