One of the single most important acts of democracy will happen this week in Eureka. The Eureka City Council is holding two “budget workshops” in the City Council chambers – on Wednesday and Thursday, both at 4 p.m. These workshops give all those concerned an opportunity to add their voice to what parts of the budget to cut. Citizenry. Voice. Democracy. I encourage all who have an opinion on this to make this meeting, and offer their opinions.

For those who are watching this unfortunate saga unfold, it is a little bit like the middle portion of that movie from the late 1980s, Back to the Future, Part II. In 2010 and 2014, the City of Eureka asked the voters to raise (and then keep raised) a ½ cent sales tax. They were Measure O and Measure Q. This has generated millions of dollars for the city. Most people remember the recent campaign of 2014. We all drove by the Myrtle Street Fire Station and were warned by a big sign that said it would close if Measure Q did not pass.

Well, it passed. Now, incredibly, one of the proposed cuts that is being bandied about is to close that station effectively nine out of 12 months. So this can truly be called that “alternate reality” created by Robert Zemeckis in the BTTF movie. We passed the measure. The bad event meant to be avoided is about to happen anyway. If you don’t believe me, drive by the station — the same sign has re-appeared. Does it run afoul of the campaign sign ordinance? Why, and are we getting the straight story?

Anyone who has studied California government – and in particular municipal finance — will tell you exactly why. It is one simple word. It goes to the heart of this debate. PENSIONS. According to the most recent data I could find on the Internet, the City of Eureka employed 259 full time people in March of 2013. They also employed 128, or roughly half that, as part-time employees. So we are not talking about a very large labor force. California allows for what is called collective public bargaining. What this means is that the employees are allowed to organize together, appoint representatives and negotiate as one bargaining unit. The famous axiom is “power in numbers.”

Now, collective bargaining never used to be very controversial. In 2011, the Governor of Wisconsin succeeded in all but banishing this process in his state, although he excluded police and fire from the ban. This political move launched a very pitched battle with massive protests, a nearly successful recall attempt, and then a tight re-election battle. He won them both. He is now arguably the leading Republican candidate for President. He even cited (poorly) his actions to show how he could effectively fight ISIS terrorists.

There are many aspects and nuances to this debate. Why the “government unions” are really on the run in this debate is because pensions are transforming. Pensions or retirement plans are broken down into what is called a “defined contribution” v. what is called a “defined benefit.” Now, here is a quiz. Which one of these do you want?

“Defined benefit” is the hands down winner. These types of pension plans used to be exceedingly common in America. It meant that whoever you worked for guaranteed you a particular benefit, that when you retired you knew pretty much what you would get. It varied from plan to plan. How much you made or how important you were affected your monthly payout, but you could plan your post-retirement life. In almost every sector of the American economic society, those defined benefit plans are gone, and they aren’t coming back.

“Defined” contribution means your employer guaranteed a certain contribution to your plan, and what you ended up with is what you got to retire on. These were enshrined in the law as “401k plans,” which is just a boring number from the Internal Revenue Code. The US military still has a defined benefit plan. In a move that is being heartily debated among military circles, the military defined benefit pension is almost on the chopping block. After 20 years, you used to be able to get 50 percent of your salary for life, beginning at the age you reached those 20 years. In theory that could be 38. The new plan in place will be a defined contribution 401k-style plan. The main drawing point is that people who have served less than 20 years will be eligible.

If the Pentagon can seriously suggest reforming their pension, and the Republicans’ biggest pension cutter is leading the field, then this issue has come full circle. Is it time to have the discussion here locally? Or are we just going to take the proposed cuts lying down? More on what those cuts are later.

Much to the surprise of many, California Governor Jerry Brown actually enacted pension reforms in California. However most of these reforms really only effect new employees. So called classic employees are grandfathered. Some have complained that this will create a modern day re-telling of the classic Dr. Seuss book The Sneetches. Currently those in public safety get the best retirement. For example, for every year a police officer works in Eureka, he or she gets 3 percent of his salary beginning at the age of 50. If you worked 25 years then you get 75 percent of your salary. A prominent county negotiator once told me that once you merely get to 80 percent it actually pays to retire, because there are tax and health insurance benefits. I know this because in 2007 and again 2011 I represented county attorneys – DAs, public defenders and child support attorneys — in our negotiations.

There are 459 cities in California. It was recently reported that Eureka is 10^th out of 459 in what it pays toward pension obligations. If that seems a little surprising, how a small city with only a few hundred employees could take such a dubious title, then you can imagine how difficult it is to cut those checks. Eureka is by no means a wealthy city. Eureka has actually gone into debt, and sold bonds to fund its pension obligations!

Since I negotiated contracts for the attorneys, I knew exactly where to look to see what type of deals Eureka was working under. They are called MOUs. And thanks to transparency in government, they are obtainable from the city’s website. The ones that the County of Humboldt negotiated are also obtainable from the county website. This becomes important because depending upon how lucrative these agreements are, the more the respective governments have to pay to CalPERS, which administers this program for the State of California. The County Deputy Sherriff’s association, for example, set a new retirement formula for new hires of 2.7 percent with benefits payable at the age of 57. This was a worse deal than was previously in place, when it was 3 percent at 55. Eureka, on the other hand, apparently kept it at 3 percent with benefits payable at the age of 50.

As for the Eureka agreement, I noticed some curious language:

“EPOA [the Eureka Police Officers’ Association] will propose funding methods for their portions of the increased cost”

Or this

“The final agreement on the 3 percent at 50 PERS Safety formula will be memorialized by side letter.”

I couldn’t understand why such an incredibly important detail was not being worked out right then and there at the time of the agreement. I didn’t find this side letter it referred to anywhere on their website. Interesting, according to the website, their current agreement ends on June 30, 2015. So literally it is being negotiated as we speak.

So how much is Eureka looking at cutting from just its police budget? An astonishing $834,000 or 12% of the department’s entire budget. Tentatively, no sworn officers are set to be axed, but what are called PSO’s – who do a lot of work so the officers can focus on serious crime – will be eliminated, with the exception of two. The chief has said that reduced services to register sex offenders would be offered. I don’t know about you, but I think that sex offenders should not be frustrated from registering. If the station is open, someone should register them.

A look at recent budgets from the City of Eureka, show that pension costs have increased nearly $500,000. That same budget revealed that the City is contributing almost $1 million towards the Sequoia Park Zoo, and over $121,500 towards the Chamber of Commerce. These latter funding items can be very controversial. As it is being contemplated that public safety will be cut by almost $834,000, many are correctly arguing that we shouldn’t be funding these luxuries. I was struck by one thing that Chief Mills said in a Times-Standard article, he was quoted, “I think what people need to understand,” he said, “this needs to be a livable city.” “The factors of a livable city are good streets, street lights, water, sewer, parks, after school programs and more, he said, not just dealing with crime.”

So these are some questions that need to be asked.

• What is the status of the negotiations with the Eureka Police Officers Association? There was a discussion about an audit of the city’s finances. That is actually very common in these negotiations. That probably needs to occur. I hope that request is not being dropped in turn for another lucrative contract.
• How many employees from the City of Eureka are slated to lose their job? I have one friend who works for the City who confided to me that he is slated to be axed.
• Do our funding commitments deliver a livable city or are they politically-connected sweetheart payouts? The Eureka Chamber of Commerce should probably be funding their own operations, and should not be taking money from the government. A government that is barely funding itself. If they fail to address the fastest rising cost in their budget, to wit the pensions, then they will not fix the structural deficit in place.

One of the amazing things about Brown’s pension reform law was how much he owed his election to the support – both financial and in votes – from government employees. Yet he enacted these reforms at their peril. I would argue that showed real political courage. The City of Eureka is going to have to show that as well. The city of course has a largely new council. If you don’t think this has the capability of getting ugly, then see how these two different departments, the Fire Department and Parks & Rec department fought on this issue in back-to-back editorials on LoCo recently. This will be well worth watching.