Wisconsin Gov. Scott Walker has commanded the headlines this week for trouncing the labor interests that tried to recall him over that state’s collective bargaining reforms. But public-sector unions also took a pounding in a pair of California elections that might have greater national significance than Gov. Walker’s win.
Voters in San Diego, the country’s eighth-largest city, and San Jose, the nation’s 10th-biggest municipality, overwhelmingly passed pension reforms. In conservative San Diego, 66 percent of voters supported Proposition B. In liberal San Jose, meanwhile, 70 percent of voters backed Measure B.
Struggling taxpayers in those cities, tired of seeing their services cut to continue providing municipal workers with retirement benefits that private-sector workers can only dream of, decided to hit the brakes. San Diego’s plan eliminates guaranteed pensions for new hires (except for police officers), putting them in 401(k)-style plans, and it effectively halts the growth of pension benefits promised to current workers. San Jose’s measure was more radical, requiring current workers to contribute up to 16 percent of their salaries to keep their pensions or accept reduced benefits, while promising new hires significantly less retirement income.
In both cities, elected officials had ratcheted up pension benefits without properly funding them. In exchange, the unionized workers who’d ultimately get those early golden parachutes – oftentimes collecting retirement benefits greater than their salaries – provided the ground game to re-elect those officials. But the bills ultimately came due, consuming more than 20 percent of the general fund in both San Diego and San Jose. And that was before the Great Recession hit.
It’s important to note that California, like Wisconsin, is no GOP stronghold. Rhode Island, Massachusetts and New York are three other blue states that have taken up pension reform to shore up their bleeding finances. This is not a partisan issue. It is common sense. Dozens of other states – including Nevada – and scores of local governments face similar problems going forward, with up to $3 trillion in promised pension benefits nationwide that can’t be paid.
Public employee unions in San Diego and San Jose say the pension reforms are illegal, and they have sued to block them. Meantime, other states and cities no longer should be afraid to challenge their bargaining units and take budget-saving compensation reforms to the electorate. Voters aren’t buying the union argument that public-sector largess protects the middle class – in reality, it helps destroy it.