Public Pensions, Once Off Limits, Face Budget Cuts

Posted by Kendall Harmon

Conventional wisdom and the laws and constitutions of many states have long held that the pensions being earned by current government workers are untouchable. But as the fiscal crisis has lingered, officials in strapped states from California to Illinois have begun to take a second look, to see whether there might be loopholes allowing them to cut the pension benefits of current employees. Now the move in Detroit — made possible, lawyers said, because Michigan’s constitutional protections are weaker — could spur other places to try to follow suit.

“These things do tend to be herd-oriented,” said Sylvester J. Schieber, an economist and consultant who studies pensions.

The mayors of some hard-hit cities have said that the high costs of pensions have forced them to lay off workers: Oakland, Calif., laid off one-tenth of its police force last year after failing to win concessions on pension costs.

Elsewhere there is pension envy: some private sector workers, who have learned the hard way that their companies can freeze or reduce their pensions, resent that the pensions of public workers enjoy stronger legal protections. But government workers, many of whom were recruited with the promise of good benefits and pensions, say that it would be unfair — and in many cases, very likely illegal — to change the rules in the middle of the game.

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Posted April 26, 2011 at 6:20 am [Printer Friendly] [Print w/ comments]

1. John Wilkins wrote:

Essentially this is raising taxes on the middle class; and dishonoring previous agreements.  Perhaps necessary in some cases.  Meanwhile, we offer more tax-cuts for the prosperous and honor their bonuses for wrecking the economy.

April 26, 6:18 pm | [comment link]
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