A California city that filed for bankruptcy in 2001 after a developer secured a $10 million judgment against it, Desert Hot Springs was featured in the NYT for its fiscal troubles.
The city, Desert Hot Springs, population 27,000, is slowly edging toward bankruptcy, largely because of police salaries and skyrocketing pension costs, but also because of years of spending and unrealistic revenue estimates. It is mostly the police, though, who have found themselves in the cross hairs recently.
“I would not venture to say they are overpaid,” said Robert Adams, the acting city manager since August. “What I would say is that we can’t pay them.”
Public safety was once considered a basic urban service – perhaps the primary reason for incorporation. Police (and fire) pensions are more costly than others because workers are allowed to retire earlier, and because the city pays into a pension fund instead of social security, for which many public safety retirees are not eligible. It’s not hard use simple figures to paint police benefits as “generous” or “unsustainable,” particular in small, working-class cities like Desert Hot Springs. But the short-term gaps that emerge from bad policy and economic cycles belies the fundamental sustainability of well-managed pension funds over the long-term. The fact that so many cities are being dragged down by pension obligations speaks more to poor management and the ominous fiscal picture of cities in general.
Police unions say the fault lies with state and local politicians who failed to adequately fund the pension system over the years, and inflated benefits during boom years. Others wonder whether such salaries and pensions were ever affordable, particularly in cities as small and struggling as this. In Desert Hot Springs, for example, for every dollar that the city pays its police officers, another 36 cents must be sent to Calpers to fund their pensions.