You might remember the old shell game. The one where you guess which shell the pea is under. Not to be confused with the Ponzi pyramid scam that uses new money to pay down debt on prior money invested.
We have a newer version of both games now being adopted by California. In turn, local municipalities like Santa Clara appear to be following suit.
Here is the problem and how our elected leaders are finding ways to scam the public.
You are aware that out there somewhere is this huge elephant named Pension Liability. He is big and rather unruly.
What is disturbing is the big elephant PL has a soul mate whose name is Retired Health Benefit.
This pair of dancing elephants, PL & RHB mate and bear offspring.
The offspring are called municipalities, and there are many.
One of these Muncipalities is named Santa Clara.
Santa Clara has a huge appetite like the rest of the offspring in California.
State law requires these elephants to be fed at any price. But the price of hay keeps increasing along with each elephant’s appetite. What adds to the problem is they keep having more kids every year.
Santa Clara has trainers that look after the elephants. They are called City Council Members. The trainers are not equipped to handle so many elephants. Every year the offspring increase along with the food bill for more hay to feed them.
The trainers are overwhelmed by the amount of the bill for hay. Like the State, they had to borrow to fund the liability. This has resulted in a legalized, but reckless, Ponzi game.
Santa Clara’s PL & RMB is unfunded to the tune of $500 million. That’s a lot of hay. The Council made a $5 million token payment on the food bill last year.
So, where are they going to obtain the money to feed the fund?
From you and every entity that lives, works, breathes or does business in Santa Clara.
In addition, money that was earmarked for capital improvements, community programs and public services will be diverted to make payments on the hay bill.
Should you worry? Not if you like elephants. You just don’t want to feed them.
The State has this giant food pot to provide for the elephants. It is called CalPERS. In 2007, it had 105% of the funds needed to feed the elephants. By 2017, the food pot fund had declined to 68% of the funds needed.
When you calculate the increase of offspring, cost of hay and contributions made by municipalites, the future of funding is bleak at best.
Our Mayor and Council majority have stated they will grow their way out of this mess.
They shut down our stadium at 10 p.m. for a week night concert. A concert that would provide us $700 thousand for one extra hour doesn’t sound like they know how to grow hay.