Pensions the cause of Petaluma’s budget woes

Like most other municipal governments in California, Petaluma is facing a “pension tsunami,” the rising cost of public employee retirement benefits that are crippling city and county governments across the state.

In Petaluma, benefit expenses of $12.5 million budgeted for the fiscal year starting July 1 were up 7.2 percent year-over-year, and up 64.5 percent from five years ago, according to historic budget documents.

The share of the general fund expenditures allocated to pay for benefits has also crept up during that period, from 23.8 percent in the fiscal year that started in July 2011 to 28 percent for the period beginning later this year.

City revenues have not kept pace with employee retirement costs, despite Petaluma recently adding new retail developments - East Washington Place and Deer Creek Shopping Center - that have contributed an additional $1 million in annual sales tax revenue. The problem has become so acute that it is threatening basic city services.

Traditionally, municipal governments offered gold-plated retirement packages to employees, much better deals than they would get in the private sector, as a way of attracting talented workers.

But more baby-boomer employees are now retiring, and the California Public Employee’s Retirement System investments took a major hit during the financial crisis, with cities like Petaluma forced to shoulder more of the load of benefit costs.

As statewide public pension reform efforts take place, Petaluma should continue to look at ways to find savings in retirement costs.

This means that new employees may have to make concessions and should not expect the same retirement benefits as those who worked here a generation ago.

The current pension crisis is very serious. When Petaluma is forced to cut funding for public safety or is unable to pave its crumbling streets because of rising pension costs, more reform is needed.