The Morning Report
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Up until Friday afternoon, San Diego faced an estimated $2.5 billion bill for providing health care to retired employees in the next 25 years.
The revised bill: $1.8 billion — $713 million less.
My colleague, Liam Dillon, has written extensively about how the city negotiated with labor unions to cut costs and why some argue that even $713 million in savings isn’t enough. To help illustrate how the savings compare, I’ve created the graphic below.
If the city did nothing to cut health care costs, officials project the annual bill would skyrocket in the next 25 years, placing more and more pressure on other parts of the budget, such as public safety, parks and libraries. The deal with labor unions doesn’t help the city’s current cash crunch, but would relieve future pressures.
The City Council approved the deal 6-2, with Carl DeMaio and Lorie Zapf dissenting. They argued for cutting more costs, even if that meant time in court. The city could have eliminated the benefit entirely for current employees, saving another $365 million in the next 25 years, depending on the outcome of likely lawsuits.
To be sure, there’s no easy option here. City officials weighed making a deal with labor groups to avoid litigation against the risk of a better or worse outcome in court. The mayor and a majority of City Council members ultimately rejected taking the gamble.