Punch line: The pension liability created by lucrative union contracts was no problem … until folks started to retire … and live a lot longer than expected.
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Excerpted from WSJ: Public Employee Unions Are Sinking California, Jan,22, 2010
Months after closing its last budget gap, the Golden State’s $83 billion budget is $20 billion in the red.
“This year alone, $3 billion was diverted to union pension costs from other programs.”
To balance the budget, California needs to take on its public employee unions.
Approximately 85% of the state’s 235,000 employees (not including higher education employees) are unionized.
Over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period.
There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year.
Many of these retirees get a pension that equals 90% of their final year’s pay. The pensions for these (and all other retirees) increase each year with inflation and are guaranteed by taxpayers forever—regardless of what happens in the economy or whether the state’s pensions funds have been fully funded (which they haven’t been).
Note: Many of the retirees are former police officers, firefighters, and prison guards who can retire at age 50 with full benefits.
Full article:
http://online.wsj.com/article/SB10001424052748703699204575017182296077118.html?mod=djemEditorialPage
The Homa Files 
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