NYT: If Public Employee Costs Aren't Reined In New York Won't be Able to Provide Essential Services
The New York Times on Sunday offered an extraordinarily sober prediction: if the state of New York doesn't rein in spiraling costs of public employees, it will find itself unable to provide even essential services.
Despite clearly tying the problem to the power of New York's public employee unions, the Times editorial board assured readers that it's still pro-labor and is opposed to what Gov. Scott Walker is doing in Wisconsin:
At a time when public school students are being forced into ever more crowded classrooms, and poor families will lose state medical benefits, New York State is paying 10 times more for state employees’ pensions than it did just a decade ago.
That huge increase is largely because of Albany’s outsized generosity to the state’s powerful employees’ unions in the early years of the last decade, made worse when the recession pushed down pension fund earnings, forcing the state to make up the difference.
Although taxpayers are on the hook for the recession’s costs, most state employees pay only 3 percent of their salaries to their pensions, half the level of most state employees elsewhere. Their health insurance payments are about half those in the private sector.
In all, the salaries and benefits of state employees add up to $18.5 billion, or a fifth of New York’s operating budget. Unless those costs are reined in, New York will find itself unable to provide even essential services.
Pretty sober assessment, right? Here's the punch line:
To point out these alarming facts is not to be anti- union, or anti-worker. In recent weeks, Republican politicians in the Midwest have distorted what should be a serious discussion about state employees’ benefits, cynically using it as a pretext to crush unions.
Republican politicians in the Midwest have distorted what should be a serious discussion about state employees’ benefits?
How about what the media have done to distort this discussion by regularly presenting falsehoods about Walker's proposal as well as misleading Americans about the actual fiscal condition of Wisconsin?
America should indeed be having a serious discussion about the poor condition of its states' budgets, but this has been hampered by a union-loving press that have intentionally confused rather than educated the public on the facts.
On Sunday, with the state it serves suffering from its own self-made financial woes, the Times interestingly tried to do just that:
Last April, in the midst of one of the worst financial crises that New York and the nation have ever faced, the state’s unionized workers got a 4 percent pay raise that cost $400 million. It came on top of 3 percent raises in each of the previous three years. These raises were negotiated long before the recession began, by a Legislature that routinely gave in to unions that remain among the biggest political contributors in Albany.
During the same period, many private-sector workers had their pay or hours cut. Private-sector wages in New York dropped nearly 9 percent in 2008. In 2009, Gov. David Paterson pleaded with the unions to give up the raises to help the state out of its crisis. Union leaders attacked him in corrosive television ads, and Mr. Paterson eventually caved, settling for an agreement that reduced pension payments to new employees. The deal wasn’t enough to address New York’s serious fiscal problems.
The average salary for New York’s full-time state employees in 2009 (even before the last round of raises) was $63,382, well above the state’s average personal income that year of $46,957.
Indeed. This is typical of states across the country and is at the very heart of their fiscal problems. At the core are unions which don't care one iota about state budgets or economic realities and instead demand compensation for their members with total disregard for the cost:
In 2000, employee pensions cost New York State taxpayers $100 million. They now cost $1.5 billion, and will be more than $2 billion in 2014. Wall Street’s troubles are a big part of that. But so are state politics. The Legislature, ever eager to curry favor with powerful unions, added sweeteners to pensions and allowed employees to stop making contributions after 10 years.
Let's look at that again: "In 2000, employee pensions cost New York State taxpayers $100 million. They now cost $1.5 billion, and will be more than $2 billion in 2014."
Readers are advised that this is a 1900 percent increase in eleven years. Inflation during that period was only 24 percent. This means that employee pension costs in New York have risen at almost 80 times the rate of inflation!
Why? "The Legislature, ever eager to curry favor with powerful unions, added sweeteners to pensions and allowed employees to stop making contributions after 10 years."
Yet, having admitted this, the Times still felt it necessary to stick up for labor while taking a bash at Walker:
Unlike Gov. Scott Walker of Wisconsin, Governor Cuomo is not trying to break the unions. He is pressing them to accept a salary freeze and a reduction in benefits for new workers. The unions need to negotiate seriously.
But will they? And even if they do, mightn't it be temporary? Doesn't the history of public employee unions so dictate?
The reality here is that New York's problems are not much different than Wisconsin's or California's or Indiana's or Ohio's. Public employee unions for decades have gotten contracts for their members that in the end were unaffordable.
But the unions don't care, and frankly, neither do their members. These folks feel they're entitled to everything they get, and that states should just be raising taxes to cover the rising costs.
Despite the Times sober view of New York's fiscal problems, this was certainly part of its proposed solution:
We are also urging the governor to rethink his pledge to cap property taxes and allow a tax surcharge on high incomes to expire at the end of this year. That would bring the state an additional $2 billion this fiscal year, and $4 billion the following year — not enough to solve the fiscal crisis, but a serious down payment.
The state’s middle-class workers will have to make real sacrifices. New York’s many wealthy residents, all of whom are benefiting substantially from a new federal tax break, should have to pay their fair share as well.
As such, despite calling for some concessions by unions, the Times wants an increase on property taxes and income taxes for high income wage earners. And, of course, it doesn't ask for any limitation to existing collective bargaining rights.
As this is at the heart of the problem, ignoring it is like putting a band aid on a severed artery. It might temporarily stop the bleeding, but it's certain to start gushing again at some point in the future.
Gov. Walker and Wisconsin's elected Republicans get this, and believe that any long-term solution to their state's budget problems must reduce the collective bargaining rights of public employees or risk a recurrence of this tenuous position down the road.
With all its good intentions Sunday, the Times editorial board is clearly missing this.