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Cities, States Press Unions To Cut Costs

From the Wall Street Journal:

Los Angeles Mayor Antonio Villaraigosa, right, and girlfriend Lu Parker arrive at the 82nd Academy Awards Sunday, March 7, 2010.

Cash-Poor Cities Take On Unions


APRIL 1, 2010

LOS ANGELES—Mayor Antonio Villaraigosa once organized for a teacher’s union here, and later ran a branch of the American Federation of Government Employees. That makes him an unlikely advocate for cutting the benefits of the city’s workers.

But with the city facing a budget deficit that could drain its reserves by summer, Mayor Villaraigosa wants to re-open contract talks with 45,000 cops, firefighters, librarians and other city employees in hopes of persuading them to contribute more to their pensions and health-care costs. His deputy chief of staff, Matt Szabo, puts it bluntly: "Unions have priced themselves out of a job."

Nationwide, politicians looking for budget cuts are confronting politically powerful unions that represent state and local government employees—15% of U.S. workers and organized labor’s biggest stronghold.

In Memphis, the city’s health-care committee recently recommended raising current and retired employees’ health-insurance premiums by as much as 15%. And Toledo’s city council last week wrung $3.1 million in concessions from its firefighters’ union as part of a measure to close its budget gap.

Similar things are happening at the state level. Over the past two years, 17 states have cut benefits for employees or increased the amount that individuals must contribute to their pension plans. Three of those states—Kentucky, Texas and Vermont—did both, according to the Pew Center on the States, a public-policy think tank.

At the heart of this fight is an unbalanced equation: The economy is shrinking cities’ and states’ tax income as their pension and health-care costs have soared. As a result, some governments are diverting money from services to cover benefits, or raising taxes and fees. That doesn’t sit well with some taxpayers—many frustrated at seeing their own benefits being cut by private-sector employers…

It is tough to compare government pay to private-sector pay because many government jobs—firefighters, police officers—don’t have private counterparts. But, on average, government workers make more in wages and benefits. In December, state and local governments spent an average of $39.60 in wages and benefits per hour worked on their employees, versus an average $27.42 for private employers, the Labor Department said.

The fight over benefits represents a defining moment for public employees and their unions. Government is by far the most unionized sector of the work force, and among the few places left where blue-collar workers can retire with traditional lifetime pensions. In 2009, the nation’s 7.9 million unionized government workers eclipsed the number of private-sector union members for the first time since the Labor Department began keeping track in 1983

Many private-company workers have seen their retirement accounts shrivel, while public-sector benefits have been relatively unscathed. Defined-contribution plans such as 401(k)s had $3.33 trillion in assets at the end of 2009, down 4% from $3.48 trillion in 2006, according to the Federal Reserve. Such accounts have lost value even though companies and workers contributed $100 billion over that period…

Virtually all full-time state- and local-government employees have access to retirement plans, and most are employer-funded. By contrast, only three-quarters of full-time workers in the private sector have access to retirement benefits

At the root of governments’ problems today are promises made in past decades. As a group, state and local governments have promised an estimated $3.35 trillion in pension and health-care benefits to be paid over the next three decades, but are estimated to have 70% of the money to cover those payments, according to the Pew Center on the States. Pension and health costs can consume 20% of city and state budgets.

California offers a view of the fallout. The state’s largest pension fund, the California Public Employees’ Retirement System, known as Calpers, is estimated to be only 57% to 65% funded

Of course none of this is really news.

And this is why the union thugs are teaming up with the CPUSA and the rest of the hardcore left to try to prevent any reduction of their ‘Cadillac’ lifestyles.

Lifestyles paid for by the lowly private sector taxpayers.

This article was posted by Steve on Thursday, April 1st, 2010. Comments are currently closed.

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