The public pension crisis that threatens to financially bury California municipalities, counties and the state itself has ignited a belated flurry of political vows, rhetoric and a good deal of babble in recent weeks aimed at staving off an economic Katrina.
Meanwhile, billions of dollars in unfunded liabilities for promised public-employee pension plans are pushing dozens of municipalities toward the same fate as the city of Vallejo, which filed for bankruptcy two years ago, overwhelmed by massive public debt in unfunded pension and employee health care obligations.
If you’ve been around for any length of time, you’ve heard and seen half-hearted efforts before simply evaporating when push came to shove, and powerful public employee unions stepped in, causing the errant political leaders to return to the reservation lest they alienate their controlling constituency – those same public employee unions.
However, if there is any redeeming factor in this painful economic tidal wave we’ve all endured, it may be that the true cost of years of nearly unrestrained public-employee pension promises has finally been exposed and the harsh but inevitable day of financial reckoning is closing in on us.
It also may be that an increasingly active business community, and an ever-alarmed electorate, have galvanized and are no longer satisfied with empty talk and promises. Now our political leaders must go head to head with the unions to stop ransoming our fiscal future and fix this crisis of their own making.
That is why the Los Angeles County Business Federation, or BizFed, representing the powerful and united voice of more than 100,000 businesses across Los Angeles County, is issuing a demand for real pension reform. We and the voters will be holding our political officials’ feet to the fire. They – and they alone – are accountable for bringing us to the abyss of insolvency.
BizFed’s board of directors reflects more than 70 countywide business and trade organizations unified in calling for scrapping the current public employee defined-benefits pension system and thereby stopping the hemorrhaging of government.
Instead, BizFed believes government should institute a defined-contribution (401(k)-style) system common to most private-sector pension plans. Further, we should alter the financially unsustainable lifetime health care guarantees for public employee retirees and their families, and institute plans more closely resembling those for retirees in the private sector.
And if there is any doubt about the need for reform, consider:
• For many municipalities and agencies, contribution amounts will soon exceed 40 percent of payroll!
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