Fri Sep 13 19:16:00 UTC 2024: ## California Supreme Court to Decide if Cities Can Issue Bonds for Unfunded Pensions Without Voter Approval
**Sacramento, CA** – The California Supreme Court will hear two cases challenging the practice of cities issuing bonds to cover unfunded pension liabilities without voter approval. The court’s decision will have significant implications for cities across the state struggling with pension obligations.
The cases, *City of San Jose v. Howard Jarvis Taxpayers Association* and *City of Escondido v. Fawcett*, both revolve around the question of whether issuing bonds to cover pension liabilities constitutes “indebtedness” requiring a two-thirds voter approval under the California Constitution.
Cities argue that the original pension liability was incurred through legally enacted plans and that issuing bonds is simply a way to manage existing debt. Taxpayers argue that issuing bonds requires voter approval because it creates new debt with interest payments.
The California Supreme Court has previously ruled that pensions cannot be cut, highlighting the state’s commitment to funding these benefits. However, the court has not yet ruled on the specific issue of bond issuance for unfunded pension liabilities.
This case is particularly relevant given California’s massive unfunded pension obligations. According to the American Legislative Exchange Council, California has the worst unfunded pension liability in the nation at $1.4 trillion, equating to $36,000 in unfunded pension debt per resident.
The court’s decision will have a significant impact on how cities manage their pension obligations and potentially affect the cost of living for California residents.
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