COSTA MESA — I took a few moments this morning to review the staff report for tonight’s Costa Mesa City Council Study Session regarding their 5 year financial forecast. In order to inflate the costs of employee pension contributions, the staff has forecast that the employees would no longer contribute to their pension costs after the current contracts expire.
The forecasted rates for Miscellaneous are as follows:
FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17
18.53% 19.38% 27.18% 27.58% 27.88% 28.18%
There are 2 reasons for the increase in FY 13-14. One is because CalPERS has projected a rate increase of 2.8%. They are currently projecting rate increases to level off after that year. The other reason is because that is the time when the current employment contract will conclude and the 5% the Miscellaneous personnel currently contribute would revert back to the City. In FY 13-14, staff estimates that amount to be $740,067.
Such a conclusion is highly speculative at best. While such contributions are the subject of negotiation, the assumption that the City Council would agree to both increase salaries and terminate employee contributions to pension costs is highly unlikely. A more likely scenario would be for the city to demand greater employee contributions, that is assuming they do not simply contract out all jobs as they have been trying to do for the last 5 months.
It’s not just the pension costs they’re playing with though. Low balling the sales tax projections is also in the mix.
Sales Tax – the current sales tax assumption is an increase of 3% per year. Staff recognizes that current market conditions are more favorable than previous years and that those conditions may not continue. Using a 3% average could allow for a 6% increase in one year and a 0% increase the following. The average for those two would be 3%.
This isn’t the first time it has been shown that these guys are cooking their books. Back in June we wrote about the Costa Mesa Financial Audit: NO FISCAL CRISIS. In that audit, it was shown that the city does not have a financial cash flow problem that places the city at risk of bankruptcy. But why should we let facts get in the way of a political talking point?
So just to make sure I’m clear here. Mayor Pro Tem Jim Righeimer and his gang of misfits are still requiring staff to cook the books to support their manufactured fiscal crisis projections.
The dog and pony show starts at 4:30 pm in the City Council Chambers.