Unions’ day of reckoning arrives

As Nevada welcomes a new governor and prepares for the start of the 2011 Legislature, two concepts ought to dominate the political landscape.

No, not tax increases and spending cuts.

Try 401(k) plans and collective bargaining.

Nevada needs to openly discuss instituting the former and outlawing the latter for public employees. And the sooner the better, because when the city of Chicago cries uncle about the spend-a-thon engineered by its union sweethearts, you know a budget apocalypse for cities, counties and states draws nigh.

Consider Wisconsin, a state known for its cheese and loons. Voters there just elected a governor who ran on a platform of ending collective bargaining for public employees -- another sign that the end of the American union gravy train may be at hand.

Weary taxpayers can only hope because right now, as you sip your morning coffee, public pension plans from sea to shining sea are drowning in $3.6 trillion worth of unfunded liabilities.

California, New Jersey, New York and Illinois face crippling financial woes caused in part by runaway public employee benefits that have been promised but can't be paid. Municipal governments everywhere are facing the same fiscal cliff, only some are already at the ledge.

Prichard, Ala., came to the nation's attention when the city stopped sending public employee pension checks. The city had been in dire straits since 2004 and tried to declare Chapter 9 bankruptcy. But a judge and Alabama law said Prichard couldn't. So what happened? Despite the orders of a judge, the laws of arithmetic and the balance sheet could not be suspended, and the city's pension fund ran out of money anyway. Checks to retired Prichard city workers stopped coming.

Consider the irony of that happening in Chicago, too.

This is a city run for decades in the spirit of Boss Tweed and Tammany Hall -- a system that married public employee union bosses with politicians to their mutual benefit and the detriment of the taxpayers who footed the bill. Now Chicago Mayor Richard M. Daley complains about his fellow Democrat, Illinois Gov. Pat Quinn, for imposing "the largest property tax increase in the history" of the city by signing pension overhaul legislation into law.

Quinn's action places "a tremendous burden on Chicago taxpayers" to prop up the pensions of public safety retirees and employees, Daley told the press.

"The direct result of the governor's actions will be a massive property tax hike for Chicago residents of at least $550 million, or about a 60 percent increase in our current property tax levy."

And the people said: "Poor baby."

What were you doing, Boss Daley, when public employee unions ran up the taxpayers' tab with generous salaries, sweetheart benefits and unsustainable retirement packages? You were in full embrace with the cause of the problem you now complain about.

Alarm at the growing costs of public employee benefits -- and putting a real-world cap on them -- is what it's going to take to restore fiscal balance to cities and states across the nation.

It certainly must have been on the mind of Midwesterners in the last election cycle.

As Josh Barro of the Manhattan Institute notes: "In November, Republicans gained control of all levels of government in four large Midwestern states: Ohio, Indiana, Michigan and Wisconsin. And when the newly elected leaders there talk about how they plan to reform state government, they sound an awful lot like New Jersey Gov. Chris Christie (R), placing reforms to employee relations and compensation at the top of their agendas."

All four governors now openly talk about ending collective bargaining for public employees altogether. Fifteen states already do this.

America's leading business publication, The Wall Street Journal, minces no words in explaining why this is the fight of the new decade:

"The ability of public workers to form unions and bargain collectively is a phenomenon of the last century, when state and local governments were relatively small. But it has proven to be a catastrophe for taxpayers, as public unions have used their political clout to negotiate rich deals on wages, pensions and health care. (California Gov.) Jerry Brown greased the wheels for his state's long fiscal decline when he allowed collective bargaining during his first stint in the statehouse in the 1970s."

Gov. Brown 2.0, just sworn in for another stint in the governor's office, bodes ill for our neighbor to the left. But for states with enlightened governors, there is reason to hope for a little sanity in public employee payrolls.

Taxpayers from Elko to Boulder City need Nevada to be one of them.

Sherman Frederick (sfrederick@reviewjournal.com), former publisher of the Las Vegas Review-Journal, writes a column for Stephens Media.