Statement: “Our pension payments after 2012 will start going down instead of up,” Mayor Jerry Sanders said at a press conference Aug. 5.
Analysis: The mayor was mistaken. The pension system’s most recent projections say the city’s payments will increase every year until 2025, peaking around $500 million, and then start to fall.
Mayoral spokeswoman Rachel Laing acknowledged the error Friday, and said Sanders meant to say the payments are expected to be lower than currently projected by the pension system. The costs would continue to rise each year, but by smaller amount.
“We don’t know exactly how much, but that’s what he was speaking to,” Laing said. “It was unclear, obviously not meant to deceive.”
Sanders’ statement came at a press conference alongside fellow Proposition D supporters. The ballot measure would increase the sales tax by a half cent if city officials complete a series of financial reforms. Some of those reforms aim to cut down on pension costs, although it’s unclear to what degree.
Supporters have touted the sales tax increase as an effort to restore public safety services and prevent further cuts to other functions like libraries and parks. At the press conference, KPBS reporter Katie Orr asked Sanders how he could guarantee the revenue would go toward those services and not the rising cost of employee pensions. Sanders responded:
I want to be real clear about this because there are others who will demagogue the issue and inflate the numbers as high as they can, but our pension payments after 2012 will start going down instead of up.
Sanders went on to explain several factors that would reduce the city’s projected payments, including better investment returns and holding off on pay raises for current employees. But again, the payments are still expected to climb until 2025. Here’s a graph of the most recent estimates:
In July, the pension system estimated that the city will need to pay $255 million for employee pensions in 2012, or $24 million more than the previous payment. The July estimate assumes the pension system will earn 7.75 percent on its investments and the city will increase salaries by 4.5 percent.
The mayor expects payments to be slightly lower than $255 million since the pension system’s investments returned 13 percent this year and the city has scaled back on payroll, Laing said.
But that’s not what he said at the press conference. Sanders implied that the city’s entire payment would be lower than the previous year and that’s not what the pension system forecasts.
We’ve called Sanders’ statement false since it inaccurately represented the trajectory of pension costs based on the information available today.
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— KEEGAN KYLE