Watsonville, California – Another Tax That's Really Just For Pensions

The city of Watsonville lies nestled among some of the most verdant farmland on earth. Just a few miles inland from the Pacific Ocean, the moderate, moist air nurtures endless fields of strawberries, apples, fresh flowers, cauliflower, broccoli and artichoke. Fragrant forests of redwood carpet the Santa Cruz Mountains to the north; some of the most abundant and diverse marine life in the world spawn in the Pajaro estuary to the immediate south. Watsonville is surrounded by agricultural abundance and scenic beauty. But like many other agricultural towns in California, Watsonville’s economy has struggled. The average household income in Watsonville is $47,442 per year, well below the California average of $58,328, and the city’s 17.8% unemployment rate is nearly twice the state’s average.

None of this stopped Watsonville’s civic leaders from putting onto the June 2014 ballot a Public Safety Sales Tax, Measure G, which in an election with 30% turnout, squeaked through with just over the required two-thirds majority. Shoppers in Watsonville will now pay 9% sales tax.

As reported in the Santa Cruz Sentinel, “about $2.8 million is expected to be collected annually for seven years, and the city’s police and fire departments will split the money 60-40, respectively.” The problem with this assertion, however, is that $2.8 million is roughly how much CalPERS intends to increase Watsonville’s annual pension contribution.

According to posts on the respected financial website CalPensions.com, and shockingly unreported elsewhere, is the grim fact that CalPERS, who manages pensions for Watsonville along with hundreds of other California cities and counties, will be increasing its annual required pension contribution by 50% over the next few years. This is documented by CalPensions editor Ed Mendel in a 2013 post entitled “CalPERS rate hike: 50 percent over six years,” and reiterated in a report posted earlier this year entitled “CalPERS plans rate hike, third in last two years.” The key word in the title of Mendel’s 2nd post, by the way, is “plans.” The rate hikes actually imposed onto California’s cities and counties so far by CalPERS are negligible compared with what’s to come.

According to the California State Controller, $4.4 million was spent on pensions in 2012 by the city of Watsonville – not including employee contributions via payroll withholding. That is, the taxpayer’s share was $4.4 million. A 50% increase to this amount of required pension contribution is $2.2 million – leaving $400,000 from Measure G’s proceeds to actually replace police cars, add another team of paramedics, and hire more police officers. That’s not nearly enough to go around. Single moms and unemployed farmworkers, who can’t afford to drive to a city with lower sales taxes are going to be paying for pensions. That’s what Measure G really did.

At this point it’s relevant to expose just how much Watsonville’s police and fire personnel actually make, in a town where the per capital income $16,837 and the household income is $47,442. Using the raw data from the State Controller’s website, which permits eliminating from the calculation part-time or partial-year employees, the average full time police officer in Watsonville during 2012 made, including overtime, $105,817; the average firefighter, an even more impressive $123,287. And that does not include employer paid benefits.

When you include the cost of benefits – bearing in mind that the employer pension contributions are going to increase by at least 50% over the next few years, which is not reflected in these numbers – the average police officer in Watsonville made total compensation of $140,978 during 2012; the average firefighter, $151,156. Put another way, the average firefighter in Watsonville makes nearly ten times the per capita income in that town.

These numbers become even more visceral if you review the payroll information for Watsonville on the TransparentCalifornia.com website. Of the 100 top paying positions in Watsonville in 2012, 71 of them were either police or firefighters. Equally visceral is Watsonville’s pension data, also available on Transparent California, which includes fields denoting years of service and year of retirement. For city employees who worked 30 years or more, and retired since 2000 when benefit formulas were enhanced, the average pension in 2012 was $83,648. And this average pension amount does not include benefits with a value that averages around $10,000 per year, because CalPERS would not provide that information.

The average private sector worker living in Watsonville earns about one-third as much money per year in their active employment as the average retired Watsonville city worker collects in annual pension payments based on a 30 year career. And the average private sector resident in Watsonville can expect to work for at least 45 years, if they are lucky enough to have a job.

So why can’t Watsonville’s city employees take meaningful reductions in pay – along with city workers throughout this financially battered state? Why can’t they accept meaningful reductions to their pension benefits? Wouldn’t that allow sales taxes to be lowered instead of raised? Wouldn’t that permit more money to be spent on replacing worn out equipment and hiring new employees? Is this crass fixation on maintaining financially unsustainable union “negotiated” pay, dramatically in excess of private sector norms, all that public service means anymore?

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Ed Ring is the executive director of the California Policy Center

14 replies
  1. Tough Love says:

    Quoting ….. “So why can’t Watsonville’s city employees take meaningful reductions in pay – along with city workers throughout this financially battered state? Why can’t they accept meaningful reductions to their pension benefits? Wouldn’t that allow sales taxes to be lowered instead of raised? Wouldn’t that permit more money to be spent on replacing worn out equipment and hiring new employees? Is this crass fixation on maintaining financially unsustainable union “negotiated” pay, dramatically in excess of private sector norms, all that public service means anymore?”

    Because the “Protect and Serve” is simply lip-service and good PR.

    What drives ALL Public Sector Unions and almost all Public Sector workers is access to great pay and GROSSLY EXCESSIVE pensions & benefits …….. and INSATIABLE GREED in obtaining and keeping them ….. no matter how unnecessary, unjust, unsustainable and unfair to Taxpayers.

    Taxpayers will remember that when these Plans go bust.

  2. Jody Morales says:

    A close look at all sales tax increases and all new parcel taxes can be traced back directly to out of control public employee salaries and pensions. Watsonville might indeed be in sharper contrast because of its low per capita income, but it is true throughout the state.

    Citizens for Sustainable Pension Plans is urging all Marin County voters to vote NO on any and all new taxes until meaningful pension reform is adopted. This includes implementing ALL tools made available by the Public Employee Pension Reform Act (PEPRA) and full endorsement and support for Mayor Chuck Reed’s Initiative. http://www.marincountypensions.com

  3. john m. moore says:

    I am running for mayor of Pacific Grove, Ca. A key part of my platform is to urge a vote for a pension emergency and reduce salaries across the board by 20% until the emergency is averted.

  4. Richard Rider says:

    One of my favorite labor union canards (a hard choice, given that there are so MANY) is their “broken window fallacy” that “public servant” pay and pensions (with largely confiscated money) are STIMULANTS — they IMPROVE the economy.

    It’s a silly assertion from the get-go. If I rob you and spend the money in town, is that good for the economy??

    But this Big Lie but goes beyond ludicrous when viewed from a small town such as Watsonville. Most city workers (especially the highly paid workers — almost ALL firefighters and 80+% of police) and their families don’t LIVE in low income, blue collar Watsonville. They live in surrounding communities or the unincorporated county. Hell, such firefighters often don’t even live in the COUNTY (because they have to commute so seldom).

    The result is that most of the Watsonville city worker plunder is NOT spent in Watsonville, but elsewhere — kind of a REVERSE stimulus program.

    When it comes to pensions, it’s even worse. Currently 14% of our government workers in California leave the state after retiring — for lower taxes and COL. And damn few (as in zero) move TO dismal Watsonville.

  5. Tough Love says:

    My favorites are :

    (1) Police and firemen STILL justifying their extraordinarily generous pensions and VERY VERY young full (unreduced) retirement ages by saying that on average, the die only a few years after retirement ….. when CalPERS own chief actuary stated that the ages at death of Safety workers are EXACTLY the same as non-safety-worker CalPERS retirees,
    (2) Public Sector workers/retirees saying “we pay taxes too”. Sure Public Sector pay and LIKE high (and HIGHER) taxes because they get about $5 back (going to support their overstuffed pensions and benefits) from every incremental dollar that THEY pay in taxes. Pretty nice gig if you can get it.

  6. Richard Rider says:

    Good points, Tough! I think they’ve finally given up on that incredible lie about early retiree deaths (at one point, they were claiming the average police or firefighter death occurred 18 months after retirement — the AVERAGE!!).

    They could make such mortality assertions with a solemn face, because they had “research” paid for by police and ff unions to back it up. I’ve seen better research in a Bernie Madoff investment brochure.

  7. Richard Rider says:

    Tough, I have to quibble with you about the 5 to 1 ratio — $5 pay increase for every dollar paid. I’ve figured it’s north of $10 pay increase/dollar paid.

    Moreover, city firefighters are the WORST hypocrites, as they are the biggest government employee campaigners for local tax increases — while at the same time are the LEAST likely city employees to live in the jurisdiction and pay the tax!

  8. Tough Love says:

    Richard, we forgot perhaps the most prevalent Union-pushed distortion … that Public Sector pensions aren’t excessive, averaging only $xxx … with $xxx usually somewhere between $20K-$30K depending on the State & City.

    Of course that’s extremely misleading because the Unions conveniently forget to mention numerous reasons why that “average” figure is pushed way down:
    (a) it includes retirees of long ago who retired with much lower salaries and on lower pension formulas
    (b) it includes part-time workers
    (c) it includes short-career workers
    (d) it includes 50% survivors of decreased retirees

    When they are pressed to divulge the average pensions of full-time, full career, very RECENT retirees, it is typically 2 to 3 times the misleading “average” they like to put forth.

  9. Richard Rider says:

    Another bulls-eye! So many, MANY blatant labor union canards to consider — and rank as to “best.”

  10. SeeSaw says:

    So, TL and RR, what is your point? An average is arrived at by adding all the money that is paid out, divided by the number of those receiving the payments. It does not matter whether the payee only worked five years or 40 years or whether or not the employee was part-time or full-time. They are all members and all play into the average payout. If I pass before my spouse, TL, he will continue to receive the amount I receive now and he will continue to be counted as I was–there are five options to consider before signing the retirement contract.

    Any local Mayor or Councilperson of mine who supports Chuck Reed’s initiative will never get my support in the future. There are more public officials in CA who oppose that initiative than there are those who support it.

  11. Richard Rider says:

    See-saw — The issue is COST. If one person works 30 years they cost us essentially the same for a pension as 3 people working 10 years each. To count each short-term employee as equivalent to a career worker lowers the average but not the taxpayer cost — a cost that you union sycophants strive mightily to conceal.

    A better measure is the taxpayer cost and liability for the pension to fill a government job for 30 years. And indeed, that’s EXACTLY what measuring government pensions based on 30 year employees does!

    And BTW, pensions alone are reason enough to contract out EVERY possible government job. Contractors don’t burden taxpayers with hidden unfunded liabilities.

    But thanks for the demo of innumeracy, see-saw. We CAN rely on you to affirm union canards are alive and well.

    Actually, perhaps I’m being a bit unfair. Chances are you are not really that ignorant — just blatantly dishonest for yourself and your favored California aristocracy — state and local government employees.

  12. SeeSaw says:

    The bottom line, RR, should be the question of the conditions of society in general. How much in taxes are you paying personally to fund the citizens that are providing your public services? No commenter on these blogs has ever been willing to answer that question, because the know that the answer is infitesimal, and they have been making mountains from mole hills all along. I am a taxpayer, just as you are, so I can certainly weight in on that question. I think that property taxes in CA are quite fair. Most municipalities have a mixture of in-house employees and contracted services. Trimming trees can be handled well with contracted services, while public works projects should be handled in-house. No unfunded, hidden liabilities with contractors? You’ve got to be kidding–who do you think pays the contractors that have line-item budget lists for salaries and benefits, just like public entities? My municipality recently laid off all in-house custodians and is now contracting out. The in-house people had good hourly wages and benefits, including pensions. The contract employees get a fraction of that. And, you think that is better for society, in general? You’ve got to be kidding! You are a very poor judge of human nature. You have never met me–yet, just because I have a different opinion on these issues than you, you have judged me to be either ignorant or dishonest. I am neither! And that is a fact.

  13. Tough Love says:

    Quoting … “The in-house people had good hourly wages and benefits, including pensions. The contract employees get a fraction of that. And, you think that is better for society, in general? ”

    That response shows just how delusional and out of touch with reality you are.

    Earth to SeeSaw, the PRIVATE Sector (which represents 85% of the total workforce) sets “market rate” compensation (wages & benefits), NOT the Pubic Sector workers which represent only 15%. If the Private Sector contractor can fill position with competent staff, he is indeed paying “market rate compensation”.

    And, to the extent (as you said) “the contract employees get a fraction of” what the outsourced Public Sector workers were compensated, it just PROVES that the PUBLIC Sector were indeed over-compensated.

  14. Richard Rider says:

    SeeSaw, you demonstrate well your ignorance of government contracting with private providers. Yes, the cost of benefits is included in the government budget (though seldom a line item) — until the day the contract is ended. From that point on, taxpayers owe ZERO for the benefits the CONTRACTOR agreed to pay its employees. NO unfunded liabilities for taxpayers.

    It’s simply ASTONISHING that you don’t know that. Or PRETEND that you don’t know that. And you’re right — since I don’t know you, I really don’t know which is the case.

    Your rationale, motivation and ethics notwithstanding, I DO thank you for such idiotic posts — they are invaluable in their way.

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