Saturday, February 16, 2013

Connecticut Snow Job


A local newspaper recently lauded the state and municipal workers who participated in the snow removal after the recent mammoth storm here in Connecticut. The paper commented that people should remember their heroic efforts whenever they think of complaining about the compensation and benefits of these and all public service workers.

I’ll go one step further and say that not only should public service workers be adequately compensated but also that there should be more policemen, firemen, teachers, and snow removal teams on the state and municipal payrolls. The fact that state and municipal services are under-staffed can be directly related to the overly generous benefit packages that have been negotiated over the past few decades.

For example, when a fireman in the town of Fairfield retires, his pension benefit will be 80% of his final year’s pay. So if his final year’s pay was $100000, his pension will be $80000 per year for the rest of his life even if he retires as early as age 55. In other words, he collects $80000 for not working while his replacement in the same job gets only $100000 for doing the actual work. There are thousands of state and municipal employees in Connecticut whose pensions are greater than the salaries of the young workers who have been hired to replace them.

Some will say that the fireman has paid into his pension over his working career but there is no way that his own contributions would have provided the amount needed to provide an annual income of $80000. At 4% interest it would take $2 million dollars to provide $80000 per year. Both the state and municipal governments have to provide for the cost of these pensions every year and they are squeezing the public coffers so dry that either new workers are underpaid, or even sacrificed when budget cuts have to be made. 

I am not suggesting that workers be deprived of their pensions but only that these pension benefits are overly generous. Who in the private sector can expect to retire on 80% of their highest year’s salary, For most of us Social Security benefits are based on our average pay over 30 years. A private sector employee earning $100000 can only expect to receive about $30000 per year from Social Security, and will have to wait until age 67 to collect.

These overly generous pensions are stifling government at every level. The Postal Service just announced that it will eliminate Saturday delivery, but if it weren’t for unfunded pension obligations the Postal Service would be solvent. Cities in California are going into bankruptcy because of unfunded pension liabilities. Here in Connecticut state aid to municipalities is being cut but the Governor has resisted any attempt to reform the Pension system.

It has been argued that negotiated contracts require these pension benefits and that these contracts are sacred. Yet, in most cases the contracts have been negotiated either by politicians who either were either too ignorant or uncaring about future financial liabilities, of just too self serving about their own personal and political needs. What incentive did Connecticut’s legislators have to negotiate on behalf of the taxpayer when they themselves gained virtually every benefit they gave to public service employees?

Andrew McDonald (left) accepts nomination
Governor Malloy on right

 A good example would be Andrew Mc Donald, the Governor’s long time friend, who was recently appointed to the State Supreme court. As a legislator he earned $35000 per year but participated in the State retirement plan. When the Governor made him his Chief Attorney, his salary jumped into the six figure realm. Now as a judge, he will earn $146000 per year but a State commission has recommended that judges’ salaries jump to $192000 per year by 2017. If and when that happens, Judge Mc Donald’s pension will be based on his judge’s salary and not what he made or contributed as a legislator. If he retires after 25 years of total state service his pension could exceed $90000 per year. What incentive did he have during his eight years as a legislator to rein in these out of control pension liabilities? ###

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