Council to weigh pension options
DIXON – The City Council plans to have more talks about putting $3 million into its fire pension fund before signing off on the city budget in 2 weeks.
For the last few years, the council has discussed using $3 million to put the fire pension fund above the $10 million mark, which would mean more investment flexibility that could lead to higher returns.
That cash infusion would also lower the city’s required annual pension contributions – the state requires that municipal police and fire pension systems be 90 percent funded by 2040, and the city has been making payments with the goal of being 100 percent funded by that time.
Growing contributions are putting more of a strain on city finances and taking away revenue that would normally go toward capital projects.
Earlier budget talks for fiscal year 2020, which starts May 1, had the majority of the council leaning toward the status quo for pension payments to wait on possible state legislation, but Councilmen Ryan Marshall, Kevin Marx and Mike Venier all later said they were in favor of putting in $3 million during a candidate forum last month.
Mayor Li Arellano Jr., who has advocated for putting more money into the fire pensions throughout budget meetings, said Monday that there’s still time for the council to make a decision, and they could get the ball rolling by approving a resolution earmarking $1.5 million from Rita Crundwell recovery funds for that purpose.
The council did not address the recovery fund resolution but made the consensus to have one or two special meetings in the next week or so to discuss more details.
Marx said they could also consider refinancing the $3 million the city loaned itself for new water meters and put that toward the pensions, and that they shouldn’t rush if it looks like legislation allowing cities to consolidate their fire and police pension systems passes.
Even if legislators passed the bill by the May 31 deadline, Arellano said it wouldn’t necessarily be implemented right away, so it’s better not to wait.
Putting $3 million into pensions is projected to increase the total funding level about 6.5 percent, to 57.5 percent, and lower the annual payment by more than $300,000, City Manager Danny Langloss said.