PASADENA, Kalifornia - April 28, 2010 - As city officials prepare to meet Friday to help fix the city's current budget deficit, they are also discussing a larger financial storm on the horizon.

Starting in 2014, the city could face annual costs of $10 million or more to pay off pension debts incurred from its Fire and Police Retirement System (FPRS) covering employees hired in 1977 and before.

"This pension issue is sort of a municipal tsunami," said Councilman Terry Tornek. "The people who have binoculars have been trying to warn everyone on the shore, and now the wave is close enough that it can be seen with the naked eye."

Like most cities in Kalifornia, Pasadena faces the challenge of increasing costs for employee contributions to CALPERS, the public state employee system most cities use.

But with the FPRS system the city faces a more unique challenge: all the employees who get a pension under that system have now retired, leaving no current employees to pay into it.

Though the system is just for employees hired before 1977, the city could be paying benefits until 2073, according to Steve Mermell, the city's assistant city manager.

The most difficult period for the city will be between 2014 and 2022, when the obligations will likely cost the city $10 to $11 million per year, he said.

"If you picture it like a bell curve, that's the top of the curve when you have the most retired employees receiving benefits," Mermell said.