The Union-Driven Crisis That Could Be Coming to a City Near You
Stephen Moore / @StephenMoore / January 11, 2015
For “Outrageous Government Scam of 2014,” it’s hard to compete with the news of the supersized public employee pensions in California. If you haven’t already heard: In 2013, an assistant fire chief in Southern California collected a $983,319 pension. A police captain in Los Angeles received nearly $753,861.
Talk about a golden parachute. And the report on Golden State government pensions contains a list of hundreds of “public servants” who have hit the jackpot with annual pensions of a half million dollars a year. It’s like they’re playing the game “Who Wants to Be a Millionaire?” with taxpayer money.
By some estimates, the unfunded public-sector pension liabilities in California have eclipsed $750 billion, which means in a few years residents will be paying their already-highest-in-the-nation income and sales taxes not for roads, bridges, schools and public safety, but for retired employees living like Daddy Warbucks.
This same scandal – only on a slightly smaller scale – is happening in most states. The crisis dates back 20 to 30 years ago, when public employee unions negotiated fat pension deals with state and local politicians that were like ticking time bombs in municipal budgets. The politicians who bought union votes didn’t care much. They’d be long gone when these grenades detonated, and the fiscal carnage began.
Americans know instinctively that this is no way to run a city or state, and that the enormous pensions border on larceny from public treasuries. This will eventually cause rip roaring problems for state and local budgets. But now we have a story from middle America of what happens when the crisis hits a financial boiling point. Look no further than Scranton, Pa.
Scranton is a middle-class, blue-collar town of 76,000 with severe financial problems. The city recently raised its property taxes for 2014 by more than 50 percent, and those taxes are expected to rise by another 20 percent in 2015. The city had to also raise various fees, such as the charge for garbage collection, by two-thirds. It’s becoming a tax hell.
These taxpayer costs are skyrocketing because the city’s auditors calculate that the police and fire pension funds will be completely depleted in three to five years. The local Times-Tribune newspaper reported last week that “pensions increased by as much as 80 percent” after a court order in 2011 awarded millions of dollars of added pensions to firefighters and police officers.
This is a town that has already been struggling for years to pay its bills. The Times-Tribune reports: “The increased pensions come at a time when Scranton, in distressed status since 1992, is struggling to survive [and faces] a $20 million deficit.” City officials admit that to pay these lucrative pensions will mean less money for school children, public safety and infrastructure needs.
Finances are so tight in this town that, late last year, the city auditor put out an advisory memo to city agencies: “Only in the event of an extreme emergency can a purchase be made. … This is a serious matter and your cooperation is expected.”
So, now, homeowners are getting squeezed on basic city services as they pay ever escalating property taxes. What a deal. Don’t be surprised as more leave Scranton, further depleting the tax base. And who would want to move there now?
When the mayor requested that the unions help keep the city afloat by renegotiating these soaring pension costs, the answer from these militant “public service” union leaders was, Hell no.
One option is for Scranton to take the Detroit route and declare bankruptcy. This is also what several California cities – such San Bernardino and Stockton – have had to do.
The California Policy Center notes that this option has the virtue of “forcing the unions to renegotiate and take a haircut.” If that doesn’t happen, cities like Scranton, and many more working-class towns, will continue to raise taxes at a time when families are already walking a financial tight rope.
The Left loves to talk about “fairness” and “inequality,” but where the inequities really exist are in towns like Scranton. Middle-class private-sector workers pay higher and higher taxes to fund public-sector pensions that, as the Manhattan Institute has shown, are often twice as generous as what most workers will receive themselves. The money for supersized pensions isn’t going to come from millionaires and billionaires like Bill Gates or Warren Buffett. It is coming right out of the paychecks of working-class America.
The crisis isn’t going away. Nationwide, public employee pensions are running $1 trillion to $5 trillion in the red, depending on the rate of return expected on stocks and bonds. This could be the next housing bubble to burst. Some states like Utah have smartly moved to head off this crisis by closing down open-ended pensions and putting public sector union members in 401(k) plans that won’t bankrupt the state or municipalities. The unions are fighting this reform everywhere.
If something isn’t done quickly, the crisis in Scranton will soon be coming to a town near you.
Originally appeared in the Orange County Register.
Here we go again ! Now the the posters will dazzle use with all the figures.
Great news paper.
OC Register Shareholders Claim Newspaper is “Insolvent,” Demand Judge Place it In Receivership
This is no longer news it is becoming an everyday problem across the US, the state of NJ is no better when you have a do nothing governor who continues to kick the can down the road.
Unsustainable benefits + greedy unions = changes in bankruptcy laws are coming because Detroit, Sacremento, Orange County, etc, were just the beginning… Now all the posters will dazzle us with how thier gold plated pensions are “constructionally protected”. Good luck with that in a bankruptcy court circa 2030.
I guess #1 just doesn’t care that states like California, Illinois and New Jersey are technically insolvent, with unfunded liabilities that are multiples of their assets, and also multiples of their annual state tax revenues (4X in the case of NJ). Do you carry debt like that in your house #1? Why should the rest of us live in debt up to our eyeballs like you just because you are so irresponsible?
If you want to worry about a financial crisis try looking the NATIONAL Debt….Currently, with the low interest rates we have today, EVERY American is over $56,000 in debt.
When the nation goes bankrupt from this 18 Trillion dollar debt the financial crash that follows will make the states problems look as big as a BB in an empty train box car.
18
If you don’t believe me that we are heading toward a NATIONAL financial crash check out this site
https://www.usdebtclock.org/
plenty of money out there for this.
POLITICO’s list of Top 100 donors of disclosed money tilts leftward
Clock can make one dizzy or cross-eyed.
this is why inflation will come…that will take care of those pensions…
inflation would also solve housing prices.
the problem is where can we find some inflation with oil prices so low. We are desperate for a nice dose of 10 years of 3% inflation. It would solve most of our domestic economic issues.
Not coming when commodity prices like oil, coal and nat gas are so low… great for consumers, who can borrow cheap, and also great for those on fixed incomes… we are Japan
“this is why inflation will come…that will take care of those pensions… ” And you trading commissions.
the police and fire dept’s in this state are making the rest of the workers in the state look bad. we in the office are not getting big fat pay out’s like them. so this sort of thing is not all workers. you never hear about the office girl or the garbage worker getting things that the fire and police.
Thats because your in the nice warm office playing on your computer not working. 9-5 no weekends and all state holidays off. Police pic up garbage too.
Who forced you to take the test?
Don’t whine about your 3 day workweek
No one forced me to take the test but don’t be jealous because the job was below you at the time and you did take the test. No one is whine. There is no police force that work a 3 day work week Stop you whining and lying.
Notice nothing said about teachers or fireman. 16 must have gotten a ticket and never got over it. When they went to court they must have brought mom and dad with them to tell the judge they were not guilty.
No they didn’t take the test because their afraid of the dark.
New Jersey Civil Service Commission Job Announcements
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Symbol: S9999R
Title: LAW ENFORCEMENT SERIES
Issue Date: 06/04/2013 Closing Date: 09/04/2013
Jurisdiction: STATE Salary: $0.00 Per Year
Num. of Positions: Vacancies Anticipated Workweek: 40 Hours per week
Application Fee: $35.00
Open to Residents of:
New Jersey
Requirements:
Candidates interested in employment for any of the titles within the 2013 LEE announcement must submit a LEE application and related fees. Candidates who took the 2013 State Correction Officer Recruit exam and apply for any title within the 2013 LEE announcement will NOT be scheduled to take the LEE exam. Candidates who took the 2013 State Correction Officer Recruit examination will automatically have their score applied to all titles for which they apply as part of the 2013 LEE announcement, when that eligible pool becomes active.
Before proceeding, you MUST Click here and read the 2013 Law Enforcement Examination Fact Sheet.
1. Applicants must be citizens of the United States as of September 4, 2013.
2. Where hiring preferences apply, applicants must meet the residency requirements of the appointing jurisdiction as of September 4, 2013 and may be required to maintain continuous residency in that jurisdiction up to and including the date of appointment.
3. Applicants must be high school or vocational high school graduates, or possess an approved High School Equivalency Certificate by September 4, 2013.
4. Applicants must be at least 18 years of age as of September 4, 2013. Applicants for Municipal Police Officer positions cannot be over 35 years of age (one is considered over 35 on the day after his/her 35th birthday) as of September 4, 2013, unless they meet the exceptions in “Maximum hiring age requirement for Municipal Police Officer”. NOTE: The age 35 maximum hiring requirement applies only to Municipal Police Officer and its bilingual titles.
5. Appointees will be required to possess a driver’s license valid in New Jersey only if the operation of a vehicle, rather than employee mobility, is necessary to perform the essential duties of the position.
6. Appointees may be required to pass thorough medical and drug screening, and psychological/psychiatric examinations. Failure of any of these is cause for removal from that title area.
NOTE: Appointees will be required to successfully complete a training program mandated by the NJ Police Training Commission. This training must be completed prior to enrollment in the Police and Fire Retirement System.
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Above is the info for employment. I recommend that you stop whining and take the test to make the big money.
This is the same guy who complains about Police and Firefighters. He goes on and on about how we should have a Volunteer Fire Department, but when you ask him if he has his application or he is a Volunteer all you hear is crickets!
Must be that that dirty hard work is not for Mr. I hate Unions, and I am above that, but it’s good for the little people.
Amazing #22 how your disdain for taxpayers and for private citizens has warped your world view. Mr. I hate taxpayers. When you were a cop or FF you probably hated the citizens you’d sworn to serve and protect, it’s pretty obvious from your posts. All you want to do is deflect any attention away from the real issues. You’d rather talk about utility bills than the big costs – pensions, health care and wages. It proves you’re nothing more than a union hack, trolling blogs to try and discredit any view that questions police & fire wages, pensions and healthcare. You also insult all volunteer FFs.
union s are hear to stay.
Anonymous said,
Amazing #22 how your disdain for taxpayers and for private citizens has warped your world view. Mr. I hate taxpayers. When you were a cop or FF you probably hated the citizens you’d sworn to serve and protect,
You appear a bit confused Mr. Hate Police and Firefighters. Let me help you focus a bit better.
I do NOT have disdain for taxpayers or private citizens.
I DO have distain for you and only you since you are the one constantly attacking and belittling Police and Firefighters.
Got it now Mr. I hate Police and Firefighters? Good!
Just ignore them, all they care about is deflecting attention away from the real issues and trying to discredit non-union approved views. It’s straight from the union playbook. They have no interest in making NJ’s economy better, they only care about lining their pockets no matter what the cost to the rest of us. Case in point above – there is no belitting of police & firefighters, only belittling of the cost of their pension and healthcare benefits. But #25 has warped that into “attacking and belittling Police & Forefighters” which is a statement he couldn’t prove in a court of law when he was being sued for character defamation. He’d better watch his posts. Got it?
You mean public sector unions – the private sector figured out the scam long ago. The public sector unions are here to stay and that’s why businesses and people are leaving and why NJ’s economy ranks right near the bottom despite the highest local tax rates. That’s “Jersey Strong”.