Ever heard of the Little Hoover Commission? Well, chances are that you haven’t, as really, it is nothing more than a glorified think tank. And, really, if we’re looking for cuts, well, how about the Little Hoover Commission. But nonetheless, they have Sacramento buzzing with their latest suggestion.
The bipartisan Little Hoover Commission recommended today that California state and local governments roll back pensions for existing employees, dump guaranteed retirement payouts and put more of the pension burden on workers.
Although any attempt to reduce pensions for current workers would prompt a legal battle, the commission says that public pension funds are in such dire financial straits that they’ll never right themselves by reducing benefits for new hires. The recommendation would not affect current retirees.
The most controversial Hoover proposal would allow state and local governments to freeze existing employee pension benefits and then lower them for future years worked.
Courts have ruled that pensions are legally protected property and that government has a contractual obligation to follow through with them. (SacBee)
Well, it’s not quite Wisconsin, but it’s pretty close. After all, what the Little Hoover Commission is recommending here is abrogating our contractual requirements to our state workers, bargained for in good faith. As David Cay Johston (the long time NYT tax reporter) said today on his blog, this is nothing more than a pay cut for state workers.
Out of every dollar that funds Wisconsin’ s pension and health insurance plans for state workers, 100 cents comes from the state workers.
How can that be? Because the “contributions” consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash. The same is true with the health care plan. If this were not so a serious crime would be taking place, the gift of public funds rather than payment for services.
Thus, state workers are not being asked to simply “contribute more” to Wisconsin’ s retirement system (or as the argument goes, “pay their fair share” of retirement costs as do employees in Wisconsin’ s private sector who still have pensions and health insurance). They are being asked to accept a cut in their salaries so that the state of Wisconsin can use the money to fill the hole left by tax cuts and reduced audits of corporations in Wisconsin.
The labor agreements show that the pension plan money is part of the total negotiated compensation. The key phrase, in those agreements I read (emphasis added), is: “The Employer shall contribute on behalf of the employee.” This shows that this is just divvying up the total compensation package, so much for cash wages, so much for paid vacations, so much for retirement, etc. (Tax.com via SFBG)
It’s nothing so fancy as “making state workers bear more of the burden” of their pensions. Nope, it’s just the Governor (in Wisconsin’s case) or some random, unelected commission (in our case) wanting to walk away from a deal. At the very least we could be honest.
And so, this latest report seems to be a good reason to come out and support our labor brothers and sisters. MoveOn.org, the CourageCampaign, Calitics and a number of other organizations are helping to organize rallies across the nation, including a bunch of them in California at noon on Saturday. There will be rallies at the State Capitol, at SF’s City Hall, LA City Hall, and the San Diego County Administrative Building. You can get more details and sign up here. Really, if you are around this weekend, now is the time to stand together.
Wisconsin might be half a country away, but it’s really not that far away after all.
So what’s the difference between the compensation contract of a public employee union member and the compensation contract of the CEO of a failed bank, he asked rhetorically?
You are right. I’ve never heard of this commission. Guess its a California state commission, and yes, we could usefully save a few bucks by eliminating it. Let’s keep shouting loudly and clearly, that we don’t need to solve our fiscal mess on the backs of union workers and the sick and elderly. We just need to tax corporations and the very wealthy just a little bit more.
Teachers get pensions in lieu of Social Security. If we, as their employers are not going to honor the pension agreements we made with them, then we need to start paying into the Social Security fund for them. But the state, as their employer, cannot opt out of Social Security taxes because they get pensions–and then not pay the pensions. That is not only unfair, but I suspect illegal.