The California auditor says El Cajon is at risk of financial distress, with one of the highest pension obligation risks in the state.
Maya Srikrishnan and Ashly McGlone crunched the numbers and found that in fiscal year 2016-16, the East County city owed roughly $493 million to its workers’ retirement accounts. There was a $174 million gap between the city’s pension assets and its pension liability, and it’s only going up.
The unfunded pension debt grew in fiscal year 2018-19 to $190 million.
Government agencies all over the state are battling ever-growing pension burdens, and their investments aren’t keeping up. During the recession, El Cajon, like many cities, significantly reduced its staff, but hasn’t replaced many of those positions as the economy improved — meaning there are fewer employees on the payroll today who can contribute to the overall system.
The city has started meeting with consultants to consider better financing options and is considering a bond to help pay down the cost of its obligations to workers. It’s a risky move because it means throwing debt on top of debt. If the new investments don’t fully cover the costs of the old investments, officials will be left owning more, not less, to their retirement account.
Pension bonds have helped bankrupt some California cities, and the Government Finance Officers Association has strongly advised against them.
Takeaways From Politifest
Many thanks to everyone who made Politifest 2019 a wild success, a tour de force, a five popcorn-bag winner. We couldn’t have done it without the dozens of awesome volunteers. If you didn’t make it, you should reevaluate your priorities and life goals. But also, don’t sweat it! We’ll be uploading video and audio recordings from many of the discussions. You can also see some of the highlights yourself via our Twitter account and this hashtag.
A few things that caught our attention:
State Sen. Scott Weiner pushed back against the common argument that certain neighborhoods or cities are “full” and that people who can’t afford to stay should just leave. California has been trying to make home construction difficult for 50 years, he said. “People come anyways, and it just causes all sorts of problems.”
Candidates for the Board of Supervisors gave their impressions of SOS, a countywide ballot measure that would require certain sprawl projects to seek public approval. Olga Diaz, who’s running for District 3, sounded sympathetic and said people who are warning that it’ll stop development are wrong. She pointed to Escondido, her hometown, where the voters have the right to vote on any projects that are outside the scope of the city’s general plan. It’s helped maintain the peace between the public and policymakers, she said.
State Sen. Joel Anderson, who’s running for D2, had another take. He’s not a fan of SOS because it would lead to “mob rule,” he said. “The idea that the coast can decide projects in my background is not right.”
Anderson is also not a big fan of the Mid-Coast Trolley extension that’ll better connect the region with public transit, but he found something positive to say about it. “La Jolla is going to learn what homelessness really is … because everybody who’s homeless and alcoholics can get on the trolley now, head up there and panhandle for money.”
If you want a perspective on what it’s like to actually be homeless, KPBS reporter Andrew Bowen helped shed some light. His panel featured Steve Ried, who said, “It’s one of the worst nightmares you can have to sleep on a sidewalk with people walking by.”
There was also an interesting exchange at the San Diego mayoral debate about — what else? — scooters. Assemblyman Todd Gloria defended a state bill he co-wrote that brings the devices in line with bike regulations. It eliminated helmet requirements for adult riders and more.
“They are not bicycles,” said City Councilwoman Barbara Bry. “They are flimsy electrical devices made in China.”
Gloria said San Diego is incapable of doing big things — or really anything at all when it comes to scooters and vacation rentals — because of a “small-town mentality that we can’t shake loose from.”
Tasha Williamson, a community activist, drew applause when she complained that the city cared more about scooters than real people.
“We are talking about scooters and bikes so passionately,” she said, “but I can’t get police officers to stop killing people.”
Hotel Tax Coalition Says it Will Donate Private Prison Money
The San Diego City Council is poised to put a hotel tax increase on the March ballot that’ll raise money for the convention center, homeless services and road repairs. But at a public meeting last week, some officials expressed reservations about who might be backing that initiative and why.
The “Yes! For a Better San Diego” campaign drew criticism for accepting a $50,000 donation from GEO Group, a company that runs private prisons and is expanding into social services. The campaign accepted the money last year around the time that its signature-gathering effort seemed on the verge of collapse.
A spokeswoman for the campaign told Maya Srikrishnan the money will be donated to various organizations that help vulnerable San Diegans. She also vowed that the campaign would better screen donations going forward.
GEO Group said it has no intention of getting into homeless services, but the company does plan to expand its re-entry and rehabilitation programs — which could receive funding from the hotel tax increase.
Andrea Guerrero, executive director of the community empowerment group Alliance San Diego, first called attention to the donation in an op-ed for us.
AB 5 Debate Is as Fierce as Ever
Assemblywoman Lorena Gonzalez’s AB 5 limits when employers can classify someone an independent contractor. The governor signed it in September, ending the question of whether it would become law. But as Sara Libby notes in the Sacramento Report, the debate over what’s in it and what the impact will be is still raging.
It began with a piece by the Hollywood Reporter spelling out the frustrations of some freelance writers who feel that the cap of 35 pieces a year per publication are going to derail their careers. (The U-T’s editor and publisher also admitted that his publication might utilize freelancers less in order to avoid hiring them.) Then it escalated into a full-out feud on social media after New York journalist Yashar Ali got involved.
It kept going through the weekend, with a Wall Street Journal columnist weighing in with some deep and thought-provoking prose: “California is so stupid.”
AB 5 is already having an affect nationally. Bloomberg reports that Democratic presidential contender Joe Biden’s new labor plan was inspired by California’s law. It would also introduce new measures to hold company executives personally liable if they interfere with union organizing efforts. Elizabeth Warren threw her support behind AB 5 in August.
In Other News
- Supervisor Kristin Gaspar did not reveal that she served on the advisory board of a charity that received $2 million to purchase a temporary shelter for sex trafficking victims. San Diego County officials reversed course and are putting the project back out to bid. (Union-Tribune)
- Gov. Gavin Newsom declared a statewide emergency on Sunday as wildfires spread across the state. (Washington Post)
- Young people throughout the county are working on their own “Bill of Rights.” They met this weekend to talk about how they’d like to see the region change in the coming years. (Union-Tribune)
- In an op-ed, two businessmen argue that San Diego’s plan to tackle homelessness was the easy part. It now requires consistent funding and participation from all stakeholders, including the private sector.
Corrections: An earlier version of this post misspelled Steven Ried. An earlier version of this post also misattributed a quote about San Diego’s “small-town mentality that we can’t shake loose from.” The quote was from Assemblyman Todd Gloria.
The Morning Report was written by Jesse Marx, and edited by Sara Libby.