Posted on 11/20/2016 7:17:21 PM PST by SeekAndFind
Back in the summer of 2012 the City of Los Angeles realized that they had a serious budget problem on their hands and the culprit, as in so many other cities, was the city’s extremely generous pension plan for municipal workers. Mayor Antonio Villaraigosa, backed by the city council, jumped into the fray and passed what was then described as sweeping pension reform and patted themselves on the back for a job well done. (LA Times, 2012)
Despite a raucous protest and threats of a lawsuit from city labor unions, the Los Angeles City Council voted Tuesday to roll back pension benefits and boost the retirement age to 65 for new civilian employees.
The council voted 14-0 to approve the plan, which budget officials say will save $30 million to $70 million over a five-year period. The changes will not go into effect until a final vote in 30 days. In the meantime, the council instructed city negotiators to meet with union leaders “to find common ground and to avoid litigation.”
Good thing they got that sorted out, eh? Really dodged a bullet there. So, four years down the line, how well have those reforms worked out? Well… let’s just say that things could have gone better. (LA Times, this week, emphasis added)
Today, Los Angeles taxpayers are underwriting retirement benefits that are among the nation’s most generous — at a cost that has never been higher.
The city’s general fund payments for pensions and retiree healthcare reached $1.04 billion last year, eating up more than 20% of operating revenue — compared with less than 5% in 2002.
L.A.’s vaunted pension reforms have not cut the city’s pension costs; at best, they have modestly slowed their rate of growth.
It’s only the fact that Hollywood and a few other big dollar enterprises keep their revenues far above average that’s stopping L.A. from sinking into fiscal dysfunction. Having 20% of your budget going to pension payments isn’t just massive… it’s unsustainable in the long run. Going back to the 2012 article I linked, the answer was right there in front of them. None of the modest reforms they enacted applied to current employees (who number more than 20K), only to new workers. Several large groups, including firefighters, police and water department workers were excluded from the reforms. And all of those pensions for existing workers are based on their salaries, which average anywhere from 20 to 42 percent higher than their civilian counterparts. No wonder their budget has this massive hole in it.
How many cities and states have seen seen this pattern repeated in? Pensions basically bankrupted Detroit. Chris Christie has spent a huge amount of his term fighting the bloated pension system in New Jersey. Cities from Cincinnati to Billings, Montana, Charleston, Portland and Chicago (which is at the top of the list) comprise the dozens of municipalities with the most massive unfunded pension debts hanging over their heads. Have we learned nothing?
If we’re to be brutally honest about how we got to this point (as well as what to do going forward), failure was baked into the cake from the beginning. The real issue is found in the fact that government employee unions were the ones negotiating with the municipal and state governments for the best, most expensive benefits they could manage. Unfortunately, in virtually every major city in the country, the government was run by the Democrats. Given what you no doubt already know, think about that for a moment. It means that the Democrats were negotiating against the Democrats. Nobody was representing the taxpayers and, perhaps even more seriously, nobody was there to keep their own appetites in check.
Now the chickens are coming home to roost in too many of these cities and the unions have crafted their deals so carefully that there is little the government can do to dig themselves out of massive budget holes. Los Angeles isn’t going under yet because of their fat budget, but looking at the bottom line on their ledgers it’s easy to see that it would only take one bad economic turn in their fortunes for the bottom to fall out of it. The public workers unions have feathered their beds quite nicely at the expense of everyone else, but you always wind up killing the goose that’s laying the golden eggs eventually.
We should require public employees to fund their vested pensions up front or forfeit them.
That’s the only way they will have a secure retirement.
Post of the day!
“Why would they get more AFTER retiring than they earned while working?”
Well all I can tell you is that both of them were making $188,000 per year, and their first year retirement incomes were $100,000 more than that. Perhaps their Health and Welfare Benes were included in that number. I also know that our town’s first Chief of Police was making less than $80k when he retired. Since public pensions are a matter of public record, I looked his up the other day $160,000! You see they are “indexed” for “inflation” so they get “pay increases” every year. And back when the county was flush (before 2007), they gave all retirees a big pop with “extra” money they had that was burning a hole in their pockets. Also, FWIW, in our county, the only employees making more money than the fire fighters, are the doctors at the county hospital, all of whose names you can’t pronounce! Our County Administrator, DA, Tax Collector, etc. don’t make as much as the FFs.
Socialism is great until you run out of other people’s money.
Astonishing pensions——and the taxpayers are footing the bill.
I’m amazed at the amounts.
.
“We may need an amendment that no pensions be guaranteed by the government; that was how it worked for quite a while.”
I think we already have with that bankruptcy judge’s decision. But with or without it, there will come a time when the taxpayers revolt, and no law, or lack of one will stop the changes from happening. Personally, I’d like to start with academia right now. Public Education, at least higher Public Education needs a serious haircut, andI think getting public financing out of the picture is step one, because it has led to the “institutions” jacking up what they pay themselves knowing that the government will keep feeding in the bucks.
Much of the problem in California is related to the pension system using unrealistic investment return estimates, and a period where cities, in a fit of post-911 enthusiasm, raised public safety pensions from 2 1/2 percent of final salary per year worked to 3 percent. The latter error was exacerbated by some badly botched actuarial work. My town, for example, was told there’d be ‘almost no’ increase in cost, which is only true if you define “almost no” to mean “several million”.
Most California counties soak up the lions share of property taxes, leaving cities to survive on fees and sales tax. Any hit the economy takes, immediately impacts city budgets.
City Council members get their seats through elections. Unions provide lots of dollars and free help for campaigns. They also spend a lot of effort to get rid of Council people who propose common sense solutions, even going so far in my town as hanging a Councilmember in effigy from their union-owned fire department ladder truck at a local street fair. Classy guys. There’s no matching taxpayers union.
I watched the stream of the first hearing on Vallejo’s bankruptcy several years ago. The crowd almost lynched the fire union’s representative.
BURN BABY BURN!!!
Those first year figures often include payment for untaken vacations, partial payment for unused sick leave, and like that. It’s also fairly common for municipal executives to have deferred compensation schemes in their contracts.
One routine irritation for me is the pension bump game played by public safety folks who take a promotion with a jump in pay in their last year on the job, work a year, then pass that along to the next guy.
govt workers....all of them....
So those potholes you are driving into and damaging your car and the streets that are like washboards are the result of that 15% more going to pay people far too much for the money they put in. It will get worse. 20% now and 30% etc soon enough.
The $25 ticket you get for using a cell phone is more then $250 with all the extra fees that are tacked on. The speeding ticket not paid on time leading to loss of car due to very large penalties all out of proportion.
BTW we have rain today so the the streets are going to start dissolving into potholes in the days ahead.
“The city’s general fund payments for pensions and retiree healthcare reached $1.04 billion last year, eating up more than 20% of operating revenue — compared with less than 5% in 2002.”
Because they're union thug bureaucRATs, and it's only taxpayer money.
if they were in the private sector, their pensions would be turned over to the Peanut butter and Jelly board...and it would be slashed by about 2/3's.
the only persons to suffer are the tax payers..
also, eventually, they will have to stop sports and band...the schools will not keep up physically because there is no money...
then these jokers move to my state or similar and buy our homes and land up like there is no tomorrow...
its quite eye opening to see what these poor liddle govt workers get....the teachers cry poverty but they take the cake in bennies and pension for working a very very short year and even their wages aren’t bad....
and secondly, they must start paying state taxes on their windfall pensions.....
Retirements at $190,000 per year, some with continuing medical coverage.
The union is not embezzling. The elected officials gave it away. Thevelecteds need to do their jobs.
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