Paul Jacob

While California may have been hit first by the pension tsunami, that dangerous wave is now cresting over much more of the nation. Pensions are over promised and underfunded all across the country. To cover the liabilities already accumulated by state and local governments nationwide, the average American household would need to pay an additional $1,350 a year—each and every year . . . for the next 30.

For instance, the pension system covering non-public safety City of Phoenix employees is only 56 percent funded, and has so far racked up an unfunded liability of $1.5 billion. The massive pension debt has already led to the city’s credit rating being downgraded, costing Phoenix taxpayers more to borrow money.

Just since 2011, the cost of pension obligations has shot up 40 percent, forcing the city, as The Arizona Republic reported, to “cut services to residents and [enact] an emergency food tax.” Pension “spiking” has become so widespread and egregious that the newspaper’s analysis found it to cost the city $12 million a year.

“Pension spiking occurs when employees are allowed to add other forms of compensation to their base pay at the end of their careers,” the paper’s report explained, noting that “unused sick leave, vacation time, cellphone allowances, overtime pay and other benefits” were being added to base pay to dramatically increase the basis for calculating a retiree’s annual pension benefit.

Late on Friday, city officials in Phoenix announced that citizens there, too, had gathered far more than the required number of voter signatures to place The Phoenix Pension Reform Act before voters this November. The ballot measure would create a 401k-style plan for newly hired Phoenix employees, while enacting provisions to stop pension spiking by current employees.

“People are tired of the games being played at City Hall,” said Scot Mussi, chairman of the pension reform committee and executive director of the Arizona Free Enterprise Club. “They want real reform.”

Can your elected officials solve the massive problems they’ve created by making big promises and then doing nothing whatsoever to keep them? They can if they are willing to face facts and figures and the future. And have the guts to be leaders.

On the other hand, if, like Mussi and the California citizens noted earlier, you’re tired of turning blue from holding your breath waiting for politicians to fix their mistakes, thank goodness that in most of the country there is a statewide or local initiative petition process whereby citizens can address pension problems (and other problems) directly at the ballot box.


Paul Jacob

Paul Jacob is President of Citizens in Charge Foundation and Citizens in Charge. His daily Common Sense commentary appears on the Web and via e-mail.