Posts Tagged ‘public employees’

The Wall Street Journal FEBRUARY 17, 2011 By KRIS MAHER And DOUGLAS BELKIN
For a second straight day, thousands of Wisconsin public employees converged on the state capitol in Madison to protest Gov. Scott Walker’s plan to close the state’s projected $3.6 billion budget shortfall by increasing the cost of their pensions and health benefits and taking away their collective bargaining rights.

About 10,000 teachers, nurses, city workers and firefighters chanted “Kill the Bill” and held signs outside that said “Recall Walker,” while others squeezed shoulder-to-shoulder inside the capitol rotunda as a key legislative panel held hearings on the bill.

In Madison, Wis., thousands protested a plan to balance the state’s budget in part by stripping public workers of bargaining rights.
Mr. Walker said Wednesday afternoon he would listen to lawmakers’ concerns but didn’t plan “to fundamentally undermine the principle of the bill, which is to allow not only the state but local governments to balance their budgets.”

In exchange for bearing more costs and losing bargaining leverage, the state’s 170,000 public employees were promised no furloughs or layoffs. Mr. Walker has threatened to order layoffs of up to 6,000 state workers if the measure fails.

President Barack Obama called Mr. Walker’s bill an “assault on unions.” He made the remark in the course of an interview with a Milwaukee radio station about federal budget issues.

“I think it’s very important for us to understand that public employees, they’re our neighbors, they’re our friends,” Mr. Obama said. “These are folks who are teachers and they’re firefighters and they’re social workers and they’re police officers.”

In Madison, the protesters aimed to sway a handful of moderate Republican senators from traditionally Democratic districts.

Mr. Walker said the dramatic action is necessary to close the state’s gaping budget hole for the fiscal year starting in July and avoid massive employee layoffs.

“We’re at a point of crisis,” Mr. Walker told reporters. And while he said he appreciated the concerns of the public employees shouting outside his office door, taxpayers “need to be heard as well.”

Beyond eliminating collective bargaining rights, the bill would force public workers to pay half the cost of their pensions and at least 12.6% of their health-care coverage.

Phil Neuenfeldt, president of the Wisconsin AFL-CIO called the bill “an attack on organized labor and middle class values.”The protests have been among the most well attended in recent Wisconsin history.

Public schools in Madison were closed on Wednesday because 40% of teachers called in sick.

Archbishop Jerome Listecki of the Wisconsin Catholic Conference called on state lawmakers to “carefully consider” the implications of removing collective-bargaining rights for public workers.

Under Mr. Walker’s proposal, public-worker unions could still represent employees, but could not pursue pay increases above those pegged to the Consumer Price Index unless they were approved by a public referendum. Unions also could not force employees to pay dues and would have to hold votes once a year to stay organized.

By George F. Will
Sunday, December 26, 2010

The nation’s menu of crises caused by governmental malpractice may soon include states coming to Congress as mendicants, seeking relief from the consequences of their choices. Congress should forestall this by passing a bill with a bland title but explosive potential.

Principal author of the Public Employee Pension Transparency Act is Rep. Devin Nunes, a Republican from California, where about 80 cents of every government dollar goes for government employees’ pay and benefits. His bill would define the scale of the problem of underfunded state and local government pensions and would notify states not to approach Congress like Oliver Twists, holding out porridge bowls and asking for more.

Corporate pension funds are heavily regulated, including pre-funding requirements. A federal agency, the Pension Benefit Guaranty Corp., copes with insolvent ones. By requiring transparency, the government gave the private sector an incentive to move to defined contributions from defined-benefit plans, which are now primarily luxuries enjoyed by public employees.

Less candor, realism and pre-funding are required of state and municipal governments regarding their pension plans. Nunes’s bill would require them to disclose the size of their pension liabilities – and the often-dreamy assumptions behind the calculations. Noncompliant governments would be ineligible for issuing bonds exempt from federal taxation. Furthermore, the bill would stipulate that state and local governments are entirely responsible for their pension obligations and the federal government will provide no bailouts.

Nunes’s bill would not traduce any state’s sovereignty: Each would retain the right not to comply, choosing to forfeit access to the federally subsidized borrowing that facilitated their slide into trouble.

Those troubles are big. A study by Northwestern University’s Kellogg School of Management calculates the combined underfunding of pensions in the all municipalities at $574 billion. States have an estimated $3.3 trillion in unfunded pension liabilities.

Nunes says that 10 states will exhaust their pension money by 2020, and all but eight states will by 2030.

States’ troubles are becoming bigger. Hitherto, local governments have acquired infusions of funds from federal budget earmarks, which are now forbidden. Furthermore, states are suffering “ARRA hangover” – withdrawal from the American Recovery and Reinvestment Act, a.k.a. the 2009 stimulus. With about $150 billion for state and local governments, it raised the federal portion of state budgets from about a quarter to a third. Also, in 2009 and 2010, states and localities borrowed almost $200 billion through the ARRA’s Build America Bonds program, under which Washington pays 35 percent of the interest costs. Republicans, in another victory over the president in negotiations on extending the Bush tax rates, extinguished that program, which they say primarily produced more public-sector employees.

There are legal provisions for municipalities to declare bankruptcy. Some have done so. As many as 200 are expected to default on debt next year. There are, however, no bankruptcy provisions for states. Some who favor providing such provisions say states are “too big to fail,” and under bankruptcy, judges could rewrite union contracts or give states powers to do so, thereby reducing existing pension obligations. Unfortunately, government-administered bankruptcy of governments might be even more unseemly than Washington’s political twisting of the bankruptcy process on behalf of General Motors and Chrysler, including the use of TARP funds supposedly restricted for “financial institutions.”

Oliver Twist did not choose his fate. California, New York and Illinois – three states whose conditions are especially parlous – did. And in November, each of these deep-blue states elected Democratic governors beholden to public employee unions.

San Francisco is spending $400 million a year on public employees’ pensions, up from $175 million in 2005. In November, San Franciscans voted on Proposition B, which would have required city employees to contribute up to 10 percent of their salaries to their pension plans, and to pay half the health-care premiums of their dependents. Michael Moritz, a venture capitalist, says: “A typical San Francisco resident with one dependent pays $953 a month for health care, while the typical city employee pays less than $10.”

San Francisco voters defeated Proposition B. If they now experience a self-inflicted budgetary earthquake, there is no national obligation to ameliorate the disaster they, like many other cities and states, have chosen.

People seeking backdoor bailouts hope that the fourth branch of government, a.k.a. Ben Bernanke, will declare an emergency power for the Federal Reserve to buy municipal bonds to lower localities’ borrowing costs. This political act might mitigate one crisis by creating a larger one – the Fed’s forfeiture of its independence.