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Thursday, June 23, 2011

Unions and Pensions

The New York Times reports:

Public employee unions are hardly the only group involved in bare-knuckles politics. Businesses lobby fiercely and executives make hefty campaign donations.

But public workers have a unique relationship with elected officials, because government employees are effectively negotiating with bosses whom they can campaign to vote out of office if they don’t get what they want. Private unions, in contrast, don’t usually have the power to fire their members’ employers.


“In my six years in Sacramento, the only time I ever received a phone call in the middle of a vote was when the head of a state labor federation chewed me out because I hadn’t voted yet,” said Joe Nation, a Democrat who served in the California Assembly from 2000 to 2006. “You learned pretty quickly that you don’t want to upset these guys.”


It was informally known among local union leaders as “Operation Domino,” and for years the goal was straightforward: persuade one city to increase salaries and pensions for workers, and then approach neighboring municipalities and argue that if the increases weren’t matched, the city’s police, firefighters or other employees might quit, in large numbers, and go elsewhere.

By the time the dominos made it to Costa Mesa, neighboring areas had already toppled. “The unions would say, ‘Gee, Irvine, Newport, all of these nearby cities, they offer these higher benefits for police and firefighters and it’s a real tight labor market, and if we don’t receive similar benefits, what if we leave and go work there?’ ” said Allan Roeder, Costa Mesa’s city manager for more than two decades, who retired in March with a pension of $190,000 a year.

Then, starting about a decade ago, word began to spread that the Costa Mesa police had more than a dozen vacancies they couldn’t fill. Graffiti became more common. Police representatives warned that gang activity was rising and, without strong benefits, the department couldn’t attract officers.

When Mr. Roeder went to the grocery store, residents asked him why he wasn’t keeping the streets safe.

“When achieving public safety is threatened, law enforcement gets what they want,” he said.

Today, many Costa Mesa police officers and other safety workers are eligible to retire as young as 50 years of age, receiving up to 90 percent of their salaries each year for life.

At what cost?

But now, with the expenses of past promises coming due, the cost of deferred decision-making is mounting. California alone needs to begin devoting an additional $28 billion a year to state and local public pensions to remedy an existing shortfall,according to one nonpartisan study — and nationwide, estimates of such deficits reach into the trillions over the next few decades.

“We had no idea what we were doing,” said Tony Oliveira, who as a supervisor in Kings County, in central California, voted to increase employees’ benefits, and now is on the board of the state’s enormous pension fund. “This was probably the worst public policy decision in the state’s history. But everyone kept saying there was plenty of money. And no one wants to be responsible if all the cops quit to get paid more in the next town.”