Taxes California or Mississippi Style
My friend Peter Schrag, former editorial page editor of the Sacramento Bee, has received much attention on the idea that California is shortchanging itself by adopting Mississippi-like tax policies and creating Mississippi level public services. Peter coined the term “Mississippification” in his oft-cited work, Paradise Lost, titling Part Three of his tome with his new word.
However, when he used the attack again Monday in his California Progress Report column, it was well past time to set the record straight.
In discussing the missed potential of Arnold Schwarzenegger’s term as governor, Schrag wrote: “Of anyone elected to the office in the past generation, he could have forced the state to confront the hard choices between generous, high-quality pubic services – good roads, great schools, perks and universities, quality health care, a clean environment – and Mississippi-level tax rates.”
California has Mississippi level tax rates? Hardly!
Group Touts New Pension Initiative
Cross-posted at CalWatchdog.
A pension reform organization has released a draft initiative plan for the 2012 ballot that would require public employees to pay half their retirement benefit costs, mandate defined contribution plans for new employees, significantly limit public pension benefits and require public employers to fully fund all pension and retiree medical benefit plans by 2020. The initiative will impose stringent new rules on the governance structure of public pension plans.
Sponsored by Californian Pension Reform, the initiative would apply to all public agencies in the state of California. “The last time we tried to reform pensions, the unions convinced everyone that the benefit changes we sought could best be negotiated at the bargaining table,” explained CPR President Marcia Fritz, the head of a Citrus Heights accounting firm. “We’ve seen a little movement in this direction, but mostly it’s been done to avoid public scrutiny. The unions have offered few changes that would begin to fix a half-trillion-dollar unfunded pension liability problem. In fact, they’ve actively tried to stop even modest pension reform efforts at the local level. So it’s time to take this matter to the state’s voters.”
The Fairness Factor in L.A. City Pension Reform
Last Spring, City of Los Angeles Chief Administrative Officer (CAO) Miguel Santana painted a vivid picture of the severe financial crisis facing the City as the cost of pensions and health care for retirees soar higher and higher each year. He pointed out that the growing annual contributions by the City, combined with the multi-billion dollar unfunded liability threatened to disrupt or dismantle every municipal service for years to come. The recently-released plan to create a new benefit tier for future City employees, presented by the CAO, Mayor Villaraigosa and a subcommittee of the City Council, shows promise to reduce pension obligations in the future. However, the new retirement age of 62 falls well short of real reform and what is fair and common practice in the private sector.
Under the current system, most L.A. City civilian employees can retire as early as 55 years old with up to 100 percent of their final year’s salary for life. This is not only unsustainable from a financial perspective, but also unfair to the millions of L.A. residents who are working much longer under Social Security and are watching basic City services be cut to the bone in order to pay the cost of pensions and lifetime health benefits to retirees. The promises made to current employees under this system are vested contracts that cannot be modified without the permission of the employees themselves – which leaves the City with the limited option of changing the pension plan for future hires and cutting basic city services.