Roosting At Home
Legislative slaves of public employee unions...
[Ray Haynes] 2/27/06
through 2002, I was the Vice Chair of the Senate Public Employment
and Retirement Committee. During that time, a number of bills presented
to the committee increased pension and retirement benefits for state and
local government employees. Every single one of these bills were passed
and signed by Governor Davis.
Haynes is an Assembly member representing Riverside
and Temecula. He serves on the Appropriations and
Budget Committees. [go to Assembly Member Haynes website
at California Assembly][go to Haynes index]
At the hearing on each of these bills, the lobbyists for the
government employee unions showed up and begged the committee
members to vote for the bill. In addition, the representative
for the California Public Employee Retirement System (CalPERS)
told the committee that the retirement system could afford the
increases because it had a $60 billion surplus. The surplus was
so big that the state did not have to pay any money to the CalPERS
fund, and CalPERS told us we would never have to pay into the
retirement system ever again, even with the benefit increases.
Of course, the government employee unions control the CalPERS
board. The state was experiencing record budget surpluses, so
everyone thought that the good times would last forever.
I kept trying to
explain to my legislative colleagues that we were being foolish.
No one can increase benefits without some
cost. At some point, I said, these pension chickens were going
to come home to roost in our budget. My colleagues called me
Chicken Little telling me “the sky is not falling.” They
said the pension was sound and the budget could absorb the cost.
The chickens have
come home to roost. The City of San Diego is going bankrupt
from generous pension benefits. Orange County
is talking seriously about filing bankruptcy again to get out
from underneath their pension requirements. The state’s
contribution to CalPERS is estimated to be $3.5 billion this
year, and even higher next year. This is from nothing in 1999.
And this week, the
Legislative Analyst’s Office released
a report that the cost of retiree health benefits will be “in
the range of $40 billion to $70 billion, and perhaps more.” The
report identifies two reasons for this increased cost; (a) increased
health care costs; and (b) legislatively mandated increased health
Health care costs have increased significantly in the last
six years for one reason: legislatively mandated minimum requirements
for health care. From 1999 to 2000, the Legislature passed over
30 different mandates on health insurers, and as a result, costs
increased over 40%.
In addition, the Government Standards Accounting Board (GASB)
passed new rules on how to account for these increases. GASB
statement 45 (GASB 45) increases the information the governments
must report to properly assess their liabilities. No longer can
the government employee unions, and their management allies,
cook the books to understate the liabilities. Once all these
liabilities are reported, the government agency must pay for
all of the costs of those liabilities.
To the state of California,
GASB 45 would require $6 billion in payments, compared to $1
billion today. This is in addition
to the state’s already $2-3 billion increase in pension
costs, and the existing $5 billion structural deficit, the state
is on the brink of a crisis.
I like to use humor
to shed light on the oddities of politics and government. Unfortunately,
this article is not very funny.
We are literally facing a crisis of epic proportions brought
on by this Legislature’s slavish devotion to the demands
of the government employee unions. These gluttons are literally
the fox guarding the chickens, and to mix metaphors, the chickens
have now come home to roost. When this system collapses, people
will wonder how this happened. Now you know that it is coming,
and what caused it. -CRO-
Haynes is a California Assembleyman representing Riverside
and Temecula and frequent contributor to CaliforniaRepublic.org.