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This is interesting and I’ll try to follow it up. Today I did a column on Chula Vista’s own pension promises to its employees and how those may be just as hard to sustain in the future as the city of San Diego’s are now.
In other words, if you’re a San Diego cop thinking of transferring to the suburb because of all the cash that city’s throwing around, you should be aware that it might face the same fiscal crunch San Diego is going through now.
The column seemed to touch a nerve and now a few readers have pointed me to other interesting facts.
I showed that Chula Vista’s pension obligations were rising rapidly and that with a slowing housing market (and a corresponding slump in tax revenues), the city would similarly struggle to pay bills that will grow just as fast if not faster than they are now.
Turns out the city may already be feeling some of this pain. According to this Union-Tribune story, Chula Vista’s stock of reserve cash is the lowest in the county. At 6.2 percent, it’s lower than the City Council’s own policy, which mandates an 8 percent reserve.
Last year, Chula Vista Mayor Steve Padilla had this to say in his state of the city:
Due to prudent fiscal planning and management, our city was able to absorb negative budget impacts due to increasing retirement contributions we pay on behalf of our employees to the California Public Employee Retirement System, and a two year budget agreement worked out with the State to help it balance its budget. Despite costing Chula Vista 3.6 million dollars in fiscal years 05 and 06, we were able to absorb the loss and maintain our General Fund Reserves above the set City Council policy that reserves should never drop below 8% of our operating budget.
So, those reserves should never drop below 8 percent unless you have to pay for pensions. If Chula Vista is dipping into its reserves during boom times like this – the city’s general fund grew by 8 percent last year – what’s going to happen when tax revenues don’t come pouring in?