Last week Los Angeles' city council voted unanimously to reduce pensions for new workers by raising the retirement age to 65 and requiring greater contributions from workers. Judging by the protests at the city council meeting, you would have thought that pension Armageddon was raining down on the city. Hardly. The modest reforms will only save the city $30 million over five years because they apply merely to workers not yet hired. How minor is that? As the chart below shows, the city's pension payments are scheduled to rise over the next four years by some $375 million.
LA's pension problem is part of a larger employee cost problem, as four drives of employee costs explode in the city. A report earlier this year by the city's Chief Administrative Officer painted a bleak picture of LA's fiscal outlook, projecting that revenues would lag expenditures by a growing gap (see chart).
As I wrote earlier this year:
As I wrote earlier this year:The city's budget woes are so steep, the CAO report says, that it's no longer feasible to close budget gaps just with cuts without risking basic services like police and fire protection, so the report recommends some $150 million in new taxes."We're facing the complete devastation of city services, including public safety," the CAO, Migeul Santana, told the press.
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