Budget reserves and allocations
Council comments, March 6

At the mid-year budget review for 2005-2006 for the city of Mission Viejo, it is critically important to address and resolve our city’s employee healthcare defined benefit unfunded liability. We all attended John Moorlach’s discussion of this issue at the [Casta del Sol] luncheon last week. We have approximately $3 million or more owed, which constitutes the unfunded liability. If you divide it into three parts. claiming to pay off the liability in three years, you simply replace this year’s payment with next year’s accrual. You still have three parts. Nothing is accomplished. In the meantime, people live longer, and healthcare costs compound at 10 percent to 14 percent per year actuarially so that during the next budget cycle, you are even further behind. This taxpayer does not want Mission Viejo to become another San Diego.

I realize that most if not all of the city reserves are encumbered. The solution to this problem will be painful. You will have to borrow from other reserves where possible to liquidate this obligation. At the same time, it is imperative you must amend and adopt a defined contribution plan capped at Medicare payout dates, currently at age 65. You will wind up with a two-tier system covering old and new employees.

Once this obligation is paid, you will still look at future obligations, which must be kept current but will be palatable from a budget point of view. The alternative to this scenario is huge, future unresolved debt for our city, resulting in massive financial problems.

Recently, this council has procrastinated on our city attorney appointment for more than a year, costing taxpayers thousands of dollars. We have a voter initiative on zoning, submitted Dec. 15, 2005, sitting in committee for three months. This large pension liability has been sitting on the table for an even longer period.

The locomotive pulling the train is this council. The train is the city. At this time, the train is on a siding, parked with the caboose in the front and the locomotive in the rear, and it’s going nowhere.

The council must bite the bullet and get the job done immediately.

James Edward Woodin
Mission Viejo