I received the following comment from voiceofsandiego.org reader Don Wood:

Isn’t the key to the city’s current financial mess the deals previous mayors and city council members made with the unions and the pension board in 1996 and 2002? Those deals are what have substantially increased the city’s pension liabilities, and thrown the budget out of whack, aren’t they?

While the city’s pension under-funding is largely the result of the 1996 and 2002 pension deals, the city’s financial problems extend well beyond the pension shortfall. The ’96 and ’02 agreements were really just symptoms of a larger problem.

City managers were being pressured by labor unions and their supporters on the city council to increase salaries beyond available resources. The council didn’t want to cut other expenses to pay for these increases. The Faustian solution was to trade-off enhanced pension benefits for reduced salary demands. We all know the results.

The underlying problem is a lack of budget discipline – the need to limit expenditures to available resources – which is just now being addressed. But the challenge of addressing that problem is now compounded by the existence of $1.4 billion of pension debt created by the earlier “fix.”

Tom Shepard

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