Los Angeles Mayor Eric Garcetti apparently left out the largest planned expense for his 2017-2018 fiscal year budget. Mayor Garcetti is planning on paying over $1.1 billion for city employees’ pensions and healthcare after they retire. This cost accounts for about 20 percent of the city’s general fund. Joe Nation, a former Democratic state legislator who teaches at Stanford’s Institute for Economic Policy Research, stated:
Every municipal government is feeling this pain. But 20% is a pretty big number to be spending on pensions.
In comparison, the cost of retiree benefits was less than five percent in 2012. Unfortunately, Mayor Garcetti inherited pension promises made by his predecessors. This year also happens to be the year that the freeze on raises for city employees ends, which will drive up the cost of pensions even further.
Major reform would have to come from the state government to reduce the high pension costs.
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