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Public Pension Piper Calls Costly Tune for Taxpayers

Wednesday September 11th, 2013   •   Posted by K. Lloyd Billingsley at 10:08am PDT   •  

CalCap_200x200Government profligacy often escapes notice because of its “slow-motion impact,” as a recent Sacramento Bee report on pension payouts confirms. Between 1999 and 2012 average monthly payouts for government retirees doubled and initial payments for one group nearly tripled. For state police and firefighters the average rose from $1,770 to $4,978. California Highway Patrol monthly pension payouts rose from $3,633 to $7,418, and government safety employees from $3,296 to $6,867. For all newly retired pensioners, the Bee notes, the average first-month pension allowance was up nearly 100 percent to $3,025.

This bonanza stems from the days of governor Gray Davis, who squandered a brief budget surplus from the dot-com boom to reward already overpaid and overpensioned government employees. The slow-motion principle allows profligate politicians to delay the negative impact until they are out of office, which is the case for Davis. But as one Sacramento observer noted, the costs are now “coming home to roost,” and taxpayers have to “pay the pension piper.”

In most cases, the financial fortunes of taxpayers have not doubled or tripled since 1999, and neither have their 401Ks and other independent pension systems. The interest rates on their savings accounts and certificates of deposit have not doubled or triple since 1999. Californians attempting to retire on Social Security will find that their initial monthly payout has not doubled or tripled from what it was in 1999. Neither have the financial fortunes of California made great strides since that time.

Despite talk of a recovery, a state auditor’s report pegs California’s net worth at negative $127.2 billion. As a news story on the report helpfully noted, the state has a negative net worth, “largely because it spent more than it received in revenue.” The double and triple pension payouts are evidence of that.

The happy government employee recipients of course argue not only that they deserve every penny but that their pensions are a matter of social justice, and set in stone, whatever the fortunes of the state and its taxpayers. In Washington and Sacramento the ruling class looks out for number one. Taxpayers aren’t even number two.

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September 2013