Steve (Editor), I’m passing along my op-ed below that is running in today’s UT San Diego-
UT San Diego – March 13, 2015
-By Carl DeMaio
If you listen to the happy talk coming out of Sacramento these days, there’s nothing wrong with our state government that a few tax and fee increases can’t solve.
Wasteful spending? It’s all been reformed! Just give us more money, they say, and we’ll fix your roads and cut your tuition.
We have heard this before, most recently in 2012 when state politicians last waged a successful campaign to pass Prop 30 to raise taxes “temporarily.” Back then they also promised to reform wasteful pensions and put the money into better services.
So what really happened?
In 2012 I helped establish a project at the Reason Foundation to serve as a watchdog of state spending. In a report being released today, Reason concludes that California faces a massive pension crisis that is consuming more and more tax revenue. On top of that, the report uncovers a multitude of ways government officials are weakening or flat-out ignoring the reforms promised in 2012.
Analysis of state and local budgets since 2012 show rising salary and pension costs for state and local government workers have outpaced the $13 billion and counting in new tax revenues generated by Prop 30. In fact, many school districts, including our own local San Diego Unified, caved into the demands of government union bosses and used Prop 30 money to give salary and benefit increases.
Not surprisingly, Reason concludes that Sacramento reforms will produce only “meager” savings and will do little to address California’s growing pension crisis. The report concludes “it will take years, or even decades, before the (reform) provisions have any meaningful impact on the unfunded liabilities” facing California.
Even if you buy the rosiest scenario offered by government officials, California taxpayers now face at least $150 billion in debt for government pensions – with the real number likely to be closer to $500 billion.
Pension costs for local governments will increase by at least 50% in the next five years. The forecast is even worse for our schools, where pension costs are expected to double!
That’s not all. Taxpayers also face $70-100 billion worth of debt for retiree health care – and not a single penny has been set aside to deal with this growing liability. If state government were to start making the required payments for retiree health care that number would top $3 billion a year alone for this expense.
As these costs increase, not a penny will be left for paving roads or reducing class sizes. To the contrary, services will be cut and tax and fee revenues diverted to cover growing pension payouts for government workers.
It gets worse. Ever hear about the Los Angeles firefighter who cashed over $900,000 in government pension checks in one year? Or the San Diego city librarian drawing a $235,000 annual pension?
The Reason report finds the abuses that allowed these outrageous payouts are still going on throughout the state.
For example the study reveals state officials are still stretching definitions to spike pensions. While state pensions were supposed to be calculated on base salary alone, just last year, the union-dominated state pension board grandfathered in all kinds of add-on and special bonus pays into pension calculations.
While reforms were supposed to be imposed on all “new” employees, state officials have creatively defined “new” employees to grandfather in anyone who has ever held a government job – even if it was 20 years ago!
The report also uncovered that state officials are redefining a variety of government jobs as related to “public safety” so those individuals will receive a higher pension calculation that regular blue or white-collar government jobs.
Since 2000 the number of government positions that have been classified as “safety” has spiked a whopping 86% – and that does not include even one firefighter or police officer. The California Union of Safety Employees has now grown to include billboard inspectors, DMV employees, lab technicians, smog-check employees, and even milk inspectors!
As Sacramento politicians gear up to place new tax hike measures on the 2016 ballot and make more promises of reform, it is important that voters realize it is all a smokescreen.
I’m part of a bipartisan group of reformers who are working to give voters an alternative to tax increases in 2016 by placing a serious pension reform measure on the ballot. The Reason study being released today only reinforces the importance of that effort.
Carl DeMaio is chairman of Reform California.