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Public payroll becomes unfair load

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The Tampa Tribune

Published: June 28, 2009

The pay and benefits for employees of state and local government are too high, and relative to workers in the private sector, getting higher. Tax revenue stopped growing as pension funds lost value, yet promises of lifetime pay to workers and former workers must be kept.

An economic recovery that is strong and fast would provide some relief, but if the recovery is slow, local governments could be forced to lay off workers to keep paying generous retirement benefits to former workers.

A statewide investigation is needed to determine the scope of the problem, publicize the financial facts that politicians find embarrassing and come up with solutions.

The first step is to agree an imbalance exists, that more has been promised to government workers than taxpayers might be able to pay. And they won't be willing to pay because they can't understand why government service deserves a much richer reward than similar jobs in the private sector.

Private industry only pays 75 percent of the average pay given to employees of state and local government, according to research by the U.S. Department of Labor. The biggest disconnect is on benefits for retirement and savings. Government pays on average $3.14 an hour while private industry pays only 96 cents.

Pensions have become rare in the private sector, and many companies have temporarily eliminated their matching contributions to employees' 401(K) plans. According to a recent survey, companies do plan to resume contributions to help workers save for retirement, but the new trend will be to link the matching contributions to the level of company profits.

Governments have been much slower to react to market conditions. And on pensions, the worse investments perform, the more taxpayers must kick in.

Employees in the state retirement plan have been told not to worry about the plunging value of the investments of their pension fund because individual returns are guaranteed.

Employees often do have to help cover losses in locally run plans, but so do taxpayers. In Tampa, next year's city contribution to the public safety pension fund is reported to be increasing 40 percent, from $6 million to $8.4 million.

Not only are benefits and pay higher in government work, but also pay raises are higher and job security is better, according to the most recent federal statistics.

The total civilian labor force in the Tampa metropolitan area shrank by 4.4 percent in the past 12 months, but government only recently began to downsize. The preliminary May estimate is that government jobs are down 1.5 percent. But that number didn't turn negative until April. Until then, government had been growing while layoffs were rampant in construction, manufacturing, mining, business services and hospitality.

The issue is not whether a certain worker deserves a certain pay or whether certain jobs are dangerous and necessary. It's a matter of equity.

The personnel cost of running government should be roughly the same as the cost of running business. The retirement plans should not be wildly dissimilar. Workers in the private sector should not be second-class citizens.

Correcting the imbalance is difficult but not impossible.

Florida TaxWatch, a think tank specializing in state budget issues, has two good suggestions.

The first is to appoint a task force to investigate the realities of government pay and benefits. Are some local governments heading toward bankruptcy? What are fair levels of compensation? How can the state Legislature be discouraged from improving the retirement benefits of police officers and firefighters and forcing local governments to pay for it?

The other suggestion is to change municipal elections to coincide with general elections. Now, many cities, including Tampa, hold special elections in the spring. An advantage is that the ballot is simple. The major disadvantage is low turnout.

In the Tampa city election of 2007, turnout was a mere 15 percent. That means a majority is something less than 8 percent of registered voters.

Municipal elections are dominated by public-employee unions. Candidates who campaign against higher pay and benefits don't have much of a chance to win.

If city voting were held at the same time as national, state and county races, turnout would be much higher. The same city council candidates might win, but they wouldn't be held hostage to their own government employees. They would answer to a broader constituency.

The growth of government pay and benefits is on an unsustainable path, and if the economic recovery is slow, the issue will soon become urgent.

Restoring balance must be a top priority from city halls to the state capital.

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