POWIP Piece of Work In Progress

Public unions, pensions, and finance (OH MY!) 14April2011

Sorry for the hiatus. Who knew that quitting a job could be so much work?

Jumping into it:

PUBLIC UNIONS: MAKING FRIENDS AND INFLUENCING PEOPLE

We've seen the good judgment (and pertinence) of unions from Adam's link below, but let's see what happens when they stick to their knitting. They get ideas like this:

The “potential activities” include:

* Target the businesses of legislators in their home districts.
....
* Make phone calls on Parents’ Day. Call parents to tell them how their child is doing and then talk about the budget cuts and invite them to attend the rallies.
....
* Throw monopoly money in the toilet to show that all our money is going down the drain
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* One-day boycott of Microsoft and other corporations that are pushing failed education reform efforts.

* Turn fire/earthquake drill into crisis response drill to the budget cuts (involve students and the community)

* Attempt to close a major artery into town/cities
....
* Dye hair red or wear red wigs

* Homeless encampments of students and teachers as they can afford a place to live
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* Pay for everything with $2 bills to show true impact of teachers

* “Lights Out Day” during the week where educators teach in the dark
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* Work with organization like Ben & Jerry to have them create a labor-union flavored ice cream that can be sold at the rallies and in stores

More great ideas at the link (I pulled out the ones I thought particularly stupid. Yes, call up parents directly after talking about how their particular kid is doing in class and ask them to come to pro-union rallies.... nobody will think there's some implied threat there, will they?)

The biggest issues with the public unions now - in terms of their PR stupidity:
1. You're pissing people off for a variety of reasons (the stupid tactics are part of the reason. Ice cream flavor? Oh, come on.)
2. The people you're pissing off pay your salaries and benefits, dumbasses
3. Part of the "pissing people off" is asking for more money from these pissed-off people. And it's frickin tax time. I am putting off writing some very big checks til tomorrow, and I know that does not put me in a good mood.
4. But there are things more important than money. What super-pisses people off? Targeting their kids.

You may think fear and intimidation works, but Americans don't do fear well. They do do ass-kicking well. Even in California. You are asking for a political beat-down if you guys go after the kids like that. Well, as long as we have the secret ballot. And can keep the fraud down.

Shock: looks like those Wisconsin teachers were doing an illegal sick-out.

FEDERAL

The coming bailout of the U.S. postal service.

Sherrod Brown proposes not letting legislators be eligible for pension benefits til Social Security retirement age. He wants to use it as a cudgel to convince Congress not to raise the SocSec retirement age, but I see it as a first step toward getting rid of politicians' pensions... go for it!

CALIFORNIA

For now, the Orange County sheriff deputies get to hang onto their pension boosts. Enjoy the legal victories while you can. The law can't keep the taxpayers from moving away, and it can't keep the money from running out.

So while a smartass judge noted: “Imprudence, however, is not unconstitutional.” Let me note that a state constitution can't will money into being. So enjoy the cashflow while it exists, guys.

Pension reform proposed in San Francisco. There are competing proposals... maybe one will get through. Of course, the public employee unions are not enjoying a taste of reality, and have fought (successfully) against prior reform attempts. Good luck!

An attempt to say that California's budget woes are not caused by the pensions. Not in the short term, at any rate.

San Diego councilman notes that the pension costs keep going up. Huh. Wonder why that is.

Tit-for-tat: can't have investment managers working for the state who are trying to make public pensions more sane, doncha know. Hey, let's rope in the Koch Brothers somehow!

When the economy was going kerflooey, some California municipalities and counties wasted no time in sweetening pensions. Great timing, guys!

Newport Beach considers firing workers in response to rising pension costs. Costa Mesa has already started sending out the pink slips. Paying for current services or past services - that's the tug-of-war now.

News alert: making public employees contribute to their pensions is cutting their pay! Hey, lady -- increasing tax rates on everyone else to cover pension shortfalls is cutting those people's pay! Ain't it funny how math works?

ILLINOIS

Julie Schmidt and Bill Zettler at Big Government rebut NPR and the Weekly Standard over Illinois pensions. A collection of Bill's articles on pension issues can be found here.

I'm shocked, shocked: Some elected officials in Illinois are really gaming the pension system.

MICHIGAN

They are still debating about taxing pensions. I understand the appeal of the idea, but there's not much keeping retirees in Michigan to begin with (other than said retirees can't sell their houses). Florida and Texas (and Tennessee and Nevada and...) would be beneficiaries to this proposal. I can see Hawaii getting away with it, because at least it's pretty there (but it looks like it won't happen there, either).

Detroit mayor trying to deal with a very bad budget situation. Shows the result of what happens when a local economy craters, and the tax base moves away. Seems the mayor has come to grips with reality, even if the city employees have not.

NEW HAMPSHIRE

Continuing debate on pension reforms. I've been seeing a lot of stories like this, from a town level, to county, to state.... and we'll be seeing this on a federal level with Social Security. But that's for a different post.

NEW JERSEY

Come on, Christie, do you really think you can shame a Democrat from enriching herself from the public till? Of course, one of the reasons he's doing this is one of his own buddies got caught double-dipping.

NEW YORK

Gov. Cuomo says he'll veto pension fatteners...but these union-bribing bills will probably never make it to his desk in the first place. I find it interesting that he felt the need to explicitly promise vetos given that he probably wouldn't have to do it even if he hadn't said anything.

Interesting how Cuomo doesn't get beat up in the press for his anti-union talk the way Christie does. I wonder why that may be....

Public Union kiss-up John Liu (NYC Comptroller, and probable mayoral candidate) claims that NYC pension shortfalls mainly due to poor investment experience. I'll have Monty from AoS explain the situation:

New York City officials: "Apparently, our wildly optimistic rate-of-return calculations are to blame for our pension shortfalls. Not our overly-generous retirement benefit packages!"
Monty: "Well, yeah, but aren't you having to assume these ridiculous rates of return because of these generous benefits you've promised?"
New York City officials: "Shut up-a you face, you!"

And as I've said before in retort to Dean Baker and his ilk: you can keep trying to shift around the blame, but now it's come to the point where we "ain't got the money of" (as my family says). When you don't got the money of, it ends up not mattering how you got that way when you're trying to figure out how to deal with cashflow issues going forward. If the benefits are unaffordable, they will not be continued.

Blame the Wall Street fatcats (mmm, reminds me, I'm gonna have a nice lunch on Stone St. today), but the fatcats don't have enough money to plug your public finance hole.

Oh, wait - I've been inspired!

There's a hole in the budget, dear 'liza, dear 'liza
There's a hole in the budget, dear 'liza, a hole

Tax the rich, tax the rich, dear Henry, dear Henry
Tax the rich, tax the rich, dear Henry, the rich

But they ain't got 'nuff money, dear 'liza, dear 'liza
They ain't got 'nuff money, dear 'liza, now what?

Tax everybody, everybody, dear Henry, dear Henry
Tax everybody, everybody, dear Henry, everyone

But they ain't got 'nuff either, dear 'liza, dear 'liza
there ain't 'nuff money for our goodies, dear 'liza, we're screwed

Maybe 'liza will realize that the goodies ain't gonna be coming. And by "'liza", I mean the Boomers. You guys aren't getting the Medicare coverage your parents got. Suck it. You should've had more kids. And bypassed the whole hippie thing.

Okay, we return from our musical interlude to move on to the next state.

RHODE ISLAND

Town of Warwick starts a pension debate. Union members show up in matching Tshirts. The oh-so-tough reform proposal?

His plan would impose a minimum retirement age on city employees. Police and firefighters would have to be at least 50 years old to retire, and municipal workers at least 59. Currently, city employees can retire at any age as long as they have the requisite number of years of service.

Avedisian’s proposal would also increase the minimum years of service needed for retirement from 20 to 25 for police and firefighters. Municipal employees would need 25 years of service.
....
Avedisian’s proposal would affect only employees hired after July 1, 2012.

I can see why the union would feel threatened. This sounds too reasonable! Heck, the taxpayers may start expecting town employees to wait til they're 65 to retire! The horror!

After adjusting the pension valuation assumptions for a bit more reality, Rhode Island's pension now looks like one of the worst in the country for fundedness. But let's be fair here: they reduced the discount rate from 8.35% to 7.5%, which had to have had a huge impact on the valuation... and we saw recently that Calpers didn't budge from its own discount rate of 7.75%. Many have rates of 8% and higher, and will not change that, because it does make the plan look really really bad. They also changed other assumptions that also made the pension look more expensive.

It's difficult to compare public pensions against each other, not just because you have different benefit designs, but some key assumptions, which really shouldn't differ all that much between plans (such as discount rate), are all over the board across the country. It makes it difficult to say who really has the funding problem.

So, buck up, Rhode Island! Sure, your pension plan is woefully underfunded, but you're probably not really the worst! It's just those other guys have their thumbs on the scale!

More news coverage on the Rhode Island pension funding suckitude from the AP and Bloomberg.