To the People

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or TO THE PEOPLE.

Tuesday, May 29, 2007

The Tax Revolt of 2017: Public Sector Unions Versus Taxpayers

In deals that are mainly hidden from public view, elected officials at all levels of government continue to curry political favor and union endorsements by granting public sector unions generous retirement health and pension benefits that far exceed those available to private sector employees and most taxpayers. Younger taxpayers, in fact, typically have no pension or health benefits supplied by their employer.

The Washington Examiner, in an article entitled "Metro gives staff free ride to retirement," reported today that,
Unlike most American workers, Washington Metropolitan Area Transit Authority employees receive handsome pensions without ever contributing a penny to their pension fund. [I would add that most private sector employees don't have pensions at all, never mind not contributing to them.] The annual pension payments, some unusually generous, are funded entirely by Metro riders and taxpayers...

While paying 50 percent more for overtime work is not unusual, Local 689’s contract is remarkable in that it mandates that overtime hours be included in the compensation totals used to calculate an employee’s future pension payments.
The classic rationale for paying public sector employees out-of-market benefits is that they make so much less in salary than their private sector counterparts. But that rationale has been turned on its head.
A recent Examiner report, for example, found that hundreds of hourly Metro employees, including bus drivers and train operators, make six-figure incomes when overtime is included, which is significantly higher than the regional average for the private sector.
This means that metro bus and train drivers make more than the average earner does in the Washington region, which includes 4 of the top ten US counties in terms of income.

Stories like this are cropping up everywhere. Today the WSJ had an op-ed [subscription only] describing not only Texas' huge public retiree obligation but also a move on their part to hide it from the public.
Retiree health benefits amount to an exceptionally cushy deal for America's public-sector workers. Texas, for example, not untypically pays 100% of health insurance premiums for state employees who can retire in their early 50s. Unlike pensions, these other retiree benefits generally are financed on a pay-as-you-go basis.

These benefits impose huge and growing future liabilities on taxpayers -- liabilities that states and localities have long hidden from public view, deceiving citizens about the true costs. And the nation's second largest state is now poised to perpetuate the deceit. Last week the Texas Senate completed passage of a bill that would allow the state and its local governments to avoid funding long-term obligations for retiree health insurance and other non-pension benefits. If Gov. Rick Perry signs the measure, Texas will simply defy a key provision of established government accounting standards. This would be stunning setback for efforts to improve transparency and accountability in government finances around the country.
Ration needs to be infused into this debate. It should be recognized that most American workers and taxpayers, especially younger ones, do not have pensions or lifetime insurance benefits and that government workers ought to be:

1) paid at a fair market rate for their labor, whereby Metro bus drivers with only a high school education would not earn more on average than some of the best educated and highest paid people in the country; and

2) required to contribute to their own pensions and pay a part of their health insurance costs.

That is a minimum and it should probably be much more reality-based. If governments don't do something about these future promises and their hidden costs, we will see a system of haves and have-nots, and the haves will be government employees and everyone else will be footing the bill.

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