Eureka in a hole
As Eureka faces the current and long lasting negative financial impact of COVID-19 and sheltering in place, there is another aspect of Eureka’s finances that is decreasing Eureka’s ability to provide services. Starting in 2015, Eureka starting paying its unfunded pension liability debt. These debt payments have been $921,000 in 2015, $1,022,000 in 2016, $3,952,000 in 2017, $4,633,000 in 2018, and $5,474,000 in 2019.
Going forward, these debt payments will increase around $300,000 a year. Yearly debt payments will be $5.7 million in 2020, $6 million in 2021, $6.3 million in 2022, increasing to $8.1 million in 2028, and further increasing to $9.1 million in 2031. These debt payments will continue until the year 2038. The total amount spent to retire this debt will be $134 million ($134,000,000). These debt payments define the magnitude of funding that will simply not be available to provide services.
With unemployment swelling to levels last seen during the Great Depression, businesses limited in services they can provide or completely closed down, some never to re-open, jobs and insurance and retirement benefits lost, (as of April 16, 15 businesses had closed permanently, 1,874 jobs had been lost, and $26,490,226 in business revenue had been lost in Humboldt County), retirement accounts in the private sector — 401(k) or IRA — significantly decreased in value due to the economic slowdown, people wondering if or when they will ever be able to retire, and these negative economic effects lasting decades, and with Eureka having a significant decrease in revenue, paying these increasing multimillion dollar pension debt payments that will last until the year 2038, and with the Eureka City budget stating current retirement costs will continue to increase for the next 7 to 10 years, (current health/retirement costs have increased from $1,969,000 in 2009 to $3,600,000 in 2018, 2018 being the last year listed on publipay.ca.gov), I’m not sure how increasing pension costs by providing “early retirement incentives such as golden handshake agreements, health care coverage continuance, etc” (be very wary of “etc”), for the good folks at City Hall will help solve Eureka’s significant underlying economic problems and increase Eureka’s ability to provide services.