January 13, 2012 - 2:10 am
Pension obligations are a ticking time bomb for state and local governments already grappling with serious budget challenges. But pension reform continues to move at a glacial pace through the country’s statehouses thanks to the influence of unionized public employees.
So enterprising groups of citizens are exercising their best chance at shrinking unfunded liabilities and saving their governments from insolvency: They’re launching initiative petitions and putting reforms on ballots for voters to decide.
The city of San Diego is about to become ground zero for pension reform, thanks to the qualification of a June ballot question. The question would eliminate pensions for all new city hires except police and put them into a defined-contribution, 401(k)-style savings plan. Supporters say the city would save at least $1.2 billion over 27 years if the question passes.
San Diego currently pours about $230 million of its $1.1 billion operating budget into its bleeding pension plan, an ever-increasing obligation that has driven a decade’s worth of budget cuts. The city can barely fill potholes and keep some libraries and parks open.
Meanwhile, just four months ago, voters in Democrat-dominated Hollywood, Fla., approved sweeping changes to that city’s public employee pensions, reducing benefits, increasing retirement ages and eliminating automatic cost-of-living increases. Residents decided they weren’t willing to pay higher property taxes so their municipal workers could enjoy a better retirement than they could expect themselves.
Nevada’s cities, counties and school districts don’t have their own, separate pension plans. They’re all part of the state Public Employees’ Retirement System, a pension that has unfunded liabilities of between $10 billion and $40 billion, depending on how the risk of its investments is measured. Nevada government workers enjoy some of the country’s most generous retirement benefits. And serious reforms are dead on arrival in the Democrat-controlled Legislature.
How long, then, until Nevada voters consider deciding the issue themselves? If the San Diego proposal succeeds, we might find out sooner rather than later.