The ugliest truth about California’s newest, gimmick-ridden budget, is that it doesn’t address the looming public employee pension issue. Adam Summers, a Reason Foundation policy analyst, gave some figures in the Orange County Register, explaining that these pensions have been “recently pegged at up to roughly $500 billion — roughly $36,000 for every household in California”:
Throw in the $50 billion or so in unfunded retiree health care liabilities, a $10 billion unemployment insurance fund debt, and the state’s $152 billion in general obligation bond debt, and you start to get a fuller sense of the state’s true financial problems.
The current plan to deal with this — reducing pensions for new state hires back to 1999 levels — Summers says was tried before, and failed. And by “failed” I mean revised after the fact and retroactively negated by the state Assembly.
Summers says there’s only one way out:
Politicians can’t continue to merely nibble around the edges of the state’s pension crisis. It’s time to admit that the 401(k)-style retirement plans that are good enough for nearly every private sector worker are going to have to be good enough for state workers, too.
But do politicians have the guts or the principles required? An initiative is needed. No level of government should be allowed to offer any pension not fully invested at the time of wage or salary payment — or promising a specified pay-out.
That would be as revolutionary as the legendary Prop 13.
This is Common Sense. I’m Paul Jacob.