Senator Mike Parry’s bill to shift three percent of the public pension burden from taxpayers to those who receive the benefits is a brilliant approach to addressing one of the state’s biggest fiscal nightmares.
SF 813 reduces the taxpayer contribution for the large state and local retirement plans by three percent of payroll and adds that three percent to the employee contribution. Simple. And when you consider the size of the state and local payroll in Minnesota, the bill would free up tens of millions for the state while allowing cities, counties and school districts to divert three percent of their payroll costs to things like more cops, property tax relief, general maintenance, fixing potholes, and helping kids in the classrooms.
We can balance the budget on the backs of public employees or the taxpayers. It’s your turn, public employees. The Senate bill requires you to pay a bit more now for the benefits you get when you retire. It's a good deal.
The way the game is played now, government employees in Minnesota (as in most states) have got the taxpayers over a barrel. The generous pay and benefits public workers receive during their working years are dictated by two-year contracts. The retirement benefits they receive once they leave government are determined by a formula that is defined in state law.
In other words, if you work for the state or a local unit of government here, you’ve got the best of both worlds – no risk now, no risk later. Because they are enshrined in contracts and statutes it is illegal not to fund these very costly systems, no matter the economic chaos ensuing in the world outside of Governmentville.
For decades the taxpayers have borne the burden of making up the difference when the cost of pay and benefits and retirement plans become unsustainable. And taxpayers can make up the difference in three ways – 1) higher taxes, 2) fewer services or 3) higher taxes and fewer services. It’s not too complicated.
As outlined in a paper by Dr. John C. Hulsman & A. Rem Korteweg, the situation for most Americans is grim: “The human cost of this looming crisis are already apparent. Today, one-third of working age Americans have no personal private retirement savings of any kind. Nearly one-fourth of all American mortgages are underwater, with people owing more on their houses than they are worth. And one-fifth of American wealth (much of it lodged in then stratospheric house prices) was wiped away in the Great Recession. These numbers are the human face of a crisis that portends a structural shift away from western dominance, signaling the birth of a multipolar world.”
The fact that GOP legislators are finally willing to have a go at true pension reform and at making changes to the state’s heretofore sacred PELRA law is encouraging. A quick search of the Revisor of Statutes bill tracking website dredges up eight House GOP and nine Senate GOP bills to reform collective bargaining under MS 179A, the Public Employees Labor Relations Act (PELRA). No doubt there are more, and committees in both chambers have debated – and passed - reform legislation that was unthinkable in previous sessions.
Oh - and get this – there’s also a DFL bill, HF 964 / SF 554, to give legislative staffers collective bargaining “rights.” Just what we need – turn the Statehouse into a union shop. Think of the overtime…