With the sudden departure of Eureka’s Finance Director, and the numerous questions raised about the City of Eureka’s actual financial state, we were happy to see an article linked on Loco “Elsewhere” from the Marin Independent Journal. The article was about the new accounting rules that will affect cities and that will (hopefully) shed some light on the true financial state of many local governments. From the article:
Is your town surviving on borrowed money? Is the fiscal health of your city improving or worsening? Due to a recent accounting change we’ll soon know the answers. And the political consequences will be great.
Accounting is sometimes exciting…..
For most, this will be the first time they can easily understand the size of their pension debt and their cities’ financial challenges. They should use this upcoming event to educate themselves, public employees and voters about their cities’ finances.
According to Publicsectorcredit.org, Eureka has a pretty substantial “Unfunded Actuarially Accrued Liability” in pension debt. To the tune of over 17.5 million dollars in 2011!
Humboldt County wasn’t listed in their unfunded pension debts. However, the CalPers payments from 2012 totaled about 20 million dollars. In 2011, Eureka’s payments were about 4.5 million.
We’ve said this before, but as a fair warning, the Examiner doesn’t have any paid government accountants on the staff. If any of our readers can clearly explain what going on please do.
When we look at ratio of 4.5m (payments) to 17.5 million dollars (pension debt) for Eureka it leaves us shaking our heads. Over in Rex and Ginnyland (The county) they might be in debt for close to 78 million dollars in “Unfunded Actuarially Accrued Liability” for CalPers. Obviously, that math only works if the Eureka and Humboldt have the same ratio of debt to payments. We won’t know how much Eureka, Humboldt, Arcata, Fortuna, and etc. are on the hook for until 2015. Whatever the case….these numbers will be huge and startling. Is there an answer to this massive debt? We can’t predict that. But surely some things need to change. Many promises were made, the question is, how long before they’re forced to break them or plead with the tax payers for more money?