NEW: Pay soars in the public sector

Oct. 21, 2012

By Steven Greenhut

STOCKTON — Workers for the city of Stockton who attended the unveiling Wednesday night of a new report detailing trends in public-employee compensation in California complained about cuts in their compensation packages that are causing hardship for them and their city.

But the report, prepared on behalf of the Howard Jarvis Taxpayers Foundation and released at a meeting of the San Joaquin County Taxpayers Association, left me searching for the world’s smallest violin — that metaphorical instrument I play whenever my kids, or anyone else, starts whining about something that’s largely their own fault.

Stockton is bankrupt, following more than a decade of Bacchanalian feasting on taxpayer dollars, including a lifetime medical benefit bestowed on city employees and a most-generous “3 percent at 50″ pension plan for its highly paid public safety workers.

The city burned through its pension-obligation bonds — the equivalent of a family taking out a loan to pay the mortgage — and is now trying to stiff its bondholders in bankruptcy. There was no obvious complaint by city unions or employees during the tax feast, but now that they are facing “cuts” — some real, but others that are merely rollbacks in expected raises and limits on special-pay gimmicks — they and their members are playing the victims.

But the numbers tell the story.

Consider this nugget from the blandly titled study, “California State Employee Compensation Trends,” prepared by Steven B. Frates of the Center for Government Analysis: “Total expenditures by the state government of California to finance salaries and pension benefits for state government employees increased almost three times as fast (29 percent) as the per capital personal income of all Californians (9.8 percent) from 2005-10.”

As Frates put it, in plain English: “They [public employees] were getting richer three times faster than the general population.”

Tax increase

Californians are stuck watching those dreadful union-financed campaign TV ads supporting Proposition 30, which would push our highest income-tax rates to the stratosphere and boost sales taxes. The main rationale for high taxes, we’re told, is that California is slashing public school funding and laying off teachers.

But if the raises and benefit boosts granted the state’s public employees from 2005-10 had been merely at the 9.8 percent rate of income growth experienced by the rest of us, the state government would have saved $2.1 billion in 2010 alone — enough to pay for nearly 25,000 new teachers, more than the number that have been laid off.

We’ve heard Gov. Jerry Brown and the Legislature’s Democratic majority bemoan draconian cuts in government. But even in the thick of the financial mess, state government has been hiring. The number of state government employees increased 5 percent during 2005-10, which is slightly higher than the job-growth rate in the general population.

State Sen. Mimi Walters, R-Laguna Niguel, kicked off Wednesday’s program with an under-the-Capitol-dome look at the state’s efforts at pension reform.

She confirmed what this column and others have been saying. The governor announced a 12-point pension-reform plan in 2011 but did nothing to promote it. After Republicans offered legislation advancing the Democratic governor’s pension reforms, the governor’s fellow party members refused to give it a hearing.

On the last day of session, the Democrats cobbled together something that Walters calls “pension change” rather than “pension reform” given that it does little, mostly applies to future workers and is not a constitutional change — meaning that future legislators can easily kill these modest changes. It does nothing about the unfunded health care promises of the sort that sent Stockton into the poorhouse.

The state’s leaders view pension reform as public relations to convince Californians that they are “doing something” so that voters are more willing to approve yet another tax hike.

Pension problem

But the compensation report showcases the reality of the pension problem. During 2005-10, the growth in pension expenses soared 45 percent for all categories of state government employees. The cost of pensions for public-safety workers increased 94 percent. Figures for employees of local governments no doubt are similar to this state data.

The state data is two years old, so the situation surely has worsened, but the California Public Employees’ Retirement System likes to stonewall and delay. As the report noted, “CalPERS’ tardiness in posting relevant data in a timely manner is unseemly in an open democratic society.”

Everything about this pension mess is unseemly, indeed.

Those of us who oppose tax increases know how the government spends money. This data on pay and pensions for public employees reveals, as Frates said, that the government’s priority has not been providing better services, but boosting salary and benefits for those who work for government.

What will happen if California voters approve Prop. 30? Check out the many bills that moved through the Legislature this session, as legislators crafted new proposed programs and benefit increases for their public-employee constituents.

Before the Wednesday presentation, I gave Frates a tour of central Stockton. We drove by the impressive port, on the edge of the Sacramento Delta, past the Ivy League-reminiscent campus of the University of the Pacific, through the leafy old neighborhoods near Victory Park, and around the mostly vacant downtown, with its restored Fox Theater and historic buildings. It’s a beautiful old city, but Frates noted the decrepit situation: pothole-pocked streets, litter, old shopping carts, graffiti and scary characters hanging out in the parks and on street corners.

The purpose of government is to provide services to the public, not to enrich the people who work for it. The compensation report, and the conditions in the city where it was released, remind us that if elected officials focus on the latter, we get far less of the former.

Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. Write to him at: [email protected].