Are we alone out there within a financial quagmire?

The fiscal sustainability committee made a commitment to inform our community of our progress toward establishing a plan leading to financial viability. Articles are written every week to share thoughts, enlighten and simplify city funding challenges! Thank you to The Lincoln Messenger for giving us the space for our messages. We appreciate it and strive to share the process our committee is using to meet our task and be faithful to the truth while shedding light on how we ended up in fiscal crisis. Many citizens are shocked and stunned when they learn about the losses in our public-safety division. How could this happen? What should have been done? Whose fault is it? Is it really this bad? Surely not; funds must be available somewhere. Is this only Lincoln's problem? Have we lost the prestige of being named an All American City in 2006? Who was minding the store? Where is the money? And the questions continue. You, our community, must understand that we, the city of Lincoln are not alone out here in the universe. Our research and sharing of information with comparable cities continues to illustrate the problems and challenges are overwhelming in many cities, not only within California, but throughout the United States. Why is this so? Many factors contributed to this financial crisis. Everything from loss of revenues to our cities due to the housing crisis, homes losing values and foreclosures dramatically increasing to the national economic downturn, high unemployment with many jobs lost to offshore companies, local and national reduction in retail sales and the stock market downturn are just a few. Add to this the extreme growth in the public-sector compensation and benefit/pension payment requirements and conditions just rapidly deteriorate on all fronts. Revenues balanced with expenses – a worthy objective and goal but not our current reality!Did you know that in the 2008/2009 stock market crash, the pension system that more than a million California state and local employees (encompassing more than 4 million employees and dependents) depend upon, lost 24 percent of its assets? (Cal-PERS-Actuarial Report, October 2011). Optimistic projections of high rates of return for the Cal-PERS system that were not realized added to the problem. As a result of this and losses in other years, our city, whose revenue dollars support the irrevocable pension plans for our city's six collective bargaining units; is having to contribute significantly more to the pension reserve fund than in prior years.Throughout our state (and our country), the alarm is sounding. Did you know that the 10 largest public pension funds in California – encompassing 90 percent of all assets and members in the state's defined benefit systems - faced a combined shortfall of more than $240 billion in 2010 (Little Hoover Commission Report, at www.lhc.ca.gov)? Currently the city of Lincoln has an unfunded liability to Cal-PERS. The real issue is not where we are now but rather where we will be in the future. Future columns will discuss the Cal-PERS issues in more detail.Again, to repeat, this is not just a Lincoln problem! Cities across California are taking pension reform measures to the ballot. Los Banos, Lincoln, Folsom, Redding, Davis, Compton, Santa Cruz and San Francisco are all exploring how to establish fiscal sustainability plans. Budget messages throughout California tell a horrific story. General Fund revenue is down virtually across the board. The word repeated constantly is unsustainable. Cities and state officials are being urged to take action on plans before it is too late.Over the next few weeks, we will attempt to explain what other cities are doing to provide their communities with sound solutions. No, we're not alone out there and in many ways we're all in this together. We'll see what others are doing and how their ideas might work for us. We're also working here to create solutions based on our unique Lincoln circumstance.This is our city and it depends on all of us to make it all it can be so please ask how you can help! For more information visit the committee's website at lincolnfsc.org. Michele Hutchinson is a fiscal sustainability committee member. This column may or may not necessarily express the opinions of The Lincoln News Messenger.