Gov. Arnold Schwarzenegger discusses his proposed 2010-11 state budget during a news conference in Sacramento, Calif. on Friday, Jan. 8, 2010. Schwarzenegger unveiled a $82.9 billion general fund spending plan that makes cuts to health and human services, welfare, prisons, transportation and environmental programs. (AP Photo/Rich Pedroncelli)
In politics, you never know from where the next gift will come.
For Gov. Arnold Schwarzenegger and fiscal hawks, the present came with the postmark “Bell, Calif.”
By now you have probably heard that Bell is a city of about 37,000, 10 miles southwest of downtown Los Angeles with a poor, mostly immigrant population. And thanks to the LA Times, we also know that the city of Bell has the highest paid administrators in the state, probably of any state. City Administrator Richard Rizzo receives close to $800,000 a year in salary. The Police Chief makes nearly half a million.
That of course isn’t the gift. For that, you need to hear what Rizzo will get once he retires.
After crunching the numbers from his past contracts (with the city of Hesperia and Rancho Cucamonga) along with potential retirement incentives, the Foundation for Fiscal Responsibility in Sacramento figures the 55-year-old Rizzo will eventually leave the town’s tiny city hall with an $880,000 annual pension. It will reach past $1 million shortly after his 63rd birthday.
If he lives into his mid 80s, the total payout will reach about $30 million.
And it won’t be just the good people of Bell who will be paying Rizzo’s Carnival cruises. According to FFR Director Marcia Fritz, Bell is part of a group of 140 small cities and special districts that pool their funding resources for the California Pension Retirement System. As a result, those other cities, from Napa to Barstow, will also be required to honor Mr. Rizzo’s pension well into his golden years.
All of which makes Robert Rizzo the poster boy for what the governor has been harping about for several years now: The runaway train known as “pension obligation.”
In April, Stanford’s Institute for Economic Policy Research released a study suggesting the state is facing a $500 billion unfunded liability for California’s three biggest pension funds. That is over five times the amount of the current state budget. We will soon be paying more for firefighters sitting on a park bench than those who actually fight fires. The pension money will need to be taken out of every other state service, from education to parks. It threatens the financial stability of the nation’s largest state.
Pension reform advocates contend that, according to the state retirement system, more than 10,000 retired state workers already receive over $100,000 a year in retirement pay -- and the number is climbing. The governor says he won’t sign a budget until the legislature figures out a way to out of the crisis. But pension reform is no easy task. Many lawmakers are afraid to take on public employee unions whose money and support is the key to survival in California politics.
But they may be hard pressed to ignore the case of Rob Rizzo. Attorney General Jerry Brown has caught on and is investigating (no doubt in hopes it will boost his credibility on the issue for the fall), along with the LA District Attorney’s office. But it appears Rizzo apparently did nothing illegal. “He just worked the system,” says Fritz.
Bell residents are the big losers in this episode. But in the process of letting city hall run wild with tax money, they may have provided a stark example of what may lie ahead for the rest of us.