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Public Employee Pensions: Taxpayers Can't Get a Break

April 12, 2015 - 6:00pm

When will Florida's elected politicians get the gumption to do something about public employee pensions that are eating the taxpayers alive?

True, it is not confined to Florida. It is happening all across the nation at every level of government, bankrupting cities in mismanaged places such as California. By some estimates it is a trillion-dollar hit on the taxpayers.

In many local government political races such as the current mayor's race in Jacksonville the pension problem becomes a campaign issue. But no matter who wins, nothing much is done.

(Jacksonville's pension plans have an unfunded liability of more than $2.5 billion.)

Many of the politicians who brought this about are no longer in office. They traded the benefits for votes, earned their own benefits during their years in office and moved on, leaving future taxpayers stuck with the tab.

We are the future taxpayers.

Term limits make the problems worse. With only an eight-year horizon, politicians are quick to hike benefits, get re-elected and get out before the bill comes due.

In many cities, the cost of retired employees is more than the cost of those who are working.
Perhaps, in some dim past, public employee benefits could have been justified because salaries were low.

But after gaining the lucrative fringe benefits, public employees then began demanding and getting huge pay raises.

The root of the problem is that public employee unions are among the most powerful special interests.

Arguably, public employees should not even be allowed to engage in collective bargaining because they don't bargain with the people paying them. Instead, they bargain with politicians and bureaucrats who tremble at the voting bloc power of public employees.

This is not a new problem. Think tanks and watchdog organizations such as Florida Tax Watch, James Madison Institute and the Leroy Collins Institute have detailed the problem, warned of the danger and urged action to head off a crisis.

In 2011, the Collins Institute said ignoring the warning signs will only make the journey longer and more difficult. Yet, the warning signs largely were ignored.

There is a reform bill in the Legislature this year, but it actually raises benefits for police and fire personnel. Difficult to see how that helps.

At the heart of the problem is the fact that public employees usually get defined benefit pensions, which means they are guaranteed a certain amount upon retirement whether their investment produces that amount or not. In the private sector, most employees contribute a certain amount, which is matched by employers, and they reap what the market delivers.

Politicians resist efforts to convert the public pension plans to rational investment vehicles.

Public employees generally get guaranteed health benefits, and that cost is soaring also. Local plans in Florida are $6.5 billion short in health benefits, not counting their $2 billion share of the state government's plan, according to the Collins Institute.

So, the problem compounds, the politicians talk and taxpayers wait for the inevitable bath.

Lloyd Brown was in the newspaper business nearly 50 years, beginning as a copy boy and retiring as editorial page editor of the Florida Times-Union in Jacksonville. After retirement he served as a policy analyst for Florida Gov. Jeb Bush.

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