Public Sector Unions Gone Wild

You have to hand it to public employee unions for their chutzpah. Only they could rally against solutions to a problem they helped create.

Last month the Municipal & County Government Employees Union and it’s allies held a rally atop a parking garage behind the Montgomery County council building to protest budget cuts—the county faces a $760 million deficit mostly from unsustainable public employee salaries and benefits. MCGEO claimed the cuts would have “a huge impact on services for county residents… transit, school health room aides who serve public school students, libraries, corrections and public safety.”MCGEO argued that Montgomery County needed a “new approach…to eliminate structural inefficiencies.”

“Don’t Californicate Montgomery County” was MEGEO’s slogan.

Only it wasn’t cuts in “services” that had MGEO’s shrieking harpies up in arms.

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No, the real impetus for the gnashing of teeth and rending of cloth was the county backing out of salary increases it can’t afford and eliminating phantom salary increases to county employee pensions. In a deal negotiated last year by County Executive Ike Leggett, the county would contribute to employee pensions based on raises employees did not receive. Councilman Phil Andrews, who made the proposal, told the Washington Post eliminating the phantom increases would save over $7 million next year and $200 million over the next four decades. In response, four of Andrews council colleagues, including Valerie Ervin—a former labor organizer for MCGEO’s parent union—joined MCGEO on the garage chanting “No justice no peace.” Ervin told the Post “Look around you and see who’s had your back,” a riff on state Democratic state senator Mac Middleton’s dictum “It’s labor and trial lawyers that get Democrats in office. And you don’t bite off the hand that feeds you.”

Of course, retaining lavish benefits for ghost salary increases would indeed Californicate Montgomery County. Take the case of Vallejo just outside San Francisco. In 2008, Vallejo went bankrupt mostly due to unsustainably lavish public employee pay benefits. Yet, the city’s “work out plan” did not affect public-employee pensions, and in fact the city increased pension contributions. Even after going bankrupt the Vallejo city fathers couldn’t find the political courage to stand up to it’s public employee unions.

Leggett and some council members deserve credit for standing up and saying no to politically powerful unions, which are rarely told no.

Unfortunately, Montgomery County’s problem is a microcosm of the tsunami heading towards the state. As Maryland Reporter’s Len Lazarick points out the Comptroller’s most recent comprehensive financial report for Maryland shows pension liabilities at $17.5 billion and retiree health benefit obligations exceeding $15 billion. As Lazarick noted that is a 25-year liability roughly the size of the current state budget. The cost of paying that bill: another $1 billion a year.

A Pew Center for the States report showed that at the end of the fiscal year 2008, Maryland has funded less than one percent of the total amount due for retiree health benefits and state pensions were funded at less than the 80% actuarial benchmark level the U.S. Government Accounting Office says is preferred by experts.

In 2006, the General Assembly created a Blue Ribbon Commission to study the issue and report back at the end of 2009. Naturally, public employee unions howled at the few detailed recommendations the commission proposed. True to form the legislature kicked the can down the road by extending the commission to 2011 after the next election.

The stark reality is that Maryland cannot afford the extravagant pensions and benefits for public employees. They are simply unsustainable. Maryland politicians can kowtow to their union masters for reelection this November, but the day of reckoning is looming and at some point the unions must be told no. We can’t afford it.

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