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Faulconer Requests Budget Cuts As San Diego Pension Costs Spike

Photo caption:

Photo by Associated Press

San Diego Mayor Kevin Faulconer speaks during a news conference about the city's NFL football team in San Diego, Jan. 13, 2016.

Faulconer Requests Budget Cuts As San Diego Pension Costs Spike


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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