What Would You Do With an Extra $13000?
When discussing spending programs and government debt bureaucrats and politicians like to throw out mind-numbing numbers like a volcano spits out ash. It was this cavalier attitude by government big spenders that prompted Senator Everett Dirksen of Illinois a staunch watchdog over the taxpayers’ purse to sardonically remark “A billion here a billion there and pretty soon you’re talking about real money.”
Now for most Californians $13000 is an easy figure to understand. With an extra $13000 we could make those car repairs we’ve been putting off fix the roof take a vacation or even put a few more dollars away for retirement.
And if a family of four had another $52000 — nearly a year’s income for many California families — that would create all kinds of possibilities from home improvement to contributing to the college fund for the kids.
Sadly this is money Californians will never see because $13000 is actually each resident’s share of the half-trillion dollar unfunded liability for government employee pensions. And unless action is taken soon to reform a system that includes allowing some public employees to retire as young as 50 with 90 percent of their pay for the rest of their lives the obligation of the average citizen will increase.
Although politicians allied with the public employee unions have tried to hide or postpone the bill coming due we are already witnessing what could be the beginning of the collapse of a retirement system that is abused at both the state and local level.
The City of Stockton overwhelmed with pension debt is going bankrupt and no one is benefiting. Credit institutions have seized government buildings including the new city hall. Stockton residents are experiencing reduced services while city employees are losing their jobs. Other cities are teetering on the brink.
Most Californians do not begrudge government workers decent pay or a pension. They do object to living like an underclass having to work longer and harder to afford retirement while so called “public servants” are retiring young enough to start a second career with pensions unavailable to most in the private sector.
According to the U.S. Census Bureau California has the highest paid state and local employees in the nation. More than 12000 retired government employees are receiving pensions in excess of $100000 per year. In the private sector it would take nearly $2 million in the bank to afford to retire in this style. (It should be noted that those public workers who retired prior to 1999 — before the Legislature made a massive boost in benefits for existing workers — are living on relatively modest pensions.)
The good news is that the public is beginning to understand the extent of the problem. In both San Diego and San Jose voters have just approved pension reforms by massive margins that will treat both workers and taxpayers fairly. San Diego will freeze pay on which pensions are calculated for six years and provide new hires with a 401K style plan typical of the private sector. In San Jose workers will have to contribute more to their retirement or accept a less generous plan.
Jerry Brown should take note of the parallel actions by voters in San Diego who tend to lean Republican and those in San Jose a bastion of Democratic support. Pension reform is a bipartisan issue. Although the governor has paid lip service to reform he has declared a willingness to postpone action until after he gets his massive tax increase expected to appear on the November ballot.
Although the governor owes his career to the support of the government employee unions it is not too late for him to reestablish his reputation as an independent thinker. Can Jerry 2.0 morph into Jerry 3.0 by being the governor “beholden to no one” as he promised two years ago? By carefully reflecting on what happened in Wisconsin San Diego and San Jose he would be wise to do so.
Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.