Business Watch: County supervisor concerned about pension liabilities

Seth Eaker

County Supervisor John Moorlach spoke at the last Chamber of Commerce breakfast immediately following a presentation to retiring Seal Beach Police Chief Jeff Kirkpatrick.

His comments, while not directly impacting Seal Beach, cast a tone of concern and commitment to the business community.

Of primary concern to Supervisor Moorlach is pensions and pension reform.

Clearly, the level of debt as a result of public employee retirement is out of control.  Currently, Orange County has an unemployment of 9.2 percent and a pension cost as a percent of payroll of 31.4 percent.

This is roughly in the middle of California counties, with Fresno in at a staggering 53.4 percent and Tulare at only 15.3 percent.  The unfunded liability of pensions is over a billion dollars in California.

Currently California also has some of the highest tax rates in the nation with third highest individual state income tax, the highest sales tax rate at 8.25 percent and the highest gasoline tax averaging $.66 per gallon.

That would seem to indicate to the audience that we have more than our fair share of taxes, and need to look closely at cutting rather than taxing.

How did we get here you might ask? Based on the supervisor’s comments, it was primarily due to a retroactive bonus of 50 percent to employees during the peak economic period of housing growth.  This SB 400 caused enormous future liability with the expectation that property tax revenue would continue to boom over time.  We all know now that future revenues for housing is not a steady growth curve.  We will likely see several more years of contraction in the housing market and more defaults by individuals and communities.

Seal Beach is fortunate in having healthy reserve funds, the supervisor was quick to point out.  In addition, he fielded several questions about funding programs and what would happen if the county did run out of money to pay its pension obligations.  Apparently, there are two different scenarios, the reduction of benefit payouts or the complete cessation of payments when the funds run out.  Under questioning, Supervisor Moorlach offered some hope that Social Security might provide some backfill, but only to the threshold allowed by Social Security.

Moorlach was also going to investigate a bit into the Seal Beach marina park, which is isolated on three sides by Huntington Beach and the Naval Weapons Station on the remaining side.

Currently, according to Sean Crumby, director of Public Works for Seal Beach, the park is revenue neutral.  Should it be? Should the taxpayers get some benefit as a result of this park?

Little was said regarding the ideas percolated regarding the “super city” idea or the merging of police forces with Seal Beach, Cypress and Los Alamitos.

At the same time, regarding grants or funding, the supervisor was simple and succinct, “We are out of money.”  Based on Moorlach’s comments, there is more cutting to do, and some may be very close to home.

Seth Eaker is the immediate past president of the Seal Beach Chamber of Commerce and founder of Black Marble Consulting, LLC.