If you read this blog regularly, you have heard all this before, but the situation is getting worse. These are excerpts from a recent WSJ article on State and Local government pension costs. All this is perhaps the worst and most blatant example of politicians currying favor for votes at the expense of fiscal stability of government and financial hardship for taxpayers.
There simply no excuse. Why in any mindset should public employees be treated far better than private workers who are paying the bill?
Public pension funds have posted double-digit gains four of the last five years, and asset levels have never been higher. Yet government pension costs are soaring as the bills that politicians postponed during the hard economic times come due. No less than Warren Buffett warned this week that “local and state financial problems are accelerating, in large part because public entities promised pensions they couldn’t afford.” Moody’s last month advised investors that “contribution requirements for pensions will remain high and trending upward in most cases.”
Not worried enough? Governor Chris Christie in New Jersey has declared that modest pension reforms in 2011, which suspended retirees’ cost-of-living adjustments and raised the retirement age to 65 from 55 for new workers, were too little, too late. The state’s pension bill has gone from zero to $2.4 billion in the last four years and will increase to $4.8 billion by 2018, which will crimp public services.
As Mr. Christie has explained, politicians goosed benefits during good times to curry favor with public unions, knowing that the bills wouldn’t come due for many years. Unions now argue that retirement promises are de facto contracts that the U.S. and state constitutions protect from impairment, and they’re going to court in states like Illinois to try to prove it.