LA MESA COUNCIL CONSIDERS BUDGET TO DEAL WITH HIGHER PENSION COSTS

By Mike Allen

June 14, 2017 (La Mesa) -- Like every city and the state of California, La Mesa is grappling with the ever-burgeoning costs related to generous pension benefits negotiated by labor unions years ago.

While agreements that may have seemed reasonable during years when California’s economy flourished, the rising benefits have caused major problems for many cities’ budgets.

Starting this fiscal year July 1, La Mesa will be dealing with a $1 million deficit to its $47 million budget because of higher contributions the city must make to its employees’ retirement accounts.

By FY 2018, that deficit will rise to $1.7 million, and within five years, it will more than double, said La Mesa finance director Sarah Waller-Bullock at a June 13 City Council meeting.

Despite projected increases in revenue for the coming year, the city is facing “rapidly escalating CalPERS pension costs,” Waller-Bullock said.

To cover the deficit, the city is constantly looking at ways of reducing its budget expenses, while seeking alternate revenue sources, she said.

The information didn’t appear to alarm council members who have heard city budget presentations going back to January, and are expected to approve the final 2018 budget in August.

One tried and true strategy for cutting expenses is reducing labor. This year La Mesa eliminated one full-time and one part-time position, bringing its total work force to 260. Next year, it’s on track to eliminate two full-time positions.

Another way of balancing a budget is bringing in more revenue, or taxes, something La Mesa has been doing fairly well in recent years, the council was told.

Not only have property and sales taxes been increasing at decent rates, so has its Prop L taxes, the 0.75 percent sales tax surcharge that voters approved in 2008, the council was told.

But the ongoing issue of increasing retirement costs will continue to impact La Mesa in the future, Waller- Bullock told the council. She noted in an earlier report that changes in the way CalPERS calculated its projected investments, the city’s retirement costs were expected to rise by 10-15 percent annually starting in 2017.

“Our pension costs are outpacing everything else,” she said.

In other actions, the council also approved a development plan for a mixed-use condo project called Montebello that straddles El Cajon Boulevard near Thorne Drive. The owner, the Arnold & Valerie Schmidt Revocable Trust, is building 253 condo units and 12 commercial suites of 5,000 square feet each on two parcels totaling 4.66 acres.

The residential number includes 21 units designated as affordable and aimed at “very low income households.” Using data from 2005, the maximum income for a single person to qualify would be $24,150, according to a report included with the item, which was approved without comment on the council’s consent agenda.

The high-density project calls for building 112 one-bedroom units, and 141 two-bedroom units. The report states the units could be either for sale condos or rentals.

Parking may be an issue when the project is completed. According to Community Development Director Carol Dick, the project is providing 407 parking spaces when the city’s code calls for 506 spaces.