Looking Ahead

LOOKING AHEAD by Wally Dobelis Reforming municipal governance; legislators are deep thinkers In context with AG Andrew Cuomo’s intent to clean up New York’s finances, once he gets elected Governor, the topic of unfunded pensions contracted by NYState’s 10,000 municipalities comes to mind. That is particularly emphasized by today’s story of California’s Bell city, one of the poorest in LA County, where the city manager, his assistant and his police chief earn $787K, 357K and $457K respectively, evidently illegally self-awarded. They are on the way out, and the most poignant gripe comes from a city person who finds it painful to contemplate the $400K lifetime pension the manager will collect, equal to the pay of President Obama. That made me look up an early 2010 NYTimes story about state and city employees not just here but countrywide, who churn up their overtime hours to get extra pensions that can exceed their base pay. NY is getting more careful, after 20 or so years of pension rule excesses: full pensions for public employees are going to be paid only after reaching age 62, according to a law passed in January 2010. This does not affect early retiring; there are specific classes of public safety employees who can retire after 20, others after 30 years of service, and as young as age 55. Some such pension boosters are illegal, the city of Yonkers is cited as particularly flagrant, with policemen able to serve as flagmen at Con Ed construction jobs, and illegally report the time to the NYS Pension Fund. Consequently, the Yonkers expected $1.2M pension burden has grown to nearly $4M. ConEd observes that other municipalities involved actually require that policemen be employed as flagmen; hopefully without involving Pension Fund. It is ironic that the Yonkers remedy, firing 90-odd flagrant cops will only increase the overtime burden for the balance of the cops, and tack on more overtime. It should be recognized that legitimate overtime is a constant fact of life for public safety employees, and without it municipalities cannot exist. NYS Constitution bars public employees from showing the rates at which they can build their pensions. Per NYT, in 2008 average public employee pensions were $18K/yr based on average pay of $45K, compared to private industry’s $8K/yr. pension and $37K/yr pay. . It is noted that years ago government pay was considerably less than private, and pensions were supposed to make up for it, but since the crises and downsizings of the past three decades the balances have changed. Note that the above statistics make no attempts to equate professional requirements, and the low benefits are due to a considerable presence of survivor or spousal pension beneficiaries. Within this pitiful statistical framework there is a spike in the bell-shaped curve that 3,700 public service retirees receive over $100K/yr free of state and local taxes. I feel very callous reporting excess pensions among public employees when the administration’s Special Master of administrative pay for bailouts Kenneth R.Feinberg shows that 17 financial companies IN private industry have spent over $2B on bonuses, also public money, 80% unearned, but that will be addressed as legally unjustified, and collected... The pension extravaganza has a full and total legal basis, and will not be cured by fines and jail terms. How did this all come about? As the AG said (see my last week’s article) NYS legislators were people of honor 30 years ago. But then the ethics slipped, elected officials tasted the sweet awards of public service, and opted to stay at the public trough. That requires votes. A lot of votes come from the public employees, and their cousins and aunts, by the dozens, claiming them was made possible by upping the employees’ benefits (the same game applies to teachers). How? You cannot do it by increasing pay levels that raises protests from taxpayers, but pensions? They will not become payable on my watch, says the wily legislator, who votes accordingly and stays in office forever. Meanwhile state and municipality budget estimates countrywide are above what the taxes will bring, by an amount that varies from a low estimate of $300B to a high of $2.5T – it looks more real when written as $2,500B. Doomsday comes with a whimper, not a bang. The same thinking applies in US Congress, when you consider the miserable chipping away of President Obama’s Environment bill. Do you think that all the Republicans and Blue Dog Democrats voting against any thought of global warming and carbon emissions control are ignoramuses? Not by a long chalk, legislators are smart, and voting against carbon controls will get the ballot approval of global warming deniers and, more importantly, tax protesters. And, besides, the legislators are also guessing that the world will not collapse on their watch and that of their children. A propos the deniers, this spring I met engineers from Ohio and Wisconsin, contractors from Illinois and Maryland, and retired cops from NY who know climate better than the ivory tower scientists and besides, the winter was naturally warm, and now a hot July feeds more denials. Obviously, a dollar saved now is worth more than a life saved a hundred years from now; the present value theorists might actually be able to quantify it. Wally Dobelis thanks The New York Times, Harry Long Walsh, Amy Schoenfeld and Internet sources,