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Oct 29 2010

Pension reform? and Jerry Brown

Pension reform? California’s first priority.

By, Dave Goodman,

Reform Party of California

As the election cycle comes to a close, the hotly contested governor’s race is showing a widening gap between Democrat Jerry Brown (as front runner) and Republican candidate Meg Whitman.

As we brace for the likelihood of another Brown term in office, it’s hard to attribute any success or failures Brown had in the 1970’s & 80’s and prejudge how effective he may govern this time. The reason is simple: California is not the same state it was 30 years ago when we experienced a stable job market, lower taxes, robust manufacturing, a defense industry, less intrusive government, and affordable real estate & secondary education. Since that time, Sacramento has gone out of its way to lay the burden on individuals and businesses to build an unsustainable infrastructure of revolving social benefits for the poor, and platinum pensions for government employees.

It’s the latter of the two spending concerns that is the most alarming. Because the legislature and governor are required to pass balanced budgets (unlike Washington), spending must be reduced or taxes increased to pay for our programs. Therefore, it’s the PUBLIC EMPLOYEE PENSION PLANS which really threaten us, because these programs are “unfunded liabilities”- and are promised to retirees who expect to receive those benefits when eligible. It’s a ticking time bomb, and according to Stanford University’s public policy program, these unfunded liabilities are presently assessed at $500 billion and growing. The collateral damage is and will be ugly as other essential programs are squeezed to make way for retiree’s pensions and medical benefits.

All Californians are seeing the effects of the cost-cuts required to pass our present budgets at state and local levels, and the current recession and high unemployment doesn’t help as tax revenue shortfalls persist. Police and fire personnel being laid off, jails letting inmates out early, teachers seeing their classrooms swell, parents having to pick up the slack by paying out of pocket for public school fundraisers and direct appeals for cash. Even the poor are being turned away.

And if we are suffering now, just wait until more and more public employees begin drawing their pensions. Are we going to honor these absurd plans and keep cutting from needed services like public safety, schools, and the like? At some point we can’t cut any further, and taxes will have to be raised to pay for ALL obligations. But it’s unthinkable given the already high tax rate that businesses and citizens have to pay for all the mismanagement, mistakes, and over-promising by lawmakers- much without voter consent.

These public pension contracts MUST be renegotiated and their costs subdued. That is a simple fact that, as Reformers, we understand clearly. This means raising retirement ages to 60, offering cash buy-outs, reducing retiree medical plans or increase premiums, and immediately place all new hires on plans that are more consistent with private sector 401k’s. Unions will balk, but unions aren’t stupid either. They realize that if the state goes into federal receivership (a form of bankruptcy for states), all contracts may become null and void, and new rules will be adjudicated by a federal oversight committee or appointed official. It would be anyone’s guess how that would play out. But maybe you have to show the legislature and their union cronies what death looks like- so they might except illness, and eventually get on the road to recovery.

Truthfully, there is no need for most public employee unions. Public safety employees need access to legal representation, which they can obtain through associations. But the same governmental body which makes and enforces labor laws should be capable to police itself, and offer reasonable salaries and benefits to public workers. These public-employee union entities have grown like cancer, and while their participants may love their perceived future benefits, the workers have to understand that years of deceptive and politically-charged collective bargaining arraignments has left them as bag-holders in what amounts to a retirement Ponzi scheme. Just like GM retiree’s experienced in bankruptcy court, and just like the real world.

Which brings us back to Jerry Brown, with all his close union ties and years of insider experience. Will Jerry get the union power bosses to come to light and make the necessary concessions? Could Meg have done any better?

The “Terminator” already failed us.

Hold on to your wallet.

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