Thursday, June 7, 2012

Goldwater Institute: San Jose and San Diego Take a First Step in Fixing Financial Failure

by Nick Dranias
Californians have leaped ahead of Arizonans in reforming local government pensions. Ballot measures in San Diego and San Jose asked residents to put new government employees into the equivalent of a 401(k) system and require old employees to opt into the new plan or contribute more to their existing plan so that it would become financially sustainable. The reforms passed the same day Wisconsin Governor Scott Walker prevailed in his recall election. If these pension reforms survive promised legal challenges, they could set precedent for Arizona and the rest of the Nation.
Still, as public pensions across the country face massive, looming deficits, more than San Diego and San Jose’s reforms will be required over the long run. Unsustainable local government pensions are a symptom of an underlying disease that needs addressing, namely, collective bargaining—even if it may be called “meet and confer” or some other warm and fuzzy name.
When unions can force government officials to bargain with them in secret, it is inevitable that they will succeed in securing above-market wages and benefits. Government collective bargaining causes our elected officials to serve two masters—government unions and the general citizenry. And the general citizenry usually loses because they only have a seat at the table during elections.
Until government collective bargaining is ended or fundamentally reformed, as achieved by Governor Walker in Wisconsin, we will continue to see government employees being paid unsustainable wages and benefits. San Diego and San Jose’s pension reform model is a great first step, but we have much further to go.
Nick Dranias holds the Clarence J. and Katherine P. Duncan Chair for Constitutional Government and is director of the Joseph and Dorothy Donnelly Moller Center for Constitutional Government at the Goldwater Institute.

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