Unfunded pension and healthcare liabilities threaten the financial stability of San Francisco and many cities. By utilizing joint powers agreements, cities could share costs for services and alleviate budget shortfalls.

California’s cities face a perfect storm: soaring unfunded pension liabilities, aging infrastructure and pressure to preserve essential public services, especially police and fire protection. 

Forced to balance their budgets, cities debate whether to raise taxes, cut services or both. Fortunately, California law offers a third alternative. A practical and proven tool to address the mounting fiscal crisis that afflicts cities across the state: the joint powers agreement, which allows them to combine their resources to jointly provide more cost-effective services, while preserving local representation and oversight.

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Unfunded pension and healthcare liabilities threaten the financial stability of many cities across the state. According to the California Policy Center, the combined local and statewide long-term debt has soared to nearly $1.4 trillion. 

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In many Bay Area cities, retirement costs consume a significant share of general fund budgets. Mill Valley’s pension costs alone account for about 18% of its general fund operating budget, with an additional 3.7% allocated to retiree health care costs. In San Jose, retirement costs constitute 28% of the city’s annual general fund spending. Combined pension and retiree healthcare obligations range from 20% to 28% of general fund budgets in many Bay Area municipalities. San Jose’s pension costs triggered a fiscal crisis in the........

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