Oakland faces pension costs, higher taxes

[The Northerner]

Oakland voters will likely be asked in November to approve higher taxes to halve a $42 million deficit, but even if they agree, the city will face an even deeper crisis within months.

Ballooning pension costs will push the city's projected deficit to $58.7 million by July 2011.

The biggest portion of that budget shortfall is a debt payment of $43.9 million due July 1, 2011, to the old Police and Fire Retirement System. The payment would be more than 10 percent of the roughly $400 million city budget.

The looming crisis prompted great concern at last week's meeting from two council members, Pat Kernighan and Ignacio De La Fuente. When the council refused to ask staff to prepare a report on the impending budget woes, the typically mild-mannered Kernighan did not restrain herself.

"If that doesn't happen, you guys are crazy and irresponsible!" she exclaimed.

Kernighan said voters will not approve an $18.2 million public safety parcel tax, which would require a two-thirds vote, if they understand that the budget problem will only worsen later.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/05/05/BARQ1D7JUI.DTL&tsp=1

[JDPriestly]

1. These pensions are the public equivalent of private 401(K) funds.

The babyboomers formed a massive workforce. Their work enriched the nation, and their savings bloated Wall Street's coffers. Now that the babyboomers are about to start living on some of the money they "invested" and that was invested for them, Wall Street and the country are running scared.

The crisis has nothing to do with bloated government budgets.

Even though nobody wants to talk about it, the fundamental economic question at this time is: how can the country (maybe even the world) provide for babyboomers in their old age? There are just too many babyboomers to handle.

Where we get our income from, whether personal savings, pensions, Social Security, "investments," or part-time work, does not make a difference. The fact is that the older we get, the less contribute to the nation's wealth, to production. Eventually, most of us will need to take more than we give back no matter how little we consume, no matter how much we saved or invest.

That means higher taxes and a tougher time for people younger than the babyboomers. It isn't anybody's fault. It's just the mathematics of the baby boom.

The babyboomers have always increased demand for whatever they needed or caused their parents to need: housing and elementary education in the 1950s, college teachers and education in the 1960s, jobs and oil in the 1970s and so on. Now it's going to be pensions and medical care.

When I read these fearful articles about whether the government can afford to pay for Medicare or Social Security or employees' pensions, I just think that the real point is being missed. We have to look a beyond the specific problem, say, the cost of government pensions and think about the bigger problem. Because it is really much bigger.

Government pensions are just one tiny piece of the big puzzle.

[truedelphi]

2. But here is something to consider -

What other "generation" has been comprised of all known births after a major war period and during a time of growing affluence, and for a long span of some fourteen years of births?

My dad was born in 1912. His generation was not part of some huge lump-em-all-together and count them all up group of people. (And granted the numbers would be smaller even if you had lumped the babies born between 1912 and 1926 all together. But still, they didn't lump his group with another group that big.)

The other thing to consider is this - the less affluent baby boomers probably will not all make it to see their retirement. The age group between 55 and 62 is very much out of work, in higher proportions than one would expect. And it is quite difficult for many reasons for them to re-enter society - employers cannot afford to hire Baby boomers in this age bracket unless their spouse provides insurance. Additionally, if they get hired in their major career choice, they have a high dollar earning history. So for the above reasons, in many cases, someone younger will be hired rather than them. It can be expected that this same group of people will suffer from poor nourishment, lack of dental care, and a host of other problems. Add in homelessness, and it is safe to say that we could see many in this group have significantly shortened lives.

Thus they fall through the safety net. They cannot afford insurance, and only if they are lucky enough to live in a county or state where the local public clinic system provides decent care do they have a chance to make tit to their mid sixties. (Unless they have very good health.)

It is also true that the age expectancy levels for this entire age group may be waning, regardless if they are rich or poor, employed or unemployed. Whereas the generations born between 1910 and 1930 grew up on organic foods (because pesticides were little used) and made gains due to such things as antibiotics coming aboard and wiping out former deadly diseases like pneumonia, the Baby Boomer generation grew up on white bread, butter and pesticides. Staph kills off some of us while we are en hospital, and many diseases are becoming antibiotic resistant.

I have lost my two closest friends to cancer, and I am not sixty yet. My much older female relatives have best friends who like them, have lived to see their eighty fifth birthday. So I will be interested in what the Census says about whether our age group has significantly declined in numbers or not.