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One reason taxpayers and the media are better informed is the efforts of state think tanks like the Maine Heritage Policy Center and the Illinois Policy Institute, which have used the Freedom of Information Act to collect and post all state employee salaries and pension payments online.
Ohio’s Buckeye Institute for Public Policy Solutions has gone one step further in highlighting the high cost of paying and pensioning our civil servants. On its website (www.BuckeyeInstitute.org), one can find the list of all employee pay, and on the top right the actual annual pension any given person would receive if he retired now, and on the top left a calculator to calculate his pension if he retired at a normal age and lived 18 years afterward. In the first 120 days after posting the list, the website drew 755,562 visitors from all 50 states. Buckeye Institute president Matt Mayer plans an iPod app that will allow students at Ohio public universities to check out the pay and pensions of their professors.
State and local workers earning $350 billion more than the real economy would pay is a statistic. Your neighbor’s gold-plated pension visible online is an outrage.
PUBLIC OPINION HAS SHIFTED in measurable ways. In Ohio, voters were asked how the state should deal with its $8 billion overspending problem, and 50 percent wanted to reduce the compensation packages of government workers, 27 percent wanted to cut government services, and 16 percent wished to increase taxes. Fully 40 percent of liberals wanted to reduce government pay and pensions. Sixty-seven percent of government workers thought their compensation should be equal to the private sector, 14 percent said “higher,” and a sainted 12 percent said “lower.”
Nationally, Rasmussen polls find that 77 percent of adults say government workers have more job security than private sector employees. Sixty-seven percent say private sector employees work harder. Forty-six percent believe government workers make more money than comparable workers in the private sector. Fifteen percent say government workers make less and 17 percent say they are paid the same amount.
But the best news for taxpayers hoping to avoid the pension bailout comes from Utah. There, state senator Daniel R. Liljenquist introduced and passed legislation that, beginning July 1, 2011, ends the creation of any more unfunded liabilities. The state was thrown into crisis in 2008 when it fell behind its pension obligations by 30 percent. Utah was heading for bankruptcy and would not be able to fund and pay its pension obligations.
Liljenquist’s legislation capped the taxpayers’ payment for new state employees at 10 percent for most state and local employees and 12 percent for police and firemen. All new employees will have a defined contribution pension similar to a 401(k). If they want a traditional defined benefit plan and the state’s contribution is not enough to cover costs they are responsible for “topping off” their pension contribution. There are no hidden costs to taxpayers. No unfunded liabilities.
Retiring state and local employees have the state kicking in 22 percent of salary for their pensions. New employees will get 10 or 12 percent. As workers retire and are replaced, the savings will increase to $500 million a year.
Republican governor Gary Herbert signed the legislation that passed 55-35 in the House with four Republicans voting wrong (one a highway patrolman, one the battered spouse of a teachers’ union member). The Senate vote was 20-9 with no Democrats voting for reform and one Republican (a current police officer) voting against taxpayers.
Utah is the model for reforming state and local workers’ pensions in a politically feasible way. Present retirees and employees were untouched. No new hires will create unfunded liabilities, and their compensation packages will approach those of the real economy.
When 10 states have enacted the Liljenquist/Herbert reform, it will be near impossible for the federal government to put together the votes to tax responsible states to bail out irresponsible state and local governments. Until then, we are all in danger of one more giant step forward to America becoming a hybrid of Greece, France, and California.
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