Google’s booming hometown of Mountain View, California, which has a jobless rate of below three percent and a median family income in the six figures, may need to raid its rainy day fund to cover its unfunded pension liabilities for public employees. The Mountain View Voice reports:
Under a plan put forward by the city’s finance team, Mountain View would draw about half that amount ($6 million) from its reserve fund, a pool of money normally set aside for emergencies. But by doing so, they warned, the city would need to tweak its longstanding policy to keep at least 25 percent of its general fund in reserves, which could threaten the city’s AAA bond rating. That isn’t very likely, said Finance Director Patty Kong. She assured the council that bond-rating agencies would probably look favorably on the “positive action” the city took to pay off its pension costs.
Still, some council members said they were nervous about touching the city’s $26 million in emergency savings for something that was hardly an emergency. Councilwoman Margaret Abe-Koga suggested pulling money from the city’s other funds to keep its reserves intact.
Many local governments are getting squeezed, as Calpers, the state pension fund, demands higher contributions to cover exploding costs. But the fact that even Mountain View is struggling to come up with the money highlights how grim the situation is for the state as a whole. Not all California towns are home to huge wealth-creating enterprises and affluent tax bases; in fact, many inland areas have been hemorrhaging high-paying jobs for years.
Mountain View will probably be OK in the long run, but the tightening pension vise will exact a devastating toll on the public services of cities and towns elsewhere in the state.