California Conservative

“When the state of California instituted health insurance for its employees in the 1960s, it was a $5 a month enterprise. As employees retired, the insurance was continued. At the general rate of inflation, that payment was $40 a month per retiree at this point in time.

Few would be adding up the “liabilities” the state, and the 8,000 other public agencies in California, have incurred by promising health benefits to their retirees at $40 a month. However, health insurance for retired public employees currently reaches up to the $1300 a month range, most all of it paid for by the public employer. The total “liability” for public employees in California is well over $200 billion. A simple calculation shows that it exceeds the $300,000 limitation of the state Constitution.”

We know that the California state pension plan, and all the other government agency plans in California have a total of over $100 billion in unfunded pension liabilities and the state legislature/Governor have done nothing to fix this soon to be fiscal disaster to the taxpayers.

In the past I have written about the tens of billions of unfunded health care liabilities by the same agencies. I was wrong and I apologize. There isn’t a $70 billion unfunded health care liability. That should make it easier to solve the pension crisis, but it doesn’t.

How about the health care, unfunded liability, being NORTH OF $200 BILLION INSTEAD? THAT IS “B” AS IN BILLIONS. Capitol Weekly did an article that outlines how we get to $200 billion and the fact nothing is being done to correct this problem. When you read this, note the convoluted methods used to figure the health care benefits, making it harder to fix the problem.

As Ken Mandler says in the article, “No liability over $300,000 can be incurred without a vote of the people.” Seems like a pretty simple statement that an attorney for a single taxpayer can use to “wand” the problem away. We can probably count on the Legislature to continue with lunch. We suspect, however, that the state’s taxpayer groups will skip dessert and head to the nearest courtroom.”

The bigger question is this: Since these agreements were “negotiated” between the unions and the agencies–who represented the taxpayers in these obviously sweetheart deals. Sweetheart deals is when one side gives unwarranted benefits to another in expectation of something in return. For example, a teachers union gets a sweetheart contract for its members, the School board members then get massive donations to run for re-election. This would stop if unions were unable to donate to those that give them contracts. Just like Wall Street folks are not donating to the State Treasurer because of the perception of how that looks (Treasurers sell bonds, at negotiated interest rates) should teachers union be allowed to donate to candidates for school board, when they will then get to vote on contracts.)

The other issue is this–the union and agency or Governor negotiate a contract. When agreed on, the union members get to vote on accepting or declining the contract. With contracts they have put the taxpayers on the hook for hundreds of billions of pension and health care liabilities, plus of course the salary and other benefits, why don’t those who are paying get to vote on these contracts? As the article states, the California Constitution is clear, any debt over $300,000 must be voted on by the voters. I am hoping that the Howard Jarvis taxpayers Association or some other organization decide to file suit to stop this corruption of the system and the bankrupting of the taxpayers. At a minimum we need a legislation outlawing donations from organizations that benefits from elected officials actions.

(I would also add not allowing organizations donating to initiatives that, if passed, they benefit from. As an example, the bond measure for $5.4 billion for water conservation and parks is a massive pay off measure to organizations that donated to it. They will get grants and programs if passed by the voters in November.

Folks the time to question these hundreds of billions in liabilities is now. We can no longer expect our elected officials to act. Just as we made illegal aliens an issue, we need to protect our homes, businesses and families by fixing this massive mess.

What do you think? Is this a problem, or does the “labor piece” we get by giving away tax dollars worth hundreds of billions? Should labor unions be allowed to donate to those that give them contracts?

—

Steve Frank is the publisher of California Political News and Views and a Senior Contributor to CaliforniaConservative.org. He is also a consultant currently working on gambling issues and advising other consultants on policy and coalition building.

Read more of his work here or at his blog.

This entry was posted on Friday, August 11th, 2006 at 3:10 pm and is filed under Author: Steve Frank, California, Economy, Health Care, Sacramento, Special Interests. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.