PD Editorial: The challenges before Sonoma County in 2013

Economic development will continue to be Sonoma County's greatest challenge in the new year, despite numerous signs that the economy is improving. The county unemployment rate inched up last month to 7.7 percent, but overall it's been on a steady decline for some time, dropping from 9.1 percent a year ago.

A recent economic forecast prepared for the county anticipates steady job growth this year and a 5.2 percent growth in personal income in 2013. But maintaining the region's economic momentum won't be easy given another major challenge facing the county and the majority of its cities — the need to continue reining in pension costs.

Although Gov. Jerry Brown and the state Legislature were able to push through a pension reform package this year and a number of cities also took reform-minded steps, no one should be left with the impression that the problem has been resolved. Far from it.

The Santa Rosa City Council earlier this month got word that, despite recent efforts to contain retirements, the city's pension costs are climbing and probably will continue to do so for the foreseeable future. Santa Rosa's annual payment to the California Public Employees Retirement System, is set to increase by about $1 million next year to $20.4 million. In addition, the city's unfunded liability has increased to $127.5 millions, up from $100 million just two years. This represents the difference between the value of the assets the city has set aside through CalPERS and what additional payments will be needed to meet its long-term obligations. The unfunded liability now exceeds the city's entire general-fund budget.

The Petaluma City Council, meanwhile, voted last week to amend its contract with CalPERS, creating a second-tier retirement system for non-public-safety employees. Under the plan, new employees will have to work to age 60 instead of 55. They will continue to receive 2 percent of their salary for each year worked, but their pension will be based on the average of their three highest salary years, not their single highest.

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