Is Omaha watching San Diego deal with city pensions?

[joeglow]

San Diego's `Radical Idea' May Help Cities Slash $382 Billion Pension Gap

"Cities from New York to San Jose, California, facing almost $400 billion in unfunded pension liabilities, will be watching what San Diego Mayor Jerry Sanders calls his “radical idea” to cut costs.

After voters in the eighth most-populous U.S. city rejected a half-cent sales tax increase to balance the budget Nov. 2, Sanders is pushing to eliminate pension plans for new city employees, offering 401(k)-like savings accounts instead.

Sanders’s plan, which would replace a pensioner’s certain return with a market-based benefit, exemplifies cities’ struggle to escape the pincers of falling tax revenue and rising retirement costs that consume as much as a fifth of their budgets. The longest recession since the Great Depression cut receipts in 2010 the most in 25 years, the National League of Cities said last month.

“We’re all going to have to get realistic,” Sanders, a 60-year-old Republican, said in a telephone interview. “The private sector went through this. Government will have to relook at how we do stuff as well.”

Stock-market losses left 50 of the largest municipal pension plans with an unfunded gap of $382 billion as of June 2009, according to Joshua Rauh, a professor at Northwestern University’s Kellogg School of Management in Evanston, Illinois. That’s the equivalent of $14,000 per household in those cities, or more than three years of revenue.

“It’s a double whammy,” Rauh said in a telephone interview. “Exactly at the time when tax revenues are down, so are their pension portfolios.”

http://www.bloomberg.com/news/2010-12-0 ... n-gap.html


This is a good start.  Over time, they will HAVE to include police and fire unions as well.

[nativeomahan]

Salaries would have to go up proportionally more in return for employee unions agreeing to something like that.  It's called collective bargaining.  While it may reduce long term expenses, it does so at the cost of higher up front salary expenses.  The reason many cities are in this fix is mostly because of the recession, which is the worst in 80 years.  So it is not like they did anything wrong, investments and the stock market just tanked at the same time revenues from other sources also were suddenly reduced.  

City/county/state leaders, being scared of raising taxes when it might be the smart thing to do from a long term perspective (elected officials seldom look at things in the long term, beyond the next election cycle), often cut deals with employee unions to raise pensions and other long term benefits in return for the employees settling for little if any pay increases in the short term.  The politicians can say they didn't raise those gosh dern taxes when they stand for re-election, even though what they have done is sure to cost the city taxpayers way more in the long haul.

[joeglow]

Salaries would have to go up proportionally more in return for employee unions agreeing to something like that.  It's called collective bargaining.  While it may reduce long term expenses, it does so at the cost of higher up front salary expenses.  The reason many cities are in this fix is mostly because of the recession, which is the worst in 80 years.  So it is not like they did anything wrong, investments and the stock market just tanked at the same time revenues from other sources also were suddenly reduced.  

City/county/state leaders, being scared of raising taxes when it might be the smart thing to do from a long term perspective (elected officials seldom look at things in the long term, beyond the next election cycle), often cut deals with employee unions to raise pensions and other long term benefits in return for the employees settling for little if any pay increases in the short term.  The politicians can say they didn't raise those gosh dern taxes when they stand for re-election, even though what they have done is sure to cost the city taxpayers way more in the long haul.

Problem is that in MANY (if not most) areas of government, that is a steaming pile of |expletive|:

http://articles.cnn.com/2006-10-11/us/c ... s?_s=PM:US

"But do typical government workers really make that much less? It depends on the occupation. The following list compares average salaries in the public sector with nationwide averages, based on 2005 data from the Department of Labor's Bureau of Labor Statistics.

Attorney

Government average: $105,577Nationwide average: $110,520

Financial Manager

Government average: $95,257 Nationwide average: $96,620

Economist

Government average: $89,441Nationwide average: $80,900

Microbiologist:

Government average: $80,798 Nationwide average: $63,360

Architect

Government average: $80,777 Nationwide average: $68,560

Accountant

Government average: $74,907 Nationwide average: $58,020

Librarian

Government average: $74,630 Nationwide average: $49,110

Human Resources Manager

Government average: $71,232 Nationwide average: $89,950

Nurse

Government average: $60,935 Nationwide average: $56,880

Tax examiner

Government average: $36,963 Nationwide average: $49,460

Medical Technician

Government average: $35,526 Nationwide average: $33,170"

[Big E]

Yikes, that comment scares me a little.

I get where you're coming from there (and largely agree), but I think it does point out how important it is to not have the rank and file population vote on every little issue.

Our representative democracy does work pretty well, even if you/I/we end up on the short side of it from time to time.

[OmahaBen]

Yikes, that comment scares me a little.

He should have phrased it more like California screwed up how it gives the population control.

My limited understanding is that Referendums/petitions/propositions only require a simple majority (50%+1) of votes to increase spending, but a super majority (66.666% +1) to increase taxes.

Needless to say, the former pass far more often than the latter.

[Bosco55David]

Yikes, that comment scares me a little.

He should have phrased it more like California screwed up how it gives the population control.

My limited understanding is that Referendums/petitions/propositions only require a simple majority (50%+1) of votes to increase spending, but a super majority (66.666% +1) to increase taxes.

Needless to say, the former pass far more often than the latter.

Yeah, that's what I meant.

[DeWalt]

Yikes, that comment scares me a little.

He should have phrased it more like California screwed up how it gives the population control.

My limited understanding is that Referendums/petitions/propositions only require a simple majority (50%+1) of votes to increase spending, but a super majority (66.666% +1) to increase taxes.

Needless to say, the former pass far more often than the latter.

Regardless of details about details, the problem is that far too many voters are far too ignorant about the reality of what they're voting for.  And they're ignorant about the real cost.

Government is NEVER a "dollar in dollar out" proposition.  Ever.  Every dollar of entitlement spending (and I'm not saying that in a derogatory manner) requires that two dollars of tax money be taken in.  The tax-paying, voting populace MUST be informed and MUST demand accountability from our elected officials.  That's the only way we're going to bring government(s) under control without a horrible revolution.

[joeglow]

Great to see other cities/states are beginning to stop the bankrupting of our local governments.  Hopefully, more will do this so we can stop the bullshit "well, we need lotto pensions because OTHER cities do it" third grade logic.

Kentucky Senate Votes to End Guaranteed Pensions


The Kentucky state Senate passed a bill Friday that would end guaranteed pensions for new state and local government employees.  The Lexington Herald-Leader reports that the bill was designed to address the public pension funds' growing liability.  The paper reports:

Kentucky needs to stay ahead of the multibillion-dollar pension liability problem that is forcing tax hikes and painful spending reductions in other states, said Republican senators backing the bill.  "It is just not affordable to go forward with our current plan, for state government or for local governments," Sen. Damon Thayer, R-Georgetown, told his colleagues.

From a fairness perspective, taxpayers in the private sector struggle with layoffs, stagnant wages and benefits cuts, yet they're expected to support generous public pensions far better than anything they will get to enjoy, he said.

The Republican-controlled Senate voted 24-13, along party lines, to send Senate Bill 2 to the Democratic-led House, where its future appears grim.



Read more: http://www.businessinsider.com/kentuck- ... z1E689u4hT

http://www.businessinsider.com/kentuck- ... z1Dy1fPQVy

[nativeomahan]

Eliminate their pensions so the taxpayers can pay for their welfare, food stamps and Medicaid/Medicare when they approach retirement age.  Sounds fiscally as sound as a shell game, but with less compassion.

[DeWalt]

Eliminate their pensions so the taxpayers can pay for their welfare, food stamps and Medicaid/Medicare when they approach retirement age.  Sounds fiscally as sound as a shell game, but with less compassion.

Or these "public servants" could simply be offered jobs that are in keeping with reality.

Unions always demand their share of the profits, when profits are being made.  But they refuse to share the burden of the loss, when companies are losing money and/or going broke.  It's even worse with public employee unions.

[joeglow]

Eliminate their pensions so the taxpayers can pay for their welfare, food stamps and Medicaid/Medicare when they approach retirement age.  Sounds fiscally as sound as a shell game, but with less compassion.

Yeah, because if Joe Gibilisco has to fund his own retirement like the rest of us and doesn't get over $3 MILLION dollars from Omaha taxpayers, he will be on welfare.  Sounds like a nice Michael Moore tactic of ignoring factual evidence and relying on the tugging of heartstrings instead.

[cdub]

It would be ok if we didn't lump every public employee in together.  Not all pension systems are created equal.

[joeglow]

It would be ok if we didn't lump every public employee in together.  Not all pension systems are created equal.

Agreed.  I would even be willing to go to a 40 pension and 60% employee contribution plan.  However, the idea that anyone should get 70-100% of base pay for life (with the city absorbing ALL future economic risks) is smoking some great stuff.

[Uffda]

This statement reminds of all the CEOs that were getting the great bonus packages even though the corporation they were 'leading' did not make a profit.

But they refuse to share the burden of the loss, when companies are losing money and/or going broke.

[DeWalt]

This statement reminds of all the CEOs that were getting the great bonus packages even though the corporation they were 'leading' did not make a profit.

But they refuse to share the burden of the loss, when companies are losing money and/or going broke.

Then, when they do finally get fired, they get appointed to the Treasury Department.  Great gig!

[Uffda]

thats one...usually they get fired and some other corp hires them for a huge salary/benefits and the whole thing repeats

[joeglow]

thats one...usually they get fired and some other corp hires them for a huge salary/benefits and the whole thing repeats

I miss the point?  Is that you justification for lotto government pensions?  If so, it sounds an awful lot like the strategy my 5 year old uses: "Billy did it first."  If some shareholders are willing to tolerate that, it is their business.  When I am a shareholder, I will fight it.  Likewise, as a shareholder of my government, I will fight it.