Faulconer Requests Budget Cuts As San Diego Pension Costs Spike
Wednesday, November 16, 2016
David Garrick, reporter, The San Diego Union-Tribune
City of San Diego departments are likely facing 3.5 percent budget cuts next year driven largely by a significant increase in the city’s pension debt.
San Diego City Council’s Budget and Government Efficiency Committee will meet Wednesday morning to review a five-year financial outlook prepared by Mayor Kevin Faulconer’s office. That report, released last week, shows the city’s annual pension payment is expected to increase by $37 million to $228 million in the fiscal year beginning July 1.
Pension costs are rising because members of the system are living longer than expected, according to a new analysis from the city’s pension fund. The fund grew only 1.1 percent in fiscal 2016, below a goal of 7 percent returns and a market benchmark of 2.3 percent. But pension fund board members said nearly all of the increase in pension costs was due to lower mortality rates.
The city expects a $37 million budget shortfall in 2018. Projected revenue increases will help cut down that shortfall in future years. The budget will have a $20 million shortfall in fiscal year 2019, then a $500,000 surplus in 2020, a $40 million surplus in 2021 and an $80 million surplus in 2022, according to city projections.
Faulconer set up a pension stabilization fund last spring to help deal with future pension spikes, but it has only $16 million in it.
David Garrick, a reporter for The San Diego Union-Tribune, joins KPBS Midday Edition Wednesday to discuss the impact these budget cuts could have on city services.
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