Take Back America
California simply cannot solve its budgetary problems without addressing government employee compensation and benefits, says Arnold Schwarzenegger, governor of California.
As former Speaker of the State Assembly and San Francisco Mayor Willie Brown pointed out earlier this year, roughly 80 cents of every government dollar in California goes to employee compensation and benefits. Those costs have been rising fast. Spending on California's state employees over the past decade rose at nearly three times the rate state revenues grew, says Schwarzenegger.
Much bigger increases in employee costs are on the horizon. Thanks to huge unfunded pension and retirement health care promises granted by past governments, and also to deceptive pension-fund accounting that understated liabilities and overstated future investment returns, California is now saddled with $550 billion of retirement debt, says Schwarzenegger:
Employee costs will keep marching upwards because of pension promises, and they will never stop doing so until we get reform. At the same time that government-employee costs have been climbing, the private-sector workers whose taxes pay for them have been hurting, says Schwarzenegger:
Few Californians in the private sector have $1 million in savings, but that's effectively the retirement account they guarantee to public employees who opt to retire at age 55 and are entitled to a monthly, inflation-protected check of $3,000 for the rest of their lives, says Schwarzenegger.
Source: Arnold Schwarzenegger, "Public Pensions and Our Fiscal Future," Wall Street Journal, August 27, 2010.