Once considered sacrosanct, the pensions of cops and firefighters are increasingly coming under the budget knife, says Reuters.Even in the recent showdown in Wisconsin, Governor Scott Walker was careful not to extend the curbing of collective bargaining rights to police and firefighters. But now dire fiscal straits across the country are threatening even the pensions of public servants who put themselves in harm’s way.From San Diego, San Jose, and Stockton to St. Louis, Detroit, and Suffolk County, the story sounds much the same. Especially after 9/11, when New York police and firemen put the everyday heroism of public safety officials in the spotlight, politicians agreed to generous pension plans. How generous? Recent police retirees in Suffolk county, New York, earn $86,702 on average, versus $37,270 for other (non-teacher) employees. And the rest of New York state has kept pace with the upward trend:
The Manhattan Institute estimates nearly 10 percent of New York State cops and firefighters who retired in 2011 will receive six-figure pensions, from 2 percent in 2001.
The problem is, no one ever figured out how they were going to pay for these gold-plated plans. Now the bills are coming due. In San Bernadino, California, for example:
public safety spending eats up 73 percent of its general fund budget, with overtime for firefighters especially onerous. Pension costs are expected to reach $25 million this year, double the 2006 level.
With voters rejecting tax increases as an option, cities are facing difficult choices between massive service cuts and reneging on past promises via bankruptcy:
In some cases, contracts that may once have seemed fair are helping to bankrupt cities and leading to severe cuts in services, including fire station closures and reductions in police forces. Eight municipalities have sought protection from their creditors so far this year, following 13 that filed in 2011, and many others are having to slash their budgets.
When the bills come due, and the numbers don’t add up, fiscal arithmetic doesn’t care if you’re a teacher, firefighter, or police officer. Someone has to pay or your pension won’t get paid.Advice for all VM readers in defined benefit pension programs: Union leaders and politicians can and will lie about how safe your pension is. The only one who really cares about your retirement is you: plan prudently, save aggressively, and if something sounds too good to be true, don’t believe it.