Calif. Taxpayers on Hook for Six-Figure Government Pensions

Retired law enforcement exec collected $1.5 million in 2018

California governor Gavin Newsom (D.) / Getty Images
November 7, 2019

Nearly 80,000 Californians collected six-figure taxpayer-funded pensions in 2018, as retirement costs leave half the state's cities at "high risk" of serious financial distress, according to an analysis.

Transparent California, a free-market think tank, found that 6 percent of retired government workers collected more than $100,000 in 2018, an 85 percent jump since 2013. Those payouts represented 20 percent of the $51.7 billion in total pension payments. Taxpayers spent a record-high $40 billion to cover the costs of public sector retirees in 2018, the report also found.

The median household income in California is $75,277. The six-figure payouts propel thousands of retirees into the top 38 percent of all earners in the state, according to census data. About 1.2 million people received pension checks in 2018, including a retired deputy police chief who collected nearly $1.5 million in 2018.

The increasing costs could push residents to a "breaking point," according to Robert Fellner, executive director of Transparent California. Local and state government agencies will have to raise taxes to cover costs or cut public services to pay people who are no longer working.

"You keep raising your sales tax [to fund pensions], you are obviously pushing residents to a breaking point," Fellner told the Washington Free Beacon. "The public services speaks for itself. You see the homelessness and stuff going on, and it's a really bad situation."

California has long struggled to contain its spiraling pension costs. In 2011, the Little Hoover Commission, the state's bipartisan government watchdog, urged California to drastically reduce its pension commitments. Then-governor Jerry Brown, a Democrat, pushed to adopt pension reform, but labor leaders killed the effort with the help of former attorney general Kamala Harris, now a 2020 presidential hopeful.

"California's pension plans are dangerously underfunded, the result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently," the commission report said. "Unless aggressive reforms are implemented now, the problem will get far worse, forcing counties and cities to severely reduce services and layoff employees to meet pension obligations."

California's public pension cost continues to eat up the budgets of local governments. A state auditor report found that 47 percent of Californian cities are at "high risk" of financial distress due to pension costs. The wide-sweeping audit found that "increasing pension costs may supplant a city’s other spending priorities and potentially cause it to curtail critical services."

Some cities, however, dispute the auditor's findings. The city manager of Marysville, the most financially risky city in the state, told the Appeal-Democrat the auditor's remarks were "damaging and outdated."

Fellner said that the bloated California public pension scheme is a "textbook argument for limited government" and urged reform.

"The majority [of cities] will keep raising taxes and cutting services," Fellner said. "But some of the cities can't afford it. California has already seen some cities go bankrupt."

Published under: California , Pension