At Reason.com Steven Greenhut presents a status report on public pensions in California:
A newly published federal court decision found the California Public Employees’ Retirement System was merely banging the legal table with its “iron fist” in the Stockton bankruptcy case.
Judge Christopher Klein rejected the pension fund’s argument that California cities could not reduce pension benefits even in bankruptcy. The decision could dramatically change the way pensions are handled in future bankruptcy proceedings, even though the judge upheld the city’s workout plan, which leaves existing pensions untouched while “impairing” creditors.
The judge was clear: When California cities go bankrupt, pensions can be cut. After Klein made that point in his verbal ruling in October,CalPERS shot back in a statement: “The ruling is not legally binding on any of the parties … or as precedent in any other bankruptcy proceeding ….” Now it seems legally binding and precedential.
California Democrats have no one to blame but themselves for the fix that state and local governments find themselves in. If Illinois’s ruling Democrats had a lick of sense they’d seize the opportunity the election of Republican Bruce Rauner has presented them to place the blame for solving Illinois’s public pension problems on Rauner while continuing to posture on it. In other words they should fight but not too hard.
A common people trait is to the put the most crucial problems last, in hopes they will somehow either disappear or solve themselves without any pain inflicted on humans.
So it goes with the inflated and unsustainable pension plans that burden so many states, especially here in California. Ironically, when sober, serious officials appear on the scene sounding the call of “reform,” it is the old political groupies who immediately lay down the tack strips of opposition, rallying the fear of their constituency to quell said antidotes containing governmental fiscal restraint addressing the bigger picture of solvency.
If the unions had a lick of sense, they would go out on strike any time there is a successful attempt to attack their pensions.
They negotiated to work for X, and the cities and states are reneging.
It’s a possible strategy, Gustopher, but it’s a risky one that bears with it the possibility of breaking the public employees’ unions, particularly those of police officers and firefighters.
The basic problem that public employees have in bankrupt cities is that you can’t get blood from a stone. I suspect we’re going to see a lot of deals cut over the next several years.
“They negotiated to work for X, and the cities and states are reneging.”
Absolutely! Break those cities and states. Make them go broke in order to not renege on those sometimes wildly inflated pensions.