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This week voters in California will make the call on, count ‘em, 140 tax increases, from sales taxes to levies on soda and marijuana. If voters should wonder what is driving these tax increases, Mark Bucher of the California Policy Center has a few suggestions in his October 26 Sacramento Bee article headlined “Big Pensions drive proposed tax increases on Nov. 4 ballots.” And “big” is no exaggeration.
Bucher cites the case of Bruce Malkenhorst, a former city official in Vernon, who last year received a pension of $552,000, more than the salary of the President of the United States. The year before, Malkenhorst was busted for misappropriate use of public funds, as Bucher notes, “causing his pension to be cut to a mere $115,000.” However, Malkenhorst mounted a legal challenge and duly bagged the $552,000. And he says to himself, what a wonderful world. In fact, as Bucher notes, in 2013, a full 99 California retirees received at least half-million-dollar government pension payouts of $500,000, a notable surge from only four in 2012, though four was still too many. A good ballpark figure would be zero.
Bucher also flags, as the major drivers of profligacy and tax increases, the 40,000 California retirees who in 2013 took home pensions greater than $100,000. These include an L.A. librarian bagging $137,000 and a court reporter with $105,000. By Bucher’s count, these pensions mean that California now spends one out of every nine state and local tax dollars on pensions, up from one in 16 tax dollars in 1994. This means that current tax increases “do not increase government services, but simply service government pensions.” Further, “in 2014, California will spend approximately $45 billion on pensions, equaling total state and local welfare spending for the first time. And in the zero-sum game of government spending, an extra dollar spent on pensions means one less spent on welfare, infrastructure or safety – or returned to the taxpayer.”
Bucher calls for proactive pension reform and finds hope in a recent ruling that CalPERS is not above bankruptcy protection, forcing Stockton retirees “to take pension haircuts.” How should other legislators proceed? Says Bucher, “start with Malkenhorst and six-figure pensions for mid-level civil servants.” But don’t stop there. Give every government employee a long-overdue pension haircut. And when they retire, don’t replace them.