- Connect
- Login
- Print Subscription
|
Welcome,
| |
| |
- Most Commented
- Most Commented
- Most Emailed
- Most Emailed
- Popular
- Popular
« Opinion
Budget debate shows gap between public and private
Budget debate shows gap between public and private
We won’t pretend that we could advise Gov. Ted Strickland and the Republican Senate or Democratic House how to balance a state budget that stands about $3.25 billion out of kilter.
But we will make a few observations.
The first is that everyone involved in the process is a political animal, and they’d be wise to stop marking their territories so assiduously. Democrats and Republicans are busy playing to special interests and ideologies while the taxpayers just want to see an open debate about service cuts or revenue increases. After the debate, the politicians need to take action.
That is, after all, what the governor, the senators and the representatives are paid to do.
And speaking of pay, since personnel costs are the single most expensive thing in the state’s budget, has enough been done to cut those costs?
State Rep. Bob Hagan of Youngstown, one of four Democrats who held a press conference in Columbus Tuesday to suggest tax cuts put in place during Gov. Bob Taft’s administration be rescinded, says state employees are being asked to make the necessary sacrifices.
Cuts they’ve taken
On Ron Verb’s talk show on WKBN Radio Thursday, Hagan noted that state employees are being required to take 10 or 20 unpaid days off, that they’ve made unspecified concessions in health coverage and that they’re talking about concessions in pensions.
OK, let’s talk about those pensions.
Strickland suggested that the state temporarily pay 8 percent rather than 14 percent of a state employee’s salary into the state’s retirement fund. Employees pay 10 percent, so the state would go from matching every employee dollar with $1.40 to matching every dollar with 80 cents for a period of two years. Strickland said the missed payments would be repaid in the next budget, which presumes a stronger economy. Even so, Chris DeRose, CEO of the Ohio Public Employees Retirement System, said the proposed reduction would have a “dramatic impact on members and retirees, reduce the solvency of the fund and have ramifications far beyond the current fiscal emergency.” And DeRose provided figures to support his point.
But apparently no one is willing to allow for the possibility that public pensions are due for some corrections.
For example, a state employee with 30 years of service and an average salary of $50,000 for his or her three highest years could retire at age 55 or above with an annual pension of $33,000 and health coverage. After 35 years of service, the same worker would receive $39,250.
Here and there
How many private pension plans guarantee those payment levels — and beginning at age 55? As General Motors and Delphi retirees in the Mahoning Valley are learning, private pensions do not come with lifetime guarantees.
In the private sector, even 401(k) matches are not secure. In the last year, hundreds of companies have suspended their dollar-for-dollar matches. Among them are Coca-Cola Bottling Co., UPS, Macy’s, Motorola, Sears, FedEx, Eastman Kodak, General Motors and Ford Motor Co. In an ironic touch, even AARP, the advocacy group formerly known as the American Association of Retired Persons, suspended its 401(k) match.
The financial upheaval for people who lose large parts of their pensions or see their retirement plans change based on the loss of 401(k) matches is happening today. Against that reality, the suggestion by the governor that a portion of the state’s payment into PERS be suspended does not sound unreasonable.
The vehement reaction against the proposal shows the difference between the private and public sectors. One group has no recourse; the other begins playing political hardball.
Public employees are not the only special interests that have reacted to proposed budget cuts with political pressure, and both Republicans and Democrats have shown themselves willing to bend toward their constituencies.
Legislators of both parties could set an example during the crises by taking substantial pay cuts, making real-world contributions to their medical coverage and suspending state contributions to their pensions. The gravity of the situation would be appreciated by others who will be asked to sacrifice. Suspending the pension payments would not endanger the solvency of the retirement system as long as the legislators did not accrue credit toward their retirement during the period that payments weren’t being made.
It would be tough medicine, but everyone agrees that these are tough times.
- Requires free registration.
Comments
Dear Jerk and Propaganda Minister.
re: "Budget debate shows gap between public and private"
About your statement, "And speaking of pay, since personnel costs are the single most expensive thing in the state’s budget, has enough been done to cut those costs?", pardon me!
Frankly you don't have any idea what you are talking about and they let you practice journalism?
If you took the time to do your job correctly before belching up your jealousy for a system that still works (OPERS et. al.) you would find that most state agency's payroll are from non GRF sources (General Revenue Funding). Also, personnel cost is not the largest part of the state's budget. You are not a funny person. You should do your homework before you publish your petty jealous latent articles. Everyone else has to to earn an honest living, why not you? You really aren't funny.
What's your problem, .... you lose your pension or something close to it for all your planning or lack of which shows in this nonsense article which attempts to blame public servants for state government budget woes!
Journalism should speak the truth. You should be barred from journalism with your kind of horrendously inaccurate information.
cgalilei@wowway.com
The thing this article left out is that the people in the Public Employees Retirement System are not eligible for Social Security. PERS is not a 401(K). Retirees have no other income other than PERS. Your article is misleading because it doesn't mention this very important information. PERS cannot be compared to GM, Coca-Cola, etc., because you're talking about their 401(K) plans, which PERS is not.
What I want to know is, a few years ago when the private sector was outpacing the public sector in every category imaginable, where were editorials and stories like this, showing how the public sector was so far behind? Now, it's not that the public sector has risen, but that the private sector has fallen, so what used to be second-rate jobs are now the only ones left. And, much like a bunch of crabs in a bucket, those who are at the bottom are trying their best to pull anyone who's above them down to their level.
Once again you nail it NOBS. In two years, if the economy is booming, nobody will give two craps about public employees. I said it before in a different post. Five years ago, public employees such as police/fire, pleaded the case that they didn't make enough money for the dangerous and honorable job that they do. People scoffed and said, "you volunteered, you can always change jobs". Now the economy is bad and the private sector, along with the public sector feels it, and people want public employees heads to roll. You know what? It's time for a taste of your own medicine.
First off NoBS, the public sector doesn't fund the private sector so what is or isn't occurring in the private sector is irrelevant. The private sector (taxpayers) do fund the public sector so we have very right to demand that public employees accept cuts in line with what the private sector is being forced to accept.
Secondly, nobody in the private sector can retire at 55 with completely ridiculous pensions and health care.
Then your claim that public employees don't get social security is foolish. Sure they do even at reduced rates.
Public wages and benefits have gotten too rich for the taxpayers to fund. Those are the states largest costs. (also the highest local governments costs) It's time to reign in those costs more in line with the reality of the private sector. It's called public service for a reason.
Bob Hagan or any politician like him that recends tax cuts or proposes more taxes needs to be voted out of office. Every form of products and taxes are going up in price while they ask us not to take wage increases or decrease our wages altogether. Its time to the American people to get up off their butts and do the right thing and vote these taxspenders out of office.
Hi, Apollo.
It would be nice if you and the other anti-public servant types would present data which are factual and true.
For one: the public sector doesn't fund the private sector? What is all this federal stimulus about? Hm.
for two: state public employee payroll is not the largest state budget expense. Take a look at medicaid welfare, education, transportation etc. They make up the biggest part of the pie. So you want more public employees on assistance, non productive and without medical insurance.... and we are at a time when our president is pressing hard for insurance for all. Grow up.
for three: public employees in Ohio don't get social security due unless their state pension is far less than anything they would get from social security.
Misery loves company. So whenever someone in the private sector hurts we need to balance that with harming someone in the public sector. Great idealogy!
Well, we get what we pay for don't we? If you don't want the services or reliable services maybe you should move where there aren't any! Yeh, why not move to somewhere like Cuba if you like unfair and cheap labor practices.
If we want professionalism, accuracy and efficiency in Ohio government we should pay for it.