Those of you who have read the occasional scary reports about public pension debt across the United States might appreciate Mark Bucher’s report for Investor’s Business Daily about recent developments on the left coast.
Hold on to your wallets, folks. Without a powerful intervention, California may soon become the first big domino to fall in America’s public pension debacle.
To help prevent catastrophe, the California Public Policy Center (CPPC) has just made public a new database detailing the size and scope of the state’s outsized expenditures on public employees — the largest ever compiled in California. Legislators and voters should take note, because California can’t afford another round of fact-free partisan warfare.
As recently reported in the New York Times, the fate of California cities such as Desert Hot Springs — where civic bankruptcy looms, in large part due to oversized pension payments — is shining a bright light on the detrimental growth of unfunded pension liabilities around the country: For years, municipalities have steadily enhanced promised retirement benefits to public sector workers.
This unsustainable profligacy spans from inland municipalities to the coastal metropolises of Silicon Valley.
All told, California state and local governments face an estimated $655 billion in unfunded pension and health care liabilities.
To address the problem head on, San Jose’s Democratic Mayor Chuck Reed filed the Pension Reform Act of 2014. If approved by voters, the act would provide state and local governments the tools they need to fix California’s public employee retirement plans.
Otherwise, our elected officials will likely steer us toward the same dreaded fate that hit California cities Vallejo and Stockton — which have been forced to impose heavy write-downs on municipal bondholders.
Incredibly, labor unions are pressing municipal officials to defend these unsustainable outlays.