San Diego’s City Council went into an emergency closed session meeting this morning to discuss the ongoing talks to trim the city’s retiree health care costs, indicating that an overdue deal may be near.

The city and its labor unions have been approaching the end of two years of negotiations to reduce the city’s unfunded health care liability, which stands at $1.1 billion.

Here’s earlier context on the issue from my colleague, Liam Dillon:

Retiree medical benefits always sat in the shadow of the city’s pension system. Mayor Pete Wilson promised them as part of a cost-savings plan to withdraw the city from Social Security in the early 1980s. Then the benefits played a scandalous role in the city’s pension crisis, as the city siphoned off pension earnings to pay for them. That was a no-no, according to the Internal Revenue Service. For decades, the city didn’t set money aside to pay for what became a ballooning liability.

Buoyed by a federal appeals court ruling this summer, Sanders’ office is pushing ahead on what could be a dramatic reform of the benefit. City Chief Operating Officer Jay Goldstone said retiree health care was one of the mayor’s top priorities in addressing the city’s long-term budget problems.

“Bottom line is we need to change the current plan because it is not affordable and sustainable,” Goldstone said.

Update: Mayor Jerry Sanders has announced that a deal has been reached that his office says will save hundreds of millions. A 10 a.m. press conference has been scheduled. We’ll have more later.

Please contact Rob Davis directly at rob.davis@voiceofsandiego.org or 619.325.0529 and follow him on Twitter: twitter.com/robwdavis.

Rob Davis

Rob Davis was formerly a senior reporter for Voice of San Diego.

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