Posted on 09/08/2012 10:05:17 AM PDT by SmithL
Going to work for the government has always come with an ironclad promise: Your pension benefits will be there when you retire.
It's a level of security not found in the private sector, and it's a big reason that government jobs are so prized in Sacramento.
Now, however, the city of Stockton's bankruptcy case and the financial problems of other cities are testing whether that promise can be broken.
Legal battles over this question loom even though the Legislature just approved an overhaul of public retirement plans throughout California. Lawmakers trimmed billions in pension benefits, but mainly at the expense of future workers rather than those already on the payroll.
The debate is about to reach a whole new level.
In Stockton, two bond-insurance companies, in danger of losing millions of dollars in the bankruptcy filing, have launched an assault against the city's pension system. They're demanding that city tax dollars earmarked for CalPERS, the state's massive public pension system, go to them instead – even if it means scaling back retirement benefits for current employees and those who already have retired.
In San Jose and San Diego, voters have taken matters into their own hands, passing ballot initiatives curtailing pension benefits for current and future municipal employees. Unions are suing to overturn the initiatives.
If benefits for current workers and retirees get reduced, it would shatter decades of conventional wisdom, backed by the courts, about the sanctity of public pensions.
(Excerpt) Read more at sacbee.com ...
Regardless of where the courts come down..... if the money ain’t there, the money ain’t there.
The only questions is what goes in the crapper first, if the pensions are inviolate.
He who knows he has enough is rich.
Greedy union bastards.
This should be interesting. In corporation law - Delaware is the place of choice. They have encouraged formation of corporations there and the law has been so intensively litigated and clearly defined that businesses from all over incorporate there to take advantage of the certainty as to the meaning of its corporate law. Likewise, I think CA is going to be where all the new law regarding Chapter 9 is coming from. There have been few Chapter 9’s in history, so there is not that much precedent developed. But CA will change that, with a number of municipalities in, or on their way to Chapter 9. Good job CA!
It would seem that the people of California forgot the lessons of history: when Lenin made promises to the proletariat, he invariably revoked them on his own whim.
Stalin was even worse.
Leftists make bad bedfellows.
Jim Manzi has made that case that millions of people are relying on promises that cannot possibly be kept, either Social Security, Medicare, Government pensions, certain private pensions.
Suppose the bond insurors lose. Wouldn’t that mean that in the future they’ll either (1) refuse to insure the bonds OR (2) just raise the rates incredibly.
The only way to stop this is to have contract negotiations with all "government employees", be they city, state, county, or whatever, done in a PUBLIC forum, with the citizens of those respective entities given full and complete disclosure of the terms of whatever "contracts" are being negotiated.
Those citizens ARE the employers of those "gubmint workers"; therefore, they have every right to know how much money will be taken out of their pockets to pay the wages and benefits of those workers!
bump
A lot of cities are in deep trouble over pension costs. They need to reform pensions for current and future employees, but their pension obligation to current retirees is ironclad.
You wanna bet? Those pension obligations are acts of the state legislature. They most certainly can and will be cut.
You wanna bet? Those pension obligations are acts of the state legislature. They most certainly can and will be cut.
HEH HEH yeah, i wanna bet....pssst winky, in the states there are powers called Courts of Law. Hell in my state the legislature won’t even take the case of currently retired workers to court....because they know whats comin....it’s a concept in American Jurisprudence known as....are ya ready?...Contract Law...I bet eventually there’s enough pressure for them to try.....but we shall see what we shall see.
Now the big one hits. Any future bonds will be put under a microscope and many will fail. That will stop the capital expansion projects say like the California bullet train in the desert. No insurance company will underwrite that mess.
The pensions and life time health care will come under stress and they will have to be reformed. See to increase taxes you need a two third majority of the voters to pass one. No one will vote for an increase like the one Jerry Brown is asking us to do. Sorry Jerry really cut spending and locate all the hidden bank accounts that the state has. Use those monies first before coming to me.
Glad I have a front row seat here to see it collapse.
Oh by the way, the City of Poway floated a
$100,000,000 bond to continue a capitalization program, see schools. Now someone has looked at it. Seems like we get $100,000,000 and make no interest of principle payments for 20 years. It will cost the taxpayers $1,000,000,000 to repay the $100,000,000. Those schools will be destroyed before we pay for them.
Think Poway can go borrow money now?
If the legislature votes to cut salaries and benefits of public sector workers, they’re screwed. It is foolish to think otherwise, IMO.
Since Jerry closed parks in California last time around, citizens raised money to keep some of them open. Guess what? They found over $50,000,000 hidden in park and recreation bank accounts. Jerry you lied to us. We not lying to you. Redo the pensions and salaries because they don't work today.
Add that to the federal debt and unfunded liabilities ($4.2+ trillion in state and $16 trillion fed debt plus $110+ trillion liabilities), it puts the US government debt at 870% of GDP! That doesn't include consumer debt.
67% of state debt tied to pension liabilities, budget reform group says
"Market-valued unfunded public pension liabilities made up 67% of all state debt, according to a report Tuesday by State Budget Solutions, a non-profit organization advocating state budget reform. The group's third annual state debt report, which looked at combined debt and future spending obligations in all 50 states as of Dec. 31, found that $2.8 trillion of the $4.19 trillion total debt total goes toward pension liabilities.
Also see:
State Budget Solutions State Debt Profiles 2012 (spreadsheet)
It's about time. It would be really funny to learn that CalPERS has retirement funds invested in these two bond insurance companies.
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