Where are our Measure X tax revenues really going?
In Oceanside we’re now being asked to renew the additional Measure X taxes we originally agreed to in 2018. We’re being told that money will be used to “enhance public safety, expand road repairs, provide youth programs with a mentoring component, modernize our infrastructure, and address homelessness.”
https://www.ci.oceanside.ca.us/government/financial-services/measure-x-sales-tax/potential-renewal-of-measure-x
But where is Measure X money actually going?
Understanding this is going to take a bit of brain work. You’re going to have to spend a couple minutes thinking this through, but I have faith that anyone with enough interest in making sure our government is spending our tax dollars wisely before voting on giving them additional funding is willing to do that.
Here we go…
The largest single expense in almost every government agency is employee pay and benefits, and rightly so. We need good people to work in our government. We need to pay them, and we need to provide good benefits. But we also need to balance that with having money left in the budget to provide residents with the services they expect (and deserve) from our government.
Things like public safety, road repairs, youth programs, infrastructure, and services for the homeless. Right?
One of the largest components of benefit costs in government is contributions to retirement plans.
Let’s do some math (sorry…)
In 2023 the average pay of all City full time employees was $107,659/year. We’re going to use that as a starting point for our calculations.
https://drive.google.com/file/d/11VNIrMXI4r3zMRCoYMA41KJtdTJmo1vV/view?usp=drive_link
In private industry we’ve come to expect our employers to contribute money toward our own social security, and it’s almost a given these days that most employers will also make contributions to our 401K retirement plans. Usually that means the employer contributes an amount equal to 6.2% of your pay to social security, and an average of 4% of your pay toward your 401k. That totals 10.2%.
If you were making $107,659 in private industry your employer would be contributing $10,983 to funding your retirement. Those of us in private industry say “thank you very much” to that, it’s a great benefit.
For that, maximum social security payout right now for someone retiring at “full retirement age” (generally 65 to 67) is $3822 per month.
https://www.investopedia.com/ask/answers/102814/what-maximum-i-can-receive-my-social-security-retirement-benefit.asp
And that 4% 401K contribution? That would be $4,306 of that $10,983 total. If your employer gives you $4,306/year for 30 years and you invested that in an average somewhat conservative market fund returning 7% you will likely have somewhere around $460,000 at retirement. Using the normal rule of thumb that you can safely withdraw 4% of that per year, that gives you another $18,400/year or $1,533/month.
Adding that to the $3,822 social security payments gives us a total income of $5,355/month, or $64,264/year. That’s not “riches”, but I think most private retirees right now would consider that a reasonably good income, given often their other costs are lower in retirement.
All of this of course assumes everything is constant over those 30 years. That’s not likely to be true, but If I projected something other than this it would just be based on guesswork. These numbers are real numbers from real data today.
Let’s look at the comparable retirement numbers for government plans.
The government plan that covers most Oceanside city employees is called CalPERS. The CalPERS required contribution differs between employee groups. For Oceanside, the “Miscellaneous” employee rate is 11.52%, “Safety” employees 22.29%. The latest compensation data for 2023 shows the City had roughly $49M in pay to “Misc” employees and $52M to “Safety” employees, so the mix is roughly 50-50. That means the blended average contribution rate would be around 16.9%.
That means on average, every time the City issues a paycheck, they also pay CalPERS an amount equal to 16.9% of that paycheck – from tax dollars – to make the “employer” part of the contribution. The employee also contributes, but we’re not considering that now because we’re only discussing what the City pays for things.
Here are the CalPERS contribution rates
https://www.calpers.ca.gov/page/employers/actuarial-resources/employer-contributions/public-agency-contributions
In pension-speak this employer contribution is called the “normal” payment. Using the same $107,659 income, that means our city is giving the employee $18,194 every year toward their retirement. This is, of course, $7,211 more than the comparable $10,983 being provided by the private employer. Which is a pretty big number. $601/month. Wouldn’t you like to have an extra $600/month put in your retirement plan?
If the private employer were to add $7,211/year to the amount they’re putting in to your 401K, that alone would likely add up to $768,000 dollars after 30 years. Pretty significant. If you don’t think so, ask someone who is currently retired how they’d like to have another three-quarters of a million dollars to spend…
Meanwhile, in 2023 the average pension payout for a City employee who put a full 30 years into the system was $95,708. In other words, all that additional money government employees get from our city results in them getting payouts of about $31,444/year ($2,620/month) more than a comparable private employee would get from their combined SS and 401K payouts. If we assume the employee lives 20 years in retirement, that means they’ll end up getting $629,000 more over the course of their retirement than you or I would get from our own retirement payments.
I’m not sure whether Oceanside city employees also collect social security (and whether the city contributes to that.) Many government plans “opt out” of social security. I know that’s true for teachers, not sure about just regular city employees, so I’m not going to add social security income into that here for the city employees.
These are just facts, according to verifiable sources including CalPERS records obtained using a Public Records Act request and published to the Transparent California website.
This post is not to discuss whether all that is “fair” to the employees (or the residents paying taxes to support those payments) or not. You can decide that, here we’re discussing Measure X, not the pension system.
Now….. here’s where we get to the “where Measure X money is going” part of this.
The contribution mentioned above – 16.9% of employee pay per year – is not enough to fund the $95,708/year for retirees forever. The CalPERS system is currently only funded well enough to pay 72% of promised payments. Either someone needs to pay more into the system OR pensioners are going to see their payments reduced by 30% at some point.
The pension system recognizes this, and requires that agencies provide more money on top of the normal contribution, every year. Because that additional payment is needed based on actuarial calculations showing the normal payment being accrued is not enough to fund the projected liabilities, this is called the “Unaccrued Actuarial Liability” payment – or UAL. Most government agencies have a UAL payment, you can look them up here:
https://www.calpers.ca.gov/page/employers/actuarial-resources/employer-contributions/public-agency-contributions
In 2018, Oceanside’s UAL payment was $12.4 million. In 2025 according to CalPERS it is expected to be $22.6 million. The latest plan for using Measure X funding expects it to raise revenue of $18.8 million this year.
https://records.ci.oceanside.ca.us/civicax/filebank/blobdload.aspx?blobid=61724
If the UAL payment were not being made, not only would the city not need an additional $18.8 million, but they would have an additional $3.8 million/year. To “enhance public safety, expand road repairs, provide youth programs with a mentoring component, modernize our infrastructure, and address homelessness.”
Imagine your household was facing a financial crises. Your spouse comes home and says “dear, we need more money or we’re not going to be able to provide some of the basics we need for our kids.” They say nothing about the fact that they’ve been stopping at the bar every night on the way home (or the nail spa, or buying box seats to the Padres, or….) You find that out and realize the reason the household budget is short is not because “everything has gotten more expensive” but because your spouse has been spending on things that only benefit them and do nothing at all for the family or the kids.
Are you happy about that? And how do you feel about having that not brought up during the “we’re short on money” conversation?
That is exactly what a UAL payment is – a benefit for employees that provides no value to the residents of Oceanside. But yet not a word about this is mentioned in this entire debate. We certainly don’t see that in the City’s promotional materials. Understandable, why would they want you to know they need money because they’re spending on themselves? We see nothing in the media either, but then our media is not what it used to be when it comes to investigating government spending.
Here are two of the only articles I know of discussing this. And, disclosure, I wrote them (!)
https://thecoastnews.com/commentary-another-tax-debate
and
https://californiaglobe.com/fr/tax-increase-season/
Now, the conclusion…
If you think all of this additional tax revenue being funneled into the retirement benefits of employees is worthwhile and worth paying higher taxes to support, great. That’s your opinion. But don’t you think when asking the residents of Oceanside (and other cities) to make a decision on whether to increase taxes on themselves, basic honesty demands that the people understand what the money is really being spent on?
Not half-truths spinning the extra money as ONLY going to “enhance public safety, expand road repairs, provide youth programs with a mentoring component, modernize our infrastructure, and address homelessness”?
The truth will out.
If you’d like to pass this on to your fellow voters, there is an open version of this on the internet at http://toddmaddison.com/measurex