The City of Sacramento has a good news, bad news mid-year budget report. The good news: it has $8 million in revenue it wasn't expecting this year.
The bad news: pension costs could increase by $16 million a year within eight years.
Leyne Milstein is the City's Finance Director.
"CalPERS took action in December of 2016 to change their interest earnings assumption, which means that when the assumption is we will earn less on the money we contribute, more money has to be contributed over time to pay the cost of those benefits," says Milstein.
She says the increasing pension costs could put the city in the red within two years, with increasing pension costs each year thereafter.
Milstein says the decisions by CalPERS and the expiration of Measure U sales-and-use-tax funds will add up to a $55 million deficit in the year 2020.
Even higher labor costs are likely in the form of salaries. The City will soon begin negotiating new contracts with seven of its nine labor unions.