What happens if Measure A fails?

Measure A and the bankruptcy exit plan are directly linked and have some flaws (my discussion of those flaws has been highlighted by opponents on a flyer).  The question to voters is will the alternatives that emerge if Measure A fails be better or worse for the City?  

There are several clear short-term impacts if Measure A fails:  1) the hiring of cops for the Marshall Plan on crime will be delayed, 2) Stockton taxpayers will save about $27 million (about $90 annually on per capita basis, although sales tax is paid by residents and non-residents).

Other impacts are less clear and direct.  Here is my take on some key questions.
 

1)   Will a tax proposal on the ballot next year be better or worse than the current proposal?  Will it be an unrestricted or restricted tax? Will there be competing tax proposals on the 2014 ballot?

As I listen to the debate around Measure A, a lot of the opposition is that it isn't a restricted tax, and if it fails - there will probably be a big push for a restricted tax.  It is possible there could be competing tax proposals (restricted and unrestricted) on the ballot, a situation that was avoided this November when the Safe Streets initiative faded and the Mayor compromised and supported Measure A.

A restricted tax is a bad idea for a City in bankruptcy, as well as one that has recently emerged from bankruptcy and has a really thin budget.  While in bankruptcy negotiations with creditors, a restricted tax is simply bad faith, and the City clearly needs some additional funds to finance a plan of adjustment and taxes legally restricted to police would make the path out of bankruptcy very difficult.

If the Plan that replaces Measure A looks like the Safe Streets restricted tax initiative, the City is worse off.

It is also possible that an unrestricted tax could be significantly worse than Measure A.  Some alarming recent evidence of this is in the Stockton Police Union's statement of neutrality on Measure A.  The Union wanted a salary floor, based on a salary surveys of other cities, placed into the fine print of the ordinance.  That is really poor fiscal practice reminiscent of what drove Stockton into bankruptcy in the first place.

I fear that some of the alternatives to Measure A could lock some negative budget choices into the tax measure itself - as evidenced by both the former Safe Streets proposal and the salary floors the Police Union tried to negotiate into Measure A. 

It looks like future tax alternatives are likely to be worse, not better than Measure A as I had hoped.  Thus, this is a reason to vote for Measure A.

2)  How will passing Measure A and B affect the bankruptcy case?

Until recently, I didn't think that Measure A and B would have a major impact on how a judge would rule on the bankruptcy plan of adjustment.  In fact, one of my concerns about Measure A/B has been that they would pass and then the judge would subsequently rule against the City's plan of adjustment.  This outcome would have put the City in a very tough political and financial bind.  I thought it was a strong argument for delaying a tax vote until next year when more bankruptcy issues would have been sorted out.

In a big surprise to me, the City and Assured Guaranty, the City's largest and most antagonistic bond creditor reached a settlement deal that depends on the passage of Measure A.  This settlement and others recently announced by the City means that we know a lot more about the bankruptcy exit plan if Measure A passes, and that there is an extremely high probability that the plan will be approved by the court if Measure A passes.

I have reviewed the settlement with Assured Guaranty, and I think it is reasonable.  The City was never going to get a creditor loss as large as their original ask, and I think this deal will result in a 30%-50% loss for the creditor that is comparable to the loss by City retirees and is thus pretty close to what would have eventually been approved by the court. 

Contrary to my original expectations, it appears that passing Measure A will directly lead to a bankruptcy exit plan approved by the court, and the City would formally exit bankruptcy some time next year.  This will directly save the City millions in additional legal costs, and I doubt it could have done much better with creditors if it pushed for a "cram down" in court.  Less directly, getting rid of the bankruptcy stigma will be good for the City's image, and I think it will be good timing that makes it more likely that the City will  benefit from the improving economy.   Thus, this is a reason to vote for Measure A.

3) Can the City be trusted to keep all the promises in Measures A/B: including hiring 120 cops, sunset the tax measure in 10 years, and finance a plan out of bankruptcy that is acceptable to creditors and employees? 

It is exceptionally hard for the City to keep all these promises, and that has been my concern about Measure A/B from the beginning (but restricted taxes are not the answer).  Something has to give.  As discussed in previous posts, that something appears to be sunset measure in Measure A.

It is bothersome to me that the City puts the sunset clause prominently in the ballot measure, and then hides the City Council's option to extend it in the fine print.  And as I have pointed out, their bankruptcy exit plan and even their settlement with their largest bond creditor assumes Measure A is permanent.

Although it is not reflected in their current plan, even if Measure A passes, the City Council can take actions to hold down cost increases (primarily through the negotiation of new employee costs) and put the City on track so that Measure A can sunset, and if it is extended in a decade, the City should be financing additional service recoveries, not just maintaining bankruptcy levels.  In my earlier blog post when I said the City Council should reject the plan of adjustment, I was saying that they should revise their financial plan filed with the court to show greater cost control so that Measure A can expire.  Even though many of those future costs are uncertain, revising the plan would set more reasonable expectations for employee unions and other stakeholders. 

While the City Council did not reject/revise the financial plan, it is clear to me that they heard the message and the projected increase in costs are not obligations.  It is up to them and the citizens of the City to stay engaged in the long-range financial projections and demand that the City keeps a tight lid on its costs.  This is true whether or not Measure A or any future tax measure passes or fails.

The City's bankruptcy exit plan is financially tenuous, does not account for a Measure A sunset, and by assuming employee compensation (not counting increasing pension costs) grow faster than projected revenue, the plan seems to prioritize employee compensation over restoring City services.  This is a reason to vote against Measure A.

4) Will the City have to shut down libraries and fire stations if Measure A does not pass?

Only if the City Council chooses these options to balance the budget, and if they do, they should be voted out.  I don't think this will be necessary for two reasons 1) the real estate rebound will boost property tax revenue in the short-run, and 2) the City has other less unpleasant options to reduce costs, and has used them in the past when facing deficits.

How much will property taxes rebound?  Earlier this week, the state Board of Equalization released an estimate of a 5% increase in valuations for San Joaquin County as a whole as of 1/1/13.  The City budget assumed less than a 1% increase this year, and assumes a 2.5% increase next year.  Assuming City property taxes actually increase 5% this year and next year, the City could expect about $5 million more over this year and next than its current projections.  That would address about half of the anticipated deficit, and that would be enough to balance the budget at current levels if the City were not incurring bankruptcy legal costs or if CalPers were not increasing its rates.  The budget would be very bad, but I am not convinced it would require closing libraries and fire stations below the current low level of services.  

However, there will be a significant impact on City Services if Measure A fails, the hiring of additional police for the Marshall Plan will most definitely be delayed.

Getting more police on the streets now is a reason to vote for Measure A.  Concern that the City might have to close its libraries is not a reason to vote for Measure A.

5) If Measure A fails, does that mean the City will take on CalPers and cut pensions?  Will it walk away from the Arena and give it to creditors?

No, the City has clearly indicated it will not go down either of these paths.  There are good financial reasons not to even though I think it is clear that building the arena and approving more generous pensions were past financial mistakes.

Politically, it isn't going to happen either.  Did you see the Stockton mayor or any members of the City Council with Chuck Reed when he turned in his pension reform initiative?  It is possible that blocking the City's negotiated settlements with a No vote, could result in the CalPers issue being raised by creditors in court as a reason to reject any "cram down" the City may try to impose on them.  But the court can't impose a CalPers cut on the City and I would guess the City would sweeten its offers to creditors even more before going after CalPers.  As I discussed in an earlier post, even Stockton's anti-pension crowd is just proposing a cap, and even if it is successful, it is unlikely to yield budget savings worth the cost.

If you are a pension reform advocate in Stockton, you should support Chuck Reed's statewide pension reform initiative and try to get Stockton to take advantage of it if it passes. 

Voting against Measure A will not lead to meaningful pension reform or savings.   

6) If Measure A fails, are there better options for Stockton to exit bankruptcy other than a sales tax increase?

Sales taxes are regressive, encourage poor land use and policy choices by city (subsidize retail!), and are an overall lousy way to finance local governments.  But in California, that is just about the only tax that cities can adjust.  The only other real option would be to raise the utility users tax, which is arguably even worse, and Stockton's utility users tax is already much higher than other comparable cities, while there are nearby cities that have sales taxes higher than Stockton. 

The City needs a tax increase to exit bankruptcy and improve public safety.  There are not any better options than an unrestricted sales tax.


My bottom line:

When the City released its bankruptcy plan of adjustment, I moved from leaning slightly in favor of Measure A to a neutral position with consideration of not supporting it.  This was primarily due to reason #3 above, and my concerns were discussed in detail in this September 30 blog post that has become a favorite of Measure A opponents. 

Since September 30th, three developments have changed my thinking a little and I am now leaning in favor of Measure A.

1.  Assured Guaranty made a reasonable settlement with the City a few days later, contingent on Measure A passing.  The deal is beneficial to both parties and was the key to paving the way out of bankruptcy.  The deal seems to eliminate most of the risks to Stockton of passing a tax increase before the bankruptcy case is resolved.

2.  I have done some more thinking about what kind of tax we might see to replace Measure A, see the discussion under #1 above.  Listening to Measure A opponents push a restricted tax and seeing this letter where the Police Union tried to negotiate a salary floor into the Measure A fine print convinced me that economics professors would not be writing a future tax measure, and that there is likely to be something worse than Measure A on a future ballot if it fails.

3.  Concerns about escalating costs and the projections in the financial plan of adjustment have been heard, if not acted upon yet.  I am concerned that the City's financial plan sets unrealistic expectations about the ability of the City to provide COLAs and raises for its employees going forward.  But these projections are just planning assumptions, they don't reflect contracts.  I have been assured that City leaders understand the long-run budget reality and will hold the line on costs.  It is up to the citizens of the city to remain engaged and ensure that they do.

Speech at the Restore the Delta Event

Last week, I gave the keynote speech at a Restore the Delta event.  Below is the speech I wrote for the event.  For context, it was a party and I was following a comedian whom I had been informed in advance was doing a routine titled "the Plan", hence my references to "the Plan" and attempts to be funny.  Also, I was accepting a "Delta Advocate" award and thus the premise of the speech is about how I was originally uncomfortable receiving an "advocate" award, but after studying these issues for several years I am now comfortable with the term.

I recall my first contact with Restore the Delta.  It was 2008, I was new to the area and attended a water issues forum held at Pacific.  I was expecting a small crowd, but the University Center was packed, and on the way out I picked up this bumper sticker – Restore the Delta: Fishable, Farmable, Swimmable, Drinkable (hold up sticker) 

What a nice positive message.  I put the bumper sticker on my car.  I didn’t even know Restore the Delta was an organization, I thought it was just a nice sentiment – like “Practice Random Acts of Kindness” or “I love puppies.”  Not long after that, I heard Barbara Barrigan-Parilla on the radio and I realized Restore the Delta wasn’t about hugging puppies.  

I was told by leaders that Restore the Delta was a tiny, self-interested, NIMBY group that was going to be rolled over for the “greater good” of the State’s economy… and I scraped that offensive bumper sticker off my car. 

I didn’t know if “the Plan” was the best thing for California or not.  But it was clear that there was misinformation in the media, and that there had not been any real attempt at benefit-cost analysis.  After 4 years and 3 significant economic studies I have now come to the conclusion that “the Plan” is bad for the state, and that there are better, less costly solutions.  At the same time, I have watched Restore the Delta grow from a noisy NIMBY group to a statewide organization that has a compelling vision that benefits the Delta and the entire state.

I have been asked to briefly describe my conversion into a Delta Advocate without using too many boring economic numbers.  So here goes.     

In 2009, the nation was in the worst economic crisis since the depression, and the Central Valley was the center of the storm in its worst crisis ever.  We had a new President with a 3-prong plan for the economy: stabilize the banks, help homeowners and stop foreclosures, and stimulus.  The President was able to get 2 of the 3 actions through Congress and did little or nothing to address the foreclosure crisis devastating the Valley.  Part of the blame goes to misinformed Central Valley Congressional representatives who were blaming their rising unemployment rate on a 2-inch fish, the Delta Smelt.
In 2009, California was in the 3^rd year of a severe drought, and 5% of irrigated agriculture was fallowed due to lack of water.  But the owners of that 5% of farmland have political influence, and the news media was lapping up the “Fish or Families” campaign, flying in from New York, driving right past the 70,000 people in the Valley who had lost their jobs due to the foreclosure crisis, to blame the rising unemployment rate on a 2-inch fish.   

I was finishing up my first year at Pacific, and that summer my Center put out our first special report on water, “Unemployment in the San Joaquin Valley: Fish or Foreclosure?”  It laid out the facts about job loss and what caused it.  The report got some attention, Restore the Delta asked for an interview for their documentary film, and most importantly – and to their credit – economists from another University corrected their mistake and recalculated their estimates of job loss to something very close to our numbers.  That report established our credibility, and it slowed – but did not stop the flow of economic misinformation.

In 2011, I was hired by the Delta Protection Commission to lead a team of experts to develop their Economic Sustainability Plan for the region.  The best decision I made in that process was to hire Dr. Robert Pyke as my chief engineer, you will hear from him a little later.  Up until that point, all of my water research had been focused on the rest of the state, I was woefully ignorant of the Delta itself.  I had never seen it from a boat; I believed the news stories of crumbling levees and the inevitable earthquake disaster; I didn’t know the communities or think there was much out here but crops. 

Dr. Pyke educated me about the levee system, but I wasn’t about to go out on a limb with a crazy, old Australian so I consulted other engineers and sources.  We uncovered other unreleased DWR consulting reports that had come to similar conclusions, and published levee data the state had been sitting on for 4 years.  Then, “the Plan” brought in national experts to publically review our recommendations for investing in levees and not in tunnels.  Their expert panel said our levee strengthening recommendations were too weak for public safety needs.  Their expert said the earthquake risk to water exports did not justify the multi-billion dollar investment in a tunnel or canal.  And their review panel echoed our call for a full benefit-cost analysis of the tunnels.

Soon thereafter, calls for benefit-cost analysis of the tunnels were coming from everywhere: Congress, the state legislature, academics and the editorial pages.  By the summer of 2012 I had grown tired of the state’s inaction and drafted my own benefit-cost report using the Plan’s data.  I found $2.50 in costs for every $1 in benefits to the state; a very bad investment.  “The Plan” has now responded with some unconvincing new economic reports, but they have done little to change the growing doubts around California about the financial viability of “the Plan.”

This research has convinced me that Restore the Delta’s common sense call for levee investments and freshwater flows through the Delta is the best approach for California as a whole.  It is clear that Southern Californians are better off spending their money on modern, sustainable water supply alternatives, and that farmers can’t afford the tunnels.
So tonight I am going to be an advocate and put this sticker on my car [display stop the tunnels], and after the tunnels are stopped, I will replace it with this pretty one [display swimmable/fishable/farmable].

In closing, I would just like to say what it means to me to be a Delta advocate.A Delta advocate cares about this special place, and wants future generations to enjoy a Delta that is fishable, farmable, swimmable, and drinkable.  But being a Delta advocate is more…

It means being an advocate for facts over fear in policy debates. It means being an advocate for good government.  Demanding government agencies follow their own rules, and act responsibly with taxpayer and ratepayer dollars. It means being an advocate for enduring values like environmental sustainability, fairness, democracy and the rule of law.

But the best part of being a Delta advocate is the great Delta wine, food and good friends.  Thank you for your support, and I hope you all have a great time tonight.

As always, the speech as delivered varied a little since I was trying not to read and was interacting with the audience.

How Much Would Capping Pensions Help Stockton?

I participated in an issue forum on Measures A and B, Stockton's proposed 3/4 cent sales tax increase, last night.  I was the economist pointing out pros and cons of the tax plan, but not taking a stand one way or the other. 

The most outspoken opponents of the tax are generally opposed to the City's approach to bankruptcy and want the City to cut pension benefits in bankruptcy.  They score a lot of points when they talk about six-figure pensions.  The enhanced pension benefits that allowed safety employees to retire at 90% of their highest salary levels certainly created some ex police chiefs who are collecting nearly $200,000 per year while retired in their fifties. 

The tax opponents' solution: cap pensions at $100,000 per year.  It's an appealing idea, especially when one considers the inequitable impacts of the City's approach to cutting retiree benefits entirely by eliminating healthcare benefits.  That hit lower income retirees the hardest, and if the City was going to take more from retirees by addressing pensions, I would agree that these high pensions or "spiked" pensions would be the first place to look.

But how much would that solution save?  And how hard would it be to implement?

I pondered that after the forum, and looked up some numbers to get a rough ballpark estimate.  Before quoting these exact numbers, I would reemphasize the word rough.

Pension reform advocates have posted the names and pension payments of the 98 Stockton retirees receiving over $100,000 on the web.  In FY 2012, those 98 folks received $12.2 million in benefits from CalPers.  If they were capped at $100,000 each, they would have received $9.8 million from CalPers, reducing CalPers payments by $2.4 million.

I looked up the City's CalPers actuarial reports for FY 2011 (most recent available).  CalPers made a total of $66.3 million in benefit payments to the City's retirees that year.  If there had been a $100,000 cap in effect, that total would have been reduced to about $64 million or only about 3.6%.

But that $2.4 million in benefit reductions should not be confused as an annual savings to the Stockton budget, as CalPers is not a pay as you go system like the discontinued retiree health benefit.  CalPers is making these payments from their investment portfolio.  Saving that $2.4 million payment, and a similar amount in subsequent years, would reduce the City's liability to CalPers which would then translate into lower CalPers contributions from the City.  But the annual savings to the City budget, would be substantially less than $2.4 million, probably no more than half that amount.

So the tax plan opponents have only offered up about $1-2 million in annual savings from this measure, less than 1% of the City's general fund spending.  (Yes, the City needs to find all the savings it can, but the benefits of this action shouldn't be overstated.) 

What would it cost for the City to gain that savings?

The City would have to change its approach to bankruptcy and take on CalPers to reduce pension benefits, and thus invite the precedent setting case that would pit federal bankruptcy laws against state law protecting pensions.  The outcome of that effort would be uncertain, the City could lose.  The only two certain outcomes is that Stockton would end up paying millions of dollars more for lawyers, and that the City would be stuck in bankruptcy for a much longer time.  Even if Stockton prevailed in an effort to cap pensions, it isn't clear that City would have gained much more than it spent in legal costs and time. 

Thus, I see the proposal that the City should try to cap pensions through bankruptcy as a feel good measure that would cost the city more in the short-run than it saves, and may not even accomplish much net savings in the long-run.  The main beneficiary of the City's efforts would be other cities who might benefit from the precedent if Stockton succeeded.  But a City in bankruptcy needs to focus on how to solve its own problems.

Stockton's pension reformers should team up with other like minded people around the state to try to change state law.  For example, the San Jose mayor is working on a statewide initiative that would give Stockton and other cities new powers to adjust pensions.  They should put their energies towards those reforms, and then press Stockton to take advantage of it if they succeed.

For Stockton right now, that energy can best be directed at making sure new employee contracts that will soon be negotiated are sustainable in the long-term.  Pensions are a burden, but they are only part of an overall compensation package, and pension reform is only one way for a City to control its costs of delivering services. 

A No-Tunnel BDCP, Optimizing Through Delta Water Conveyance

A few follow-up notes on the no-tunnel BDCP op-ed I authored in today's Sac Bee.

1.  All the calculations in the article assume the BDCP economic analysis has correctly valued the cost of future water shortages (the economic benefit of the tunnels is preventing these shortages).  However, the BDCP uses a high future growth scenario and a dim view of alternative water supply technologies to blow up the costs of shortages (benefits of the tunnels).  If they had adopted a growth forecast that matches the state's and most forecasters' consensus projections, they would have estimated 5 million fewer people in Southern California in 2050.  If they would have combined this with modest cost reductions in water supply alternatives, the study would have found that paying for the tunnels is even worse for ratepayers than the water doomsday scenario (as low as 3.4 maf of exports) they used for comparison to the tunnels.

2.  The BDCP economic analysis did consider 1 no-tunnel alternative, a highly engineered Delta corrirdors plan that uses $5 billion of modifications of Delta channels (a dozen or more barriers and gates, dredging, fish screens, etc.)  to isolate San Joaquin River flows from the Sacramento river water conveyed through the Delta to the pumps.  The BDCP economic study finds that this alternative has a significantly higher benefit-cost ratio than the tunnel plans and some benefits for fish.  And the economic study forgot to include $2-4 billion of water quality benefits to the exporters from this plan that I am told will be in the final revised study.  That will put the benefit-cost ratio of this alternative significantly over 2, which blows away the tunnels plan on an economic basis.  There are problems with this alternative too, but it certainly looks better than the tunnels using the BDCP's own studies.

The bottom line is this.  The BDCP has ignored a number of viable and less costly no-tunnel alternatives.  As today's op-ed said, a reasonable conclusion from their own studies is that simply removing the tunnels from the current BDCP is almost certainly better than the tunnels plan.  The BDCP study also found that a plan with super extensive modifications to Delta channels is better than the current plan.  In light of this evidence from their own reports, the continued tunnel vision of BDCP is inexcusable.  

There is a lot of space in between these two visions of through Delta conveyance.  Since the BDCP analyzed a bunch of different size and configurations for the tunnels to find the optimial isolated conveyance facility, they should make a similar effort for the through Delta options to find the optimial through Delta option.  These options would include different levels of channel modifications, different levels of seismic levee upgrades (from as little as 100 to up to 600 miles), different fish screen options for existing conveyance, and explore the possibility of new intakes in the West Delta as proposed by my friend Dr. Pyke (I'll call this through Delta conveyance too since the freshwater gets most of the way through the Delta).

Wow, Assured Guaranty and Stockton Reach a Settlement. The Deal Improves the Case to Voters for Measure A (sales tax increase).

The City was hinting at a deal, but I guess I didn't believe it given how antagonistic Assured Guaranty has been with the City.  I will reserve final judgement until seeing the fine print, but the outlines of the deal seem reasonable.  I don't think the City would have been able to get anything substantially better in court, as their original ask on the pension bonds of an 84% loss was highly inequitable.  In other posts and writings, I have suggested an appropriate loss for the Pension Bonds would be about 40% whether viewed from the perspective of equity with retirees or the damage the pension bond deal did to the City's finances.  This deal appears to be in that ballpark.

The City will start making small payments on the pension bonds from the general fund in 2023 and extend those payments an additional 15 years out to 2052.  Combined with the portion of the bonds paid from sources outside the general fund, that puts the haircut from the fixed payments at around 50% in net present value basis. However, Assured will do better than that because they will keep a share of Stockton tax revenue over current projections - and Stockton will definitely exceed their projections for at least the next couple of years.  It's hard to know exactly where it will turn out in the end, but the deal definitely gives Stockton's general fund significant short-run relief and the scale of the loss and shift of risk to Assured seems fair and roughly proportional to the loss to retirees.

All these creditor deals have definitely been made easier by the recovering real estate market.  Several of the bonds had pledges of property tax increment, and the loss of property tax increment is why they fell back on the general fund in the first place.  Improving property values and tax increment is making some of the deals possible, such as the settlement on the Arena bonds.  The improving market also helped the deal on the 400 E. Main building as Assured will take title to that office building and sell it.  My rough math says they will break even if they can sell it for about $165 per square foot, and my understanding is that office buildings are selling for $125-150 per square foot in the Stockton area.  With the City leasing up more of the building's space and the market improving, the creditors loss won't be too enormous from taking over the building.  Finally, the improving market makes it very likely that tax revenue will exceed the City's projection over the next few years, and thus will help improve Assured Guaranty's payments on the pension bond deal as well.

With all of these deals, the City can make a strong case that the judge will likely accept the settlements, and thus avoid a protracted bankruptcy.  The creditor deals depend on Measure A.  I would say that exiting bankruptcy in a timely fashion and saving millions in additional legal costs seems like another tangible benefit to passing Measure A that did not seem likely to me a few days ago.  The City definitely strengthened its case for the sales tax to voters tonight.

As discussed in the previous post, I still have significant concerns about the City's long-range financial projections that showed deficits in 8 of the next 10 years despite passing the sales tax and bankruptcy savings.  This was driven by the high growth rate of costs (mostly employee compensation).  Given the extremely low levels of non-police services for projected for decades to come, and the suggestion that Measure A revenues could sunset in 10 years, the City needs to control costs more than this projection suggests.  However, I was assured today by the City's consultants that the growth in employee compensation is not in contracts, it is just a planning assumption they have been using.  (They defended the assumption and why they thought those raises are needed, but I wasn't convinced.)  The bottom line is that the City can't afford to put 2% COLAs (cost of living adjustments) back into employee contracts in 2015 like its financial projections do if it plans to let Measure A expire or start restoring any non-Safety services in the next 20 years.  Since this financial plan of adjustment does not represent a commitment to those costs, this debate can be postponed for a short while.

Update 10/7:  I have had a chance to review the details.  I was concerned about the "contingent" payment formula that is based on whether and how much city revenues exceed a forecast, but it looks o.k.  I am comfortable that the ultimate loss on the pension bonds will be in the range of 30-50% and thus be proportional to the loss of benefits to retirees.

I did have one item wrong, there are more general fund payments on these bonds than I stated above.  General fund payments start at about $1.3 million annually in 2018, and will increase to about $2.9 million per year in 2023, and $3 million from 2042 to 2052.  There will also be the payments allocated to restricted funds (i.e. water and wastewater) for their share of costs, and the potential for additional contingent payments if the City's revenues are high.  For the next 5 years, this will save the City's general fund about $7 million per year, and about $3-5 million per year for the next 20 years.  Then there is 15 years of additional payments because the term has been extended.