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Thursday, February 03, 2011 5:17 AM

New York Mayor Seeks Pension Overhaul; New Jersey Governor Tells Unions "Sue Me" Over Pension Cuts

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New York Mayor Michael Bloomberg is in a bed of his own making. When he took office in 2002 pension costs took 1 out of 28 revenue dollars. Today the cost is 1 out of eight dollars.

This is what happens when you buy union votes to get elected. Now Bloomberg is scrambling to undo the damage he caused, and the unions are not happy about it at all.

Please consider Bloomberg Seeks a Sweeping Overhaul of City’s Pensions

Mayor Michael R. Bloomberg proposed sweeping changes on Wednesday to New York’s costly pension system, seeking to save billions of dollars by fundamentally altering long-established rules that have awarded generous retirement benefits to municipal workers and have deepened the city’s financial hole.

The mayor wants to require most new municipal workers to work at least 10 years, or double the current amount, to qualify for a pension, and bar them from receiving pension checks until age 65. Now most nonuniformed workers, including teachers, can get pension checks at age 57, and some police officers and firefighters can receive full pension checks after working 20 years, no matter their age.

New employees would also need to contribute more of their own money to their retirement accounts, according to the plan.

And Mr. Bloomberg would forbid all new employees to benefit from a time-honored practice: adding hundreds of hours of overtime at the end of their careers to balloon their final year’s pay and their pensions.

The mayor did not spare current retirees, vowing to eliminate a $12,000 annual stipend that retired police officers and firefighters get on top of their regular pension benefits.

The official, Harry Nespoli, chairman of the Municipal Labor Committee, an umbrella group of unions, said that Mr. Bloomberg had become “a dictator” and that “the mayor has set back labor relations 40 years.”

Not long ago, Mr. Bloomberg was viewed as a reliable ally of labor. He offered generous salary increases in contract negotiations, and spoke with pride about the city’s municipal work force, which is now about 300,000. In 2008, as part of a merit-pay agreement with the teachers’ union, the Bloomberg administration shepherded a pension package through Albany that allowed teachers to retire five years earlier than before, but with full pension benefits.

And in late 2008, just as the financial crisis began to explode, Mr. Bloomberg granted 4 percent raises for two consecutive years to the city’s largest municipal workers’ union, District Council 37, without extracting support for pension givebacks.

Mr. Bloomberg’s assiduous courting of labor paid political dividends: after getting virtually no labor support in his first campaign in 2001, he picked up dozens of union endorsements in his third-term victory in 2009.
Cheer the Ideas, Not the Man

Typically, politicians only do the right thing by accident or when the public (or necessity) finally demands it. In this case, necessity finally knocked some common sense into the mayor.

While I can cheer Bloomberg's proposals, it is much tougher to cheer the man. He helped make this mess and is only reacting now because he has to. As recently as a year ago, he was still singing the wrong tune, making untenable deals that could not be honored. Nonetheless, at long last, Bloomberg is on track with many of those ideas.

Yet, for all the whining the unions are going to do, there is not a single thing in Bloomberg's proposal that can be considered hardball.

Hardball From New Jersey Governor Chris Christie

Those looking for hardball can find it here: Christie Says ‘Sue Me’ as Pensioners Challenge Cuts
New Jersey Governor Chris Christie said he doesn’t mind breaking promises to pensioners to close a $10.5 billion budget deficit -- even if they sue.

“I have bigger issues than who sues me,” said Christie, 48, a Republican and former federal prosecutor who wants to end cost-of-living increases for retirees. “Get in line.”

Public workers in Colorado, South Dakota and Minnesota are already suing their states, which are among 18 that want to pare pension costs by increasing employee contributions, raising the retirement age or curbing cost-of-living increases.

“We believe it’s unconstitutional,” said Gary Justus, 63, a retired mathematics teacher in the Denver public schools who’s a plaintiff in the Colorado suit. “These are contracts that I and 100,000 other retirees worked for.”
Fraudulent Contracts

I back proposed legislation in Congress to allow states to go bankrupt. Such legislation will not happen until after the next presidential election, but it is the right approach.

If you don't have the money you can't pay it. It's as simple as that. Moreover, unions better get used to that idea, especially at the city or county level. Otherwise many of these cases will end up in bankruptcy court for sure.

There are a couple of issues people keep throwing my way. The first is "fairness". Excuse me but what exactly is moral or fair about hiking taxes on those barely scraping by to give unjust rewards to someone else. Moreover, there is nothing fair about dumping this problem on generation X or Y either, many deep in debt, fresh out of college, with no job and no benefits at all.

Besides, there is no blood to give. Companies go bankrupt all the time. Ask GM or United Airlines what happened to them. They had a contract too.

Fairness aside, I consider the contracts to be fraudulent. Public unions coerced, bribed, and threatened Armageddon if they did not get their way. They also bought the votes of corrupt politicians. To top it off, the unions got into bed with administrators working out raises that often went up for each of them, usually in sync.

No one was ever looking out for the taxpayer. Thus, it is hard for me to feel sorry for, or beholden to those screaming about fairness or contractual obligations. Indeed the fair thing, is to default and work it all out in bankruptcy court just as United and Delta did.

I made a blatant typo in one of my subtitles above
It was a context I do not use or condone and has been corrected
Apologies offered to anyone offended

Mike "Mish" Shedlock
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