The Rollback Begins

Via-IBD


Public Pay And Pensions: Voters across the nation — California included — are signaling an end to the government workers' gravy train. Even the unions may be starting to get the message.

Last week's elections didn't just upend the Democratic Party in Congress. They also delivered a warning to the public-sector unions that form the core of the party's support. In nearly all elections where public pay and benefits were an issue, the voters ruled that the era of ever-richer rewards for government was over: Say goodbye to fat pensions at 55. Get used to living like the rest of us.

We can count one contest in which the unions beat back an attempt to trim public workers' benefits. This was in San Francisco, where voters defeated a measure that would have required city workers to pay more for health care and retirement.

But even in that union-friendly town, the unions didn't win them all. Another proposition, to end automatic pay increases as part of reforming the city's transit system, won handily.

Elsewhere in California, voters in eight cities and counties approved measures to cut public pension benefits. In Illinois, dozens of suburban communities voted for a resolution urging the legislature to lower benefits for new state workers.

Six new governors won on platforms that endorsed the idea of moving toward 401(k)-style plans, in which public workers would contribute to their own retirement and are not guaranteed a pension income. Republicans Brian Sandoval of Nevada, Robert Bentley of Alabama, Bill Haslam of Tennessee and Scott Walker of Wisconsin all supported these "defined contribution" plans, which are the norm in most of the private sector.

Republican Tom Corbett of Pennsylvania and independent Lincoln Chafee of Rhode Island have endorsed hybrid plans combining defined-contribution elements with those of traditional defined-benefit pensions, which guarantee retirement income.

The Pew Center on the States, at its Stateline Web site, summed up last week's voting as "in some ways the first national referendum on the future of public pensions." It was also a referendum on priorities, with the public choosing to put public services before the self-interest of public workers.

Back when the economy was humming and pensions thought they could get 8% annual returns in the stock market forever, unions seemed to have it both ways. They could make their members richer (especially on the retirement end) without the public feeling any pain.

But people now see how untenable this sweet deal was — and how it endangers the very services that the public workers are paid to deliver. The revenue hits taken by states and localities in the Great Recession have forced the issue by requiring real trade-offs: Either cut pay and pensions or have fewer teachers, police and firefighters.