Gullixson: Why all the tax measures? Turn to page 13

Something doesn't add up about the local tax measures that voters will be deciding this fall.

We've become accustomed to seeing tax increases during difficult economic times to help the state, cities and counties stay afloat. But why so many now in an otherwise good - if not robust - time?

Let me start with the caveat that there are good arguments to be made for why the county library system needs funding from a one-eighth-cent sale tax increase and why county parks - which has seen flat revenue growth for the past 10 years, according to Parks Director Caryl Hart - need the support of a half-cent sales tax.

There also are good arguments for why voters should boost the county's hotel tax from 9 percent to 12 percent, generating some $4.8 million a year for road repairs, affordable housing and other stuff. What's the harm? As the late Sen. Russell Long of Louisiana said, “Don't tax you. Don't tax me. Tax the guy behind the tree.” In our case, that would be a tourist standing behind a redwood tree - at a winery.

But why now? The county's general fund budget for the fiscal year that began July 1 is up nearly 3 percent from the year before. Overall tax revenue is up 5.9 percent, while spending on salaries and benefits is up $7.2 million over the year before. Why is money for parks and road repair so hard to find?

The answers, of course, are complex. But one of the clearest explanations can be found right there on page 13 - of a document that should be required reading in Sonoma County. It's the final report of the county's Independent Citizens Advisory Committee on Pension Matters. It's under the heading “Cost to the community of foregone services.”

The reports shows that the decisions county supervisors made back in the early 2000s to increase retirement benefits - essentially giving employees a retroactive 50 percent boost in their pensions - have cost the county an extra $260 million over the past 10 years. That's money that “would have been available to fund critical public services.” (To clarify, this is not the county's full cost of pensions. This is just the additional costs above what the county was paying prior to increasing benefits.)

Of all the figures in the pension report, this is the one that should stand out. That's $26 million a year that the county otherwise would have had to spend. To put this in perspective, according to the report, for every $10 million extra the county has, it could hire 44 more deputies. Or it could repair and pave an additional 40 miles of roads. The county supervisors have gone to great efforts to find extra money - including taking $11 million from the general fund this year - to help with road repair. But our roads still continue to be ranked among the worst in the Bay Area.

And keep in mind that $26 million a year is only to cover past costs. The pension committee reports that the extra costs are expected to total another $741 million between now and 2030 - barring any downturns in the economy. That's an average of $53 million a year.

In short, while agencies and county department compete in this high-stakes game of musical chairs in seeking voter approval for silo funding initiatives, there's an elephant in the room that is taking up all the space. That pachyderm is a massive unfunded pension obligation that - despite all of the efforts at reform by local and state leaders and despite the massive infusion of extra taxpayer dollars to make up for stock market losses - still totals $831 million. As the report states, “To eliminate the county's unfunded pension obligation, it would cost each person living in the county approximately $1,650.”

It has been a breathtaking gift of public funds, one that never was approved by voters.

In receiving this report on July 12, the supervisors promised to look into it more but took no action other than to disband the committee. They argue that their hands are tied by state law in doing much to deal with the problem. In large part that is true. But, as the report points out, there is much more that the county should be doing, such as being more transparent about how big the problem is and pledging to stop making the situation worse.

The county had set the goal five years ago of trying to get employees to share the normal costs of pensions 50/50. But they are not close to reaching that goal. In the latest round of salary negotiations with public safety unions, for example, the county agreed to LOWER the employee's contribution to the point that they are only paying 1.5 percent of salary, along with the 3 percent toward the retroactive increase. According to Ken Churchill, a pension watchdog and former candidate for supervisor, “This means that the county is paying 52 percent of salary toward pension and pension bond costs and public safety employees are only paying 4.5 percent.”

The old saying about the first rule of holes is that when you find yourself in one, stop digging. But the county is still digging.

Critics of this report are already breaking out the usual arguments for why it should be ignored. One is that the county needs to offer these benefits in order to keep and attract good people. Or course, that's pretty insulting to those who retired before 2002 under a pension plan that was affordable, and sustainable, but not as generous. No one has gotten more of a shaft than these earlier retirees who haven't even seen a cost of living increase in pension benefits in 10 years because the county can't afford to give one.

Meanwhile, given that the county is not alone in dealing with this pension problem, this argument about employee flight will diminish once more cities and counties start dealing with these costs in a more responsible fashion. Right now, it's a race to bankruptcy.

As the pension committee pointed out, if you've worked full time for the county for 30 years, it's almost guaranteed that when you retire, your income, particularly when combined with Social Security benefits, will be more than 100 percent of your final salary. If you are a high-level manager, you are likely to receive far in excess of 100 percent of your final salary. So why would you work a day past your eligible retirement day, which is 50 for longtime public safety employees (57 for current ones) and 60 for other employees (67 for recent hires).

Those in the private sector are not so fortunate. According to federal figures, the median annual income of retirees with only Social Security is $15,985. The media income of retires with Social Security and a private pension is $33,420.

In the end, voters may still decide that parks and libraries need the funding because there's nothing on the horizon to suggest things are going to improve for these services. And they would be right.

But given the big picture provided by this pension report, such requests for more funding are hard to stomach. They further raise the vexing question of whether approving them would send the unfortunate message to supervisors that, yes, they have done enough to address the pension issue.

The truth is, they haven't.

Paul Gullixson is editorial director for The Press Democrat. Email him at paul.gullixson@pressdemocrat.com.