WisGOP trying to bankrupt local gov't through pension "reform"

On this Labor Day, there is a looming bill which offers more proof that Scott Walker's union-busting Act 10 was merely one piece of a much larger agenda. There bill is intended to further hamper the benefits and compensation of public employees, and to force local governments into a choice between not having benefits for their employees and decimating public services in order to fairly compensate such employees.

The proposed legislation is Assembly Bill 269, and it is scheduled to be heard by the Assembly's Urban and Local Affairs Committee tomorrow morning. The state's Legislative Reference Bureau explains the bill as follows:

Currently, cities, villages, towns, counties, school districts, and technical college districts (local governments) provide health care benefits for their employees. Some also provide postretirement health care benefits for their employees.

This bill prohibits a local government from providing health care benefits to any employee hired on or after January 1, 2016, for use upon the employee’s retirement, including compensated absences but excluding the implicit rate subsidy, unless the cost of the benefit is fully funded in a segregated account, based on an actuarial study conducted at least once every four years or other method that complies with generally accepted accounting principles. The bill also provides that, if a local government dissolves a segregated account established for the purpose of providing such health care benefits, the local government must provide for the equitable distribution of the proceeds among the beneficiaries.

And if this type of legislation sounds familiar, it should, because this is cut from the same cloth as the evil piece of legislation passed by an outgoing Republican Congress which mandated pre-funded retirement benefits for the U.S. Postal Service. The Economic Policy Institute described the requirements of the law as follows in 2010.

The Postal Accountability and Enhancement Act (PAEA), enacted in 2006, required the USPS to pay an average of $55.8 billion into the Postal Service Retiree Health Benefit Fund over a 10-year period. This requirement, a 75-year obligation, has produced the worst financial crisis in the agency’s history and is the primary cause of the Postal Service’s short-term deficit. Furthermore, the USPS is the only government agency required to pre-fund retiree health benefits, let alone at an accelerated rate.

This requirement of having 75 years of post-retirement benefits up front has made the Postal Service have to put away increasing sums of money to follow this burdensome law, which then creates larger deficits for the Postal Service. In turn, these deficits can encourage more privatization of one of our country's original uses for government, and it lowers the ability of the Postal Service to give competitive salaries and benefits for its workers, as more and more funds are tied up into these post-retirement health benefits.

This Wisconsin bill goes along with model legislation from the American Legislative Exchange Council (ALEC), whose ultimate goal is to stop public employees from getting pensions, and to have them put their future fates in with the stock market. Take a look at the first paragraph of this "fill-in-the-blank" legislation from ALEC, which your local GOP state legislator can slip in, and bring to your neck of the wods.

The Legislature finds that the defined-benefit model of retirement benefits for state and municipal employees is not fiscally sustainable. It is the intent of the Legislature, therefore, to direct the [state retirement board] to create and maintain a defined-contribution program in which all state and municipal employees hired on or after [date], 2011 will automatically enroll after [X] months of employment to become eligible to accrue retirement benefits.

Put the two together, and you can see immediately where this endgame is with Wisconsin AB 269. Many local governments would likely have to pay more to keep these post-retirement health care benefits for current and future employees, which constrains the ability of the local government to continue their current range and level of services, making it more likely some of those services will have to be cut and/or sold off to private interests (a common ALEC goal).

In addition, it sets up a meme of "greedy teachers/ public employees and their benefits" to be the scapegoat of these inevitable budget cuts in local government. This is intended to take the heat off of a WisGOP-run state government which has cut shared aids to schools and other local governments, and placed fiscal handcuffs such as overfunding retirement benefits and limiting the ability of those local governments to raise taxes to continue to pay for both benefits and services.

Because there isn't a union negotiating to maintain these benefits and services for public employees, and because unions aren't as able to rally support and send information to the public to cut off this ALEC bill (something Sen. Majority Scott Fitzgerald infamously said was a goal of Act 10 during the 2011 protests), AB 269 stands a better chance of slipping through the public's notice. Which is why I'm writing about it on this Labor Day, because you can bet that in the final year of a GOP majority that is increasingly falling out of favor in Wisconsin, you can bet these ALEC water-carriers will try to jam through more of these types of "create a crisis" types of bills in coming months.