I’m not surprised to hear that Pasadena passed a bond issuance resolution tonight to shore up what I understood to perhaps be a $23 million pension obligation.Â But taxpayers should realize that bonding pensions means that we will pay at least $46 million for those pensions including bond interest just as you pay about double on a 30-year mortgage.Â That probably doesn’t include OPEB – “Other Planned Employment Benefits” – which is a euphemism for medical benefits for retirees. So I’m guessing the real unmet obligation is something like three times $23 million or $69 million.
Pensions were originally designed to be paid on a “pay-as-you-go” basis, not mortgaged.Â This is what bankrupted the City of New York in the 1970’s under Mayor Lindsay – they bonded social services and pensions.
Pasadena is one of only six cities in California with the highest bond rating.Â It is a wealthy community.Â But it not only foolishly diverted redevelopment funds to police and firefighter pensions and away from public schools in the 1980’s but it apparently over-promised on other city pension obligations.
In 2008, I fought the City’s Telephone Utility Tax and lost. The City promptly spent the roughly $10 million it annually derives from those taxes on luxury public goods – open space acquisitions, buying the YWCA for preservation, funding an urgent care center in East Pasadena when there are private urgent care centers available, subsidizing a land purchase for a restaurant business incubator that has done nothing but help “roach coaches” take business away from established restaurants, buying out a strip club on Foothill Boulevard, buying out a small proposed condo project on North Allen Avenue for a measly one unit of low income housing that has yet to sell all the units. Wouldn’t it have been better stewardship to plug its pension obligations by renegotiating the benefit packages downward and then funding them with a reliable source of taxes?
Meanwhile investing in Pasadena’s economic future by buying water rights or working out more water storage agreements in the Raymond Basin for a reliable, cheap source of water has received less funding and attention.
Pasadena has some excellent civil servants in its city manager, assistant city manager, finance director and PWP manager.Â But the policies of its decision makers should seriously called into question.Â What the decision tonight means is that about $46 million in services will be squeezed out of the budget and diverted from citizens to pensioners over the next 20 years.
In Pasadena elected officials are prone to say “no good deed goes unpunished.”Â Neither to bad deeds and policies go punished.