Pension escape routes being cut – Pacific Research Institute

Pension escape routes being cut

I’ve frequently argued that, as the state faces an unfunded pension liability that’s as high as $500 billion, legislators are not doing anything about a problem that is depleting public services and imposing additional debt and tax burdens on Californians.

In fact, the state’s legislators are doing something: They are making the problem worse by expanding benefits and making it harder for localities to reduce the crushing burdens imposed by these union-friendly deals.

State Senator Sam Aanestad, R-Grass Valley, takes a moment for a frozen treat while working at his desk during the Senate session at the Capitol in in Sacramento, Calif., Monday, Aug. 23, 2010. Lawmakers have until Aug. 31 to finish their work before the end of the two-year legislative session.

Associated Press photo

Against the backdrop of a $19 billion budget deficit, a long-past budget deadline and growing public anxiety over a faltering economy and increasing government debt levels, the state Legislature last week moved forward a union-backed bill that would make it nearly impossible for cities to declare bankruptcy when they can’t pay the bills because of ballooning personnel costs.
Legislators have also recently approved a bill that would expand the cancer “presumption” for certain classes of government employee – meaning that if retirees get any sort of cancer a decade or more after retiring that it is presumed to be caused by their job, which opens up yet another storehouse of taxpayer funds and further burdens a faltering debt-soaked system.
And a much-ballyhooed pension-reform bill – with the modest goal of reining in the most egregious pension-spiking schemes – was gutted by unions and their lackeys to make it even easier for public employees to pad their pensions by including uniform allowances, sick leave and other benefits as part of the salary formula by which the final retirement benefit is calculated.
The unions have such control over the state – and in many cases the Democratic legislators themselves are union officials, dedicated mainly to advancing the interests of their special-interest colleagues – that even bills that everyone publicly says are needed to fix abuses get quietly turned into further expansions of the Pension Giveaway game.
To average people, the problem is clear. The public-employee pay and pension situation has gotten out of hand. The state has promised far more benefits than taxpayers can afford. The scoundrels in the city of Bell, where the city manager “earned” more than $800,000 a year plus 28 weeks of vacation and a pension worth about $30 million, represent the problem at its ludicrous extreme. But the enrichment games have gone on all over the state, and up and down the ladder – from rank-and-file government workers to top managers.
This is an unfair situation, especially given the modest retirement programs that most private-sector employees must rely upon. And it is harming those services that the government is supposed to provide. As the Fresno Bee reported, “County government is becoming a pension provider that provides government services on the side.”
The solutions are clear, also: Reduce pensions, especially going forward. Stop the pension-spiking abuses. Rein in union power, through “paycheck protection” (reducing unions’ ability to use mandatory dues for political purposes), and cut the pay packages of government employees to more closely resemble their counterparts in the private sector. Cutting back on government and privatizing services also would help.
To legislators, all of that is heresy. The unions and state’s Democrats have their solutions: Raise taxes early and often. Spend more. Repeat step one. They want voters to eliminate the two-thirds vote requirement for passing budgets and ultimately would get rid of the two-thirds vote requirement for raising taxes. I’ve increasingly seen those union bumper stickers: Repeal Prop. 13.
So legislative Democrats squelched a modest plan to create a lower but still-generous pension plan for new state employees. And a Senate committee voted for Assembly Bill 155, which would require broke cities to get bankruptcy approval through a commission or submit their financial information to the state auditor before receiving approval to take their insolvency to court. All the usual union subjects and Treasurer Bill Lockyer – who had given lip service to the “unsustainability” of the pension system – backed the bill.
The San Jose Mercury News captured the essence of this travesty: “The bill would require local governments to jump through hoops in the state bureaucracy before filing for bankruptcy – not to protect the taxpayers but to make it more difficult for labor union contracts to be voided in bankruptcy court.”
The unions’ goal is to take off the table every way of dealing with the problem – reducing existing pensions, lowering future pensions, bankruptcy, etc. –save for one solution – raising taxes to sustain the style of living to which our public servants have become accustomed.
Oblivious to the fiscal calamity at our door, the unions keep pushing for more, such as the William “Dallas” Jones Cancer Presumption Act of 2010.” As Matt Smith writes in the San Francisco Weekly, “If Gov. Arnold Schwarzenegger signs the bill, it would compel workers’ compensation officials to presume that firefighters and police officers who get cancer long after they retire became sick because of work. So if chain-smoking cops develop lung cancer nine years after leaving the job, the government will have to pay their workers’ comp health care costs. But that’s not all. In many cases, the government would throw in disability pay on top of retirees’ pensions.”
Still, the most telling story from recent weeks regards Assemblywoman Fiona Ma’s AB1987, which is designed and still championed as a measure that would fight pension spiking. But after the requisite union amendments, the bill now codifies items that can be added to the final pay calculation, thus making it easier for public employees to enhance their pay and inflate their pensions.
“We should be taking away the candy, not adding more,” said pension-reform advocate Marcia Fritz in published reports. That’s California’s Legislature in a nutshell. Take an effort to fix the pension problem, gut it and let the unions add amendments that make the problem worse, while still calling it reform. Then look for more ways to raise our taxes.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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