2012-09-13 / Editorials
Pension changes only a start
Finally, they get it.
The state’s much-anticipated pension reform act was signed into law this week, saving taxpayers billions of dollars by capping benefits, increasing employee contributions, raising retirement ages and, in general, eliminating some of the fiscally irresponsible policies that have allowed more than a few public employees to ride off into the sunset with six figures in retirement income.
Although viewed by some as a back-door strategy by Gov. Jerry Brown to gain support for his proposed tax increase in November, the new law is at least a step in the right direction. Some of California’s public employees were retiring as early as 50 years old with full benefits, leaving taxpayers on the hook to meet the growing pension demand and leaving the state on the brink of bankruptcy.
AB 340 is a good start. But it’s just that—a start.
There’s still the matter of paying for entitlements that have already been promised, and the amount of unfunded liability is staggering.
According to conservative estimates, the state could be on the hook for at least $225 billion, an enormous figure that continues to grow. California taxpayers will spend $6.6 billion on retirement benefits just this year, up from $2.7 billion a decade ago.
Current public employees, not affected by the new law, are understandably fighting to keep their benefits. But they must be willing to make concessions if they want to preserve the future of what was once the world’s sixth-largest economy (California is now ninth, behind Italy).
Some of that reform should start right here in T.O., where the city is threatened by a budget deficit of its own, albeit a much smaller one.
While the city has been wise enough to keep its retirement costs under control and completely funded, taxpayers remain on the line for 100 percent of every employee’s CalPERS contribution. That needs to change. The time has come for city employees to start ponying up some—if not all—of their 7 percent contribution.
And what about those retirees receiving more than $100,000 in pension benefits, including former city manager Phil Gatch, who is receiving a whopping $221,400 a year. Promised or not, it’s time for the city to use whatever power it has to get those figures in line with the new state law that caps benefits at $100,000 a year. We challenge any retiree who’s not a firefighter or police officer to justify why they should be paid more.
At long last, the playing field has been somewhat leveled, and it hasn’t happened a minute too soon.