Longtime labor leader Judie Italiano did not work for the city of San Diego long enough to be eligible for retirement benefits. When she became president of San Diego's largest municipal union, the Municipal Employees Association, she was not eligible for pension benefits from the city. Yet she was allowed to contribute to the city pension system based on her union salary. And in 2006 Italiano retired as MEA president and began to draw more than $70,000 in annual retirement pay from the city of San Diego.
How did this happen?
Improperly, the Internal Revenue Service says. So improperly, in fact, that the arrangement among the pension board, the city and Italiano jeopardized the tax-exempt status of the city pension system.
In December, after two years of negotiations, the IRS and the pension board reached an agreement that included ending Italiano's city pension and retiree health care after her November check.
But why this breach of IRS rules in the first place?
Apparently because pension and city officials thought it was OK. The City Council had an additional incentive. It needed the acquiescence of city union presidents in continuing a scheme to deliberately underfund pension costs while increasing pension benefits.
Everybody involved had to know that the full pension costs would someday come due. But someday seemed too far away to worry about.
They should have worried. Because they didn't, the city's credit rating dived. Money to repair streets, sidewalks, street lights and water pipes went instead to pension repair in the form of hefty catch-up payments to the pension system. Among the latest additional costs is a $146 million payment to cover the pension board's miscalculation of what many employees should have paid to draw retirement checks for years they didn't work.
In the bigger picture of San Diego's wretched entry into the 21st century, Judie Italiano's receipt and loss of extra special treatment is a thumbnail sketch. As one of so few instances when city officials' craven preference for union support over the commonweal has actually been righted, it's a billboard.
