For decades, public employee unions in state and local government negotiated with the politicians they helped elect to add layer after layer of compensation, benefits and perks.
As a result, today the potholes don’t get fixed, the library hours are curtailed, the parks are closed, but the gold-plated pension and health benefits of our “public servants” get more costly every year.
The state of Illinois spends 20 percent of its annual budget in addition to the earnings of its state employee retirement system just to keep up with employee retirement benefit costs. In a few years, Illinois estimates that percentage will increase to 50 percent of state revenue.
The City of San Diego paid just $48 million in pension contribution in 2000. Last year it was $231 million. In 5 years, it will be $340 Million, or nearly 20 percent of the city budget.
This same trend afflicts every state and municipality in the country.
You may be fortunate enough to have a private-sector pension plan.
Does your pension plan allow you to use your top year of earnings (rather than an average of the top three or five years) to calculate your pension? Does it allow you to pad your top year earnings with unused sick pay and vacation time?
Does it allow for higher retirement pay than the salary for the job? Does it provide for unlimited free health benefit in retirement? Does it allow you to “retire,” then come right back and be re-hired for the same job, effectively getting paid twice for the same work?
These and other benefits have accrued to public workers to the point that state and local governments are now run largely of, by and for the unions. These governments are going broke, and taxpayers have had enough.
Republican Gov. Scott Walker of Wisconsin faces a recall election on June 5 because he fought for reform. National public employee unions have pledged over $12 million to defeat him.
Elected in 2010, Walker inherited a $3.6 billion budget deficit (in a state of just 5.7 million people), millions in unpaid bills to state vendors and the expectation that tax increases were necessary to solve the problem.
Walker supported spending reduction and reform instead of tax increases.
His reform proposal included requiring state workers to contribute 5.8 percent of their salary toward their pension plan where no employee contribution had been required since 1966.
Walker also supported restricting collective bargaining only to salary, not benefits, and supported an end to automatic union dues collection by the state from employee paychecks.
Last year, public employee unions noisily occupied the Wisconsin statehouse, and State Senate Democrats fled the state to prevent a vote on Walker’s reforms. The reforms passed anyway.
One year later, spending reductions and pension reform have erased the Wisconsin deficit without tax increases. The unemployment rate has dropped from near double digits to under 7 percent. The Wisconsin school districts are hiring teachers.
One of Walker’s opponents in the recall, Democratic Milwaukee Mayor Tom Barrett warned last year that the governor’s reforms would “explode” the city’s deficit. This year, the city is running an $11 million surplus because of lowered city retirement costs.
The demand for reform is bipartisan. The movement is nationwide.
In Rhode Island, a comprehensive pension reform package similar to Wisconsin’s passed the heavily Democratic Legislature and was signed by the governor.
In Massachusetts, Democratic Gov. Deval Patrick has asked the heavily Democratic Legislature to adopt a pension reform package that will save that state over $5 billion over 30 years by raising the retirement age and basing pensions on the average of the five highest years of earnings.
In San Diego, Councilman Carl Demaio heads a reform movement that placed a nationally important Comprehensive Pension Reform (CPR) on the June 5 ballot by initiative petition.
CPR bans “pension spiking” by restricting the pension calculations to base salary, requires 401(k) pension plans for all new hires and for city politicians, requires equal employee contributions to the pension plan and caps employee compensation for five years.
The largest national public employee union, the American Federation of State, County, and Municipal Employees (AFSCME), has just opened a Super PAC to funnel millions of national union dollars into defeating CPR on June 5 in San Diego.
For good measure, the AFSCME opened a second Super PAC to defeat Carl Demaio who is also on the June 5 ballot running for San Diego mayor on his reform platform.
These June elections will determine whether state and local governments are responsive to the taxpayers or to the unions, and could set the stage for the presidential election in November.