Public Pension Raiders Slip Up

One way to scuttle unions is to go after their pensions.  The premise is that these public employee pensions are responsible for huge deficits in state budgets.  Conveniently built-in to that premise is the implication that public sector unions and those rich retirees are bleeding the taxpayers dry.  This diversion reinforces the argument of anyone who wants to cut taxes and cut the unions off at the knees. It looks like this strategy is running into some difficulties;  the main one is that it doesn’t square with contract law.

On April 30, the Oregon Supreme Court shut down a recent raid on the public employee pension system that had been engineered by the Governor and public sector haters in 2013.  The vocabulary framing the discussion achieved notoriety among the targets of the raid.  The fix became known as the “Grand Bargain” and it was going to achieve “savings” by reducing COLA and other formulations promised to the Public Employee Retirement System (PERS) members.  

The Supreme Court said, among other things, that the state could not go back on a promise: that promise being the benefits already defined for current state workers and retirees.  The workers are made whole by the decision.  The tragedy is that the mine-field of finding a solution to a state funding crisis that had been kicked down the road by the Grand Bargain is once again laid bare by the decision.  And the same old bogeymen and ragged targets are once again on parade: Goddamn retirees. Blood-sucking unions.

Must be a trend or something: On May 8 the Illinois Supreme Court ruled (unanimously) that the pension overhaul that reined in benefits to fix the “consistently underfunded” system was unconstitutional.  The can that had been kicked down the road in Illinois  ($111B) makes the almost-billion dollar gap in Oregon look like nickels and dimes lost in the couch.  The Wall Street Journal reports that “Illinois joins Oregon and Arizona as recent examples of high courts peeling back pension overhauls. Other states, including Colorado and Florida, have upheld laws cutting benefits.”

At best, this turnaround is a very mixed bag.  Deferred justice is always welcome but we are just waiting for the other shoe to drop.  State budgets are still bleeding more than ever. State governments, are in thrall to the likes of ALEC and the Koch brothers. These predators will be on the prowl for new victims.  State governments, owned by the money, have no stomach for going after the obvious and rightful sources of “new revenue” (another catch-phrase from the Grand Bargain). The people need to shut down the raiders who have stolen their voice.  And the states need to close corporate tax loopholes and tax their wealthiest citizens fairly.