Nevada County's government is in the black financially, but county executives must keep an eye fixed on those finances to keep things that way.

Prudent spending, staff cuts and a $3.4 million investment in general fund reserves since 2006 have kept the county budget balanced, Deputy County Executive Officer Joe Christoffel told the Board of Supervisors Tuesday.

“Not since the Great Depression has the county been faced with such a financial crisis,” Christoffel said. He attributed the problems to dwindling property and sales tax revenues, California's fiscal problems and a sluggish economic rebound.

In response to questions posed by 30 or so representatives from the Tea Party Patriots of Nevada County, Christoffel also said the amount of money needed for unfunded pension liabilities poses concern.

A state report expected soon from the CalPERS state government employee retirement system will show the county has about $63 million in unfunded pension liabilities, Christoffel said. That is the amount of money the county would need to pay out in pensions if all 906 county employees were to retire tomorrow.

“These benefits are costly. Whether they are sustainable is a matter of local judgment,” Christoffel said.

The issue was raised by local financial consultant Michael McDaniel, who has independently reviewed the liabilities and was asked by Tea Party leaders to present his findings to the Board of Supervisors.

McDaniel estimated the unfunded pension liabilities somewhere between $83 million and $88 million.

“There's a fiscal time bomb about to happen here in Nevada County,” McDaniel said.

McDaniel's figures are based on CalPERS investments prior to the market crash two years ago. The liability could now be even worse with deflated stock values, McDaniel said.

CalPERs estimates it can fully fund pensions by making an annual return on investments of 7.75 percent, a number Gov. Arnold Schwarzenegger estimates should be around 4.5 percent to allow for market fluctuations, McDaniel said.

To meet the future demand for retirement money, Nevada County should form a committee to study the matter and then pressure state lawmakers for solutions, McDaniel suggested.

“We need to start barking at Sacramento about this,” he added.

Board members agreed with that suggestion, but assured McDaniel that as elected officials, it was their job to watch the pension liabilities.

The county also needs to look at how much it is putting into employee CalPERS payments, McDaniel said.

Board members and County Executive Officer Rick Haffey said that already was happening in closed-door negotiations Tuesday afternoon with labor unions representing county employees. County officials said they could not divulge details of the talks because of bargaining agreements.

“We can't break contracts, but we can bring some of your ideas to the table,” Haffey said.

The county pays into CalPERS with a county contribution and an employee contribution, Haffey said after the meeting. The county pays 100 percent of law enforcement employees' contributions to the state and 67 percent for most other employees.

The county has made some headway in reducing its portion, with employees agreeing last year that retirees would pay around 90 percent of their health coverage and the county picking up about 10 percent for those with 20 years of service or more, Haffey said.

In prior years, the county paid 100 percent of retirees' health insurance premiums.

To contact Senior Staff Writer Dave Moller, e-mail dmoller@theunion.com, or call 477-4237.