November 30, 2006

NC Times Opinion: Stemming the pension benefit tide

November 29, 2006

By: North County Times Opinion staff

Our view: Proposal to cut health benefits for retired county employees likely to spread

Public employee unions should take notice: Soon there may be less to feast on at the taxpayer-funded benefit trough.

The first sign came Monday, when county Supervisors Dianne Jacob and Pam Slater-Price proposed eliminating health benefits for retired employees.

If the full Board of Supervisors adopts the plan next week, county employees who retired after 2002 could soon have to foot their own health care bills. Unlike pension payments based on a retiree's salary, medical coverage is not a guaranteed benefit -- and cutting it could save the county $1.8 billion over the next 20 years.

That savings will grow as those who retired before 2002 pass away, shrinking the county's health benefit costs.

This is good news for taxpayers, bad news for unions.

We expect this will spark a trend, as cities and school districts comply with new accounting rules forcing them to list benefit obligations as debt in annual budgets.

Even if the supervisors approve the cuts, it will be up to the independent agency that manages the county pension to adopt it. But, as reported Tuesday, Jacob and Slater-Price's proposal would stop payments for benefits to all county employees if the retirement association doesn't go along.

Such action is long overdue.

In good economic times and bad, public employee benefits have skyrocketed as elected officials blatantly ignored the debt they were piling up for future taxpayers.

The push to hand out lavish pensions began in 1999, when state lawmakers lifted the ceiling on benefit increases. Four years ago, the county increased benefits for its employees by 50 percent. Many cities -- including those in North County -- followed suit, mainly because unions became increasingly political, throwing money behind friendly candidates and mobilizing voters to ensure the ever-increasing flow of benefits didn't stop.

That's all about to change. Under the new accounting rules, our leaders will be forced to reckon with pension costs. Once included as part of an agency's debt, rising benefit costs could ruin its credit rating, making it difficult to bond for new schools, parks and roadways.

The public, too, will finally see how much it owes to public employees.

Once that happens, unions will lose much of their influence. City council and school board members won't be able to run up the pension credit card and hide the bill from those who have to pay it.

Cities and school districts can't default on their pension obligations the way many private corporations have. So it's likely that, just as they followed in increasing benefits, they will follow the county in cutting them.

Jacob and Slater-Price deserve credit for being realistic and working to stem the tide of increasing retirement benefits that threatens to drown us all in debt. Let's hope this is just the beginning.

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