The board that oversees the Los Angeles City Employees’ Retirement System will meet Tuesday to consider cutting its “assumed rate of return,” the yearly expected earnings for its investment portfolio, from 7.5% to 7.25%. The move is expected to shift about $38 million in retirement costs onto the city’s general fund, which pays for police patrols, firefighter staffing and other basic services, in mid-2018. The pension board also has the option to pursue a more dramatic step: taking the investment assumption to 7%, which would add $93 million to the city’s yearly pension burden, officials said.
As inspectors assess the damage and investigate what caused the explosion, Saturday’s incident is emblematic of the challenges facing the nation’s largest municipal utility as it plays catch-up to update its aging power grid, officials said. The blast provided another example of the city's deteriorating infrastructure, which has made headlines after epic bursts of aging water pipes, crumbling sidewalks and gaping sinkholes. There are 70 large transformers in the utility’s network, and 20 of them still need to be replaced at a cost of about $5 million each, officials said. The utility’s ongoing Power System Reliability Program seeks to upgrade or replace thousands of smaller transformers, power poles, circuit breakers and other equipment. Wright said the utility is trying “to make up for what is several decades of deferred maintenance. The concern is that we need to get ahead so that reliability increases.”
Despite historic revenue gains, California’s public schools are in financial trouble. While California’s public schools often suffer financial distress during recessions, their current plight is alarmingly taking place during an economic recovery and after a large tax increase. The principal cause is exploding spending on pension and retiree health care obligations.
In a report last month, the analysts noted while 16% of properties statewide were sold in 1977-78, just 5% were sold in 2014-15. Less turnover means tax rates don’t get recalibrated, resulting in less revenue for government services. But the report concluded that’s likely to change, as more than half of California’s homeowners are 55 or older. The homes of baby boomers, as their lives come to an end or when they seek alternatives like assisted living, will end up on the market. The property tax rates for new owners will be set by higher purchase prices. The impact could be substantial. The report pointed out that the typical homeowner over the age of 65 has been in that house for at least 20 years. Many of those are in Southern California.
Solar- and wind-generated power, being much more expensive than conventional fossil-fuel-generated electricity, would only be used sparingly if it weren’t for government support. And while fossil-fuel producers and users pay billions of dollars of taxes and fees to the government, renewable-energy sources are net tax sinks, even when the billions of dollars given through various state governments to the wind and solar industries are ignored.