The days of astounding defined benefits like 3-at-50 are
over
The easy way out is to blame “the system” but the truth is that Gilroy City Hall salaries are escalating out of control because nobody’s really been minding the store.
The salary escalation that has, for example, resulted in three fire battalion chiefs in Gilroy being paid $162,948, $188,666 and $191,290 annually in a town our size has to be checked before Gilroy ends up whistling Dixie all the way to bankruptcy court.
It’s the amounts that are haywire. Though some of those are based on systemic problems with the proverbial “system,” the plain fact is that our elected officials have to put a stop to the wanton overindulgence that has permeated City Hall over the last two decades.
The labor unions are collectively kidding themselves if they continue to refuse to acknowledge the new economic reality which private sector businesses have been dealing with for at least three years. The days of astounding defined benefits like 3 percent retirement at 50 years old must come to an immediate halt.
A report entitled “The Gathering Pension Storm” by the Reason Foundation puts the problem in perfect perspective:
“The amount of the benefit is calculated by multiplying a fixed percentage by the number of years that the employee worked for government agency by the employee’s final compensation. The employer invests money to ensure that these promises can be kept. If the investment returns do not match up, taxpayers are obligated to make up the difference. Alarmingly, once benefits are bestowed via a defined benefit plan, the courts have ruled they cannot be taken away.
“Because of this reality, taxpayers have been abused to promote political agendas that promise extravagant retirement benefits to government workers-even as the taxpayers themselves must work longer to prepare for their own retirement. Significant benefit increases, such as “3 percent at 50″ plans, have proven themselves unsustainable. These excessive benefit levels and a variety of government policies have encouraged premature retirement and pension spiking, driving up costs even further.”
Responsible Gilroy elected officials and city administrators will have to not only hold the line on wage and benefit increases, but will have to roll back benefits and create two-tier benefit packages and cut compensation in one form or another.
If the unions play hardball, not only will more and more city employees lose their jobs, but the public’s sentiment will turn against them.
On the positive note, if the current recalcitrant union positions in Gilroy stay intact, the repeal of binding arbitration from the city charter becomes more and more likely. The residents are unlikely to be fooled again.
When residents take away the union threat of binding arbitration, which allows a faceless out-of-town attorney to decide Gilroy’s fiscal future, then the playing field for honest and fair negotiations will return once again to level.
It’s unlikely given recent rhetoric that the labor unions will come to the table with realistic options. The posture seems to be “defend every dime to the death.”
The irony is that’s exactly what’s going to happen. There’s still time for the unions to change and enjoy careers with stability and good benefits, but not much time. The day of fiscal reckoning draws closer and closer and the longer there is denial, the more painful and necessary the coming budget slashes will be.
