Finding a pension-reform plan that will work in the long run
I'm a pension-reform advocate. I think the current system is not only bad public policy, but that it's not sustainable in the long run. But I'm not convinced that the plan proposed by Public Defender Jeff Adachi is good public policy, either and I'm not convinced that it works in the long run.
Adachi wants to mandate that city employees pay between 9 percent and 10 percent of their salaries into the city pension fund. He also wants to make employees pay more for dependent health care. He points out that the changes would save the city around $170 million a year.
But what he's proposing is an across-the-board pay cut for city employees on top of the cuts they've already taken in the past several budget cycles and that's a dangerous thing to do in a recession.
Think about it. That $170 million is money that city workers won't be spending buying food, clothes, movie tickets, restaurant meals, or any of the thousands of other things that can help get the economy going again. It won't be a fair pay cut, either. The clerk who makes $40,000 a year will get a $4,000 cut, leaving him or her with just $36,000, while the senior manager who makes $150,000 a year will get hit with the same 10 percent cut, leaving him or her with $135,000 a year. In one case, it's the difference between making rent and not; in the other, it's cutting out some discretionary spending. Even the Internal Revenue Service doesn't operate on that principle.
There's a larger point here, too. I hear from Adachi, and from many others, that when the city is broke, when the pension system can't meet its obligations, then everyone has to give back. Everyone has to take a haircut. Everyone has to share the pain.
But as Robert Cruickshank pointed out on the Calitics blog recently, public employees, and poor people, and middle-class private sector workers, and people who need public services, and kids who go to public schools, and college students ... they've been giving back for years. The rich, the big corporations, the people and institutions that have fared so well under the Bush-era tax cuts ... they haven't given back a dime.
It's true that there's pension abuse, the vast majority of it in the management and public safety areas. There are cops who make too much money anyway, get pay bumps right before they retire, and walk away with 90 percent of their artificially inflated salaries for life. I could see capping pensions for each pay grade, and I could see requiring people who make more than $100,000 a year to contribute more to their pension funds.
But I think it has to be done in combination with new revenue. It has to be done in combination with an acknowledgment that in this budget crisis, some parts of our city, some parts of our society, aren't hurting at all, and are refusing to help out with anyone else's pain. We simply are not sharing the burden equally. And until we can start to change that, I'm not so thrilled with blaming the middle-class city workers for the local budget problem.