California’s cities are running out of cash, as pension expenses gobble up growing portions of their budgets. They’ve cut services, raised taxes and come to Sacramento to implore the pension funds and the Legislature to help out, but city governments don’t have the muscle of the state’s public-sector unions, which fight reform.
Here’s more of a reality check: These fiscal problems are becoming dire even though the stock market is at record levels, and the state’s two massive pension funds enjoyed stellar gains last year. Healthy investment returns keep the pension systems funded, but what happens if there’s another downturn?
What to do? The union-controlled California Public Employees’ Retirement System assures us that everything will be fine.