TRENTON — Local governments and school districts will see their pension bills climb by 8.9 percent next year, according to figures released today by state Department of Treasury.Why should this year be any different? Just don't pay it. It's worked out so well up until now...
The steep rise follows an even bigger 22 percent increase in the local pension bill for 2011. State Treasurer Andrew Sidamon-Eristoff said the increases underscore the need for lawmakers to pass the pension reforms proposed by Gov. Chris Christie.
"Without passage of the governor’s reform package, local taxpayers will put almost $1 billion more into public employee pension funds over the next five years," Sidamon-Eristoff said. "The cost of local pension contributions in 2011 and 2012 illustrates again the high cost of doing nothing about pension and benefit cost inflation."
Let's look at Dean Baker's chart again, shall we?
As Krugman says:
The basic moral is that the official story these days — of years and years of huge giveaways to unions, resulting in gigantic, unpayable debts — is just wrong: to a very large extent, the pension shortfall has emerged just since 2007, thanks to the financial crisis, and even then it’s not nearly as big relative to future state incomes as widely imagined.Baker has more to say here:
This is exactly he reason the promises made to workers and retirees need to be kept. By accepting deferred compensation, public workers have kept taxes low. Abandoning defined-benefit pensions will, in the long run, shift the burden for paying wages away from the market and towards the taxpayer. It's an incredibly short-sighted plan.
And it's probably irreversible. When the word goes out to young people choosing careers that the promises the potential government employer makes to them can be broken at will, they will simply not choose to enter public service. Why accept deferred compensation when it can be taken away at any time?
I've said this before, and I'll keep hammering it home: what Christie, Walker, and the rest are doing is the sort of damage that cannot be undone. They are destroying the teaching corps, and the damage will last far, far beyond their terms. Further, they are abandoning compensation strategies that saved the taxpayer money in the long-term.
It will probably be a good ten years before this starts to hit home. I hope President Palin will have a plan to deal with it.