Use $1.5 million of city budget surplus to cut pension debt, Costa Mesa committee recommends
Members of the Costa Mesa Pension Oversight Committee said this week that the city should use a good chunk of a projected budget surplus to chip away at some of the city’s pension debt.
Committee members voted 8-1 on Wednesday to recommend that the City Council allocate $1.5 million of the expected budget surplus for fiscal 2015-16, which initial estimates last month pegged at $11 million, to reduce Costa Mesa’s unfunded pension liability.
“I think the quicker we can pay some of that down, the better off we are,” committee Vice Chairman Ralph Taboada said.
In recent years, cities up and down the state have wrestled with unfunded pension liabilities, particularly as the California Public Employees’ Retirement System has fallen short of its investment return targets.
Pension committee Chairman Jeff Arthur presented information Wednesday showing that Costa Mesa’s pension debt totaled about $246 million in 2015 and is projected to rise to more than $255 million by the end of the current fiscal year June 30.
The City Council eventually will decide how to use any surplus — perhaps as part of the midyear budget review early next year. Existing council policy calls for using surplus funds to increase reserves, reduce debt and pay for capital projects, according to city spokesman Tony Dodero.
City staff last month preliminarily suggested putting $500,000 of the surplus toward reducing pension debt.
Staff also recommended putting the bulk of it toward meeting the council’s goal of having $55 million in reserve and to help reduce the borrowing needed to bankroll the city’s plans for Lions Park, including building a new central library, demolishing the Neighborhood Community Center and renovating the Donald Dungan library branch into a meeting space to replace the community center.
The only pension committee member who voted against putting more of the surplus toward pension debt was Al Melone, who said he would support banking the balance for a rainy day.
“When it hits the fan five or 10 years from now, you’re going to wish you had more reserves,” Melone said.
Melone and fellow pension committee member Lee Ramos are running for City Council in the Nov. 8 election.
Twitter: @LukeMMoney
