HomeBudget & Tax NewsWhy Are We Not Talking About California’s Pension Problems?

Why Are We Not Talking About California’s Pension Problems?

By Cecilia Iglesias

It is no secret that California has its own myriad of economic issues: high taxes, a bloated government, overly powerful unions, and many more. However, one issue that is a product of all of these, but does not get nearly enough attention, is skyrocketing public pensions.

For as long as I can remember, unions and Californian politicians have been leveraging public employee pensions to satisfy their own agenda, feeding into a vicious cycle of unattainable promises and overshot budgets. Where this problem is especially glaring is within firefighter unions.

Even though we are burdened with the highest taxes in the country, with sales taxes reaching to the double digits, public safety pensions have resulted in yearly tax ballot measures being pushed on voters by public safety unions. The problem is so far reaching in fact, that The California League of Cities estimates that by 2024, 54 to 63 percent of a city’s public safety payroll will go towards paying pension obligations for retirees. That is nearly two thirds of a payroll going just to pension costs alone. To further demonstrate the issue, the California Pension Tracker states that the market basis pension liability for California taxpayers is $81,634 per household, with the estimated pension liability for California over a trillion dollars.

The problem is – to the layman, pensions don’t sound like an issue. Established with the idea when an employer puts a certain amount in at a given time, the anticipated growth will equal what the employee has been promised by the time they retire. However, when the final number does not add up, the money has to come from somewhere. Meaning other facets of county budgets, like health care and education, are slashed to pay for these overreaching promises. California has no shortage of issues that need to be tackled, such as the state’s growing homelessness and food insecurity problem, but with a chunk of county budgets going towards firefighter pensions, those issues get pushed down the priority list.

While we are already being forced to pay for inflated firefighter pensions, counties are also trying to turn to a new model, known as the Alliance Model, that gives fire departments the decision-making power of a full EMS agency, without the oversight that typically comes along with it. Basically, they get all the power, without any of the accountability. As pointed out by a recent Reason Foundation paper, one of the biggest flaws of this model is its blatant favoritism to fire departments, who are trying to take over the ambulance departments. The paper lays out, “The combination of focusing on perceived positives of the model while ignoring downsides produce poor analyses that fire departments have used as touchstones in justifying their pursuit of a flawed governance model that undoubtedly benefits fire departments and their employee associations greatly, but at the expense of competition and transparency.”

For all the good California offers – beautiful coastlines, enviable weather, delicious food – there is a lot we need to work on. Public fire departments and firefighter unions are not-so-subtly trying to game a system only to pad their own wallets. They are deceiving taxpayers, ultimately resulting in higher taxes, bankrupt counties, and unresolved issues. We cannot solve a problem with another problem. It is time to reevaluate and reform these exorbitant public safety pensions.

Originally published by the California Globe. Republished with permission.

2 COMMENTS

  1. Why are we not talking about that elephant in the room?
    Those costs that are rising are not “pension costs” (normal costs for pensions earned this year). Rising costs are the vigorish on all the contributions –not– paid when they were due for the last 12 years.

    Like paying the minimum on a credit card every month. No reasonable amount of pension benefit reductions can correct this.

  2. Thanks for the comment, Stephen. You make a good point. We at Budget & Tax News have been warning the public for years about these insufficient pension contribution requirements based on wildly unrealistic assumptions of return on the investments the pension plans make. Lawmakers get the support of public employee unions and their families while kicking the problem down the road. This author alludes to that in paragraph 4. We will continue to publish articles on this issue and foreground that element of the problem.

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