That’s something public policymakers – and everyday citizens – may want to remember as they try to make sense of the emerging debate over pension reform in the state of Florida.

The AFL-CIO recently held a major press conference in Tallahassee designed to minimize the need for pension reform legislation. The union leaders argued – correctly – that Florida’s state pensions are in better shape than those in California, Illinois, New Jersey, and several other states in financial crisis.

But just because Florida’s state pension problems aren’t (yet) a three-alarm fire doesn’t mean that many cities in the Sunshine State can afford to ignore their extremely leaky roofs. Because a number of municipal pension plans in Florida are suffering from the very sorts of mismanagement that have plagued state plans elsewhere. And some city pensions are so seriously underfunded that they will go belly up unless public policymakers step in and take bold action.

According to economist Randall Holcombe of Florida State University, government pension programs get into financial trouble because politicians often make promises today that have to be paid for by taxpayers tomorrow.

“There is always a temptation on the part of government officials to promise increased compensation in the form of unfunded pension benefits, because by doing so they can push the present cost of government into the future,” Dr. Holcombe notes in a new report of The James Madison Institute. “Generous pension benefits promised a decade or more ago are now placing significant burdens on government budgets.”

Or, as they say in Marianna, the chickens are coming home to roost.

Dr. Holcombe believes there are a number of ways that city governments can curb pension spending. Lowering the projected rate of return on pension fund investments would be a start since “taxpayers are left with the responsibility of making up the difference” when overly-optimistic scenarios don’t pan out.

And putting an end to pre-retirement “spiking” would also help. Spiking is the all-too-common practice in which government employees work as much overtime as possible in their final year of employment so that their rest-of-life pension benefits are based on an artificially-high “spike” in final-year pay.

But the most significant – and only permanent – means of addressing pension problems would be for governments to begin replacing their “defined benefit” plans with 401k-style “defined contribution” plans. Dr. Holcombe says this “would ensure that the present costs of government would be funded in present budgets.”

And it means that politicians would no longer be able to offer overly-generous pension benefits on the backs of the “future poor” (tomorrow’s taxpayers).

Several Florida municipalities – such as Fort Lauderdale and Pembroke Pines – have already switched to “defined-contribution” plans (following the well-established trend in the private sector away from General-Motors-style “defined benefit” plans). And Sen. Jeremy Ring, (D-Margate), believes the state government needs to look at ways to facilitate pension reform at the municipal level – especially since some states have had their credit ratings adversely affected by refusing to rescue local pension plans going bankrupt.

Ring plans to advance pension reform legislation through the Senate committee he chairs. And Ring appears to have little patience for the Pollyannas who pooh-pooh pension problems in the state. “They can either come to the table and be part of the solution and offer suggestions or they can simply be obstructionist and say the system is fine and doesn’t need reform and they won’t be welcome at the table,” Ring recently told several state newspapers.

Floridians should be glad that its state pension problems aren’t (yet) as bad as California’s. But Florida taxpayers should also be glad that there are public officials heeding Dr. Holcombe’s warnings and championing the need for reform.

Because even though a homeowner with a leaky roof may be better off than one whose kitchen is on fire, he still has a serious problem.

William Mattox is a resident fellow at The James Madison Institute, a public policy think tank based in Tallahassee.

Think that’s shocking? Just wait til taxpayers finally start paying attention to the power public employees have over local, state, and federal budgets. California Gov. Arnold Schwarzenegger and former San Francisco mayor Willie Brown have already warned that 80 cents of every state dollar goes to public employee pay and benefits. Other states face similar figures. Shocking figures have shown public employee pensions twice as high in New York compared to their private-sector counterparts. Heck, even 60 Minutes is starting to take notice.

With all the political payoffs, scandals, and bailouts, the issue seems as mundane as the figures are mind-boggling, but the bill for lavish public employee pay is coming due in the form of a pension tsunami — or, if you prefer, a blizzard that will have union bosses calling for a bailout.

All told, billions of dollars have been promised and in many cases are constitutionally guaranteed to retirees. But not all of those promises are realistic, and yet union bosses continue to push for higher pay and more benefits. It’s as if they forget that their members are Americans, too. The decisions are going to be difficult — especially for politicians who were elected by public employee union bosses who are the nation’s heaviest political hitters.

It doesn’t take a weatherman to see the coming blizzard. But it will take political courage — seemingly in such short supply — to start digging out of this mess. This is one of the key fights of 2011 and 2012, so keep your eye on it.

Photo courtesy: flickr/jeffmaurone

The following chart makes that case. Since the beginning of the recession (roughly January 2008), some 7.9 million jobs were lost in the private sector while 590,000 jobs were gained in the public one.  And since the passage of the stimulus bill (February 2009), over 2.6 million private jobs were lost, but the government workforce grew by 400,000.

Plus, as you know, according to the latest numbers from Bureau of Economic Analysis, the average federal civilian worker now earns double what private-sector workers earn when factoring in wages and benefits ($119,982 vs. $59,909). And the gap is increasing.  According to Chris Edwards of the Cato Institute, in 2000, the average federal worker earned 66 percent more in total compensation than the average private-sector worker. By 2008, that ratio had risen to 100 percent. That’s serious money.

Peter Orszag, the soon to be leaving OMB director, has  explained the differences in pay by saying that public employees have more diplomas (probably implying that they are smarter) than private employees:

But the truth is that a comparison of federal and private-sector pay, even by occupation, is misleading because the employees hired by the federal government often have higher levels of education than their counterparts in the private sector — even within the same occupations.  When you factor in the education and experience of the federal workforce, there is no statistically significant difference in average pay levels.

Edwards, however, shows this is nonsense. He writes:

Some people argue that the federal government has a unique high-end workforce, which deserves to be paid handsomely. But let’s consider some ordinary and mundane offices in the U.S. Department of Agriculture. In 2010, the USDA’s Office of Communications employed 77 people and paid $9 million in wages and benefits. That works out to $117,000 each for these public relations workers, which is close to the overall federal compensation average. Or consider that the 62 employees of the USDA’s Office of Chief Economist earned an average $177,000 each in wages and benefits in 2010. It isn’t just rocket scientists that are earning high federal compensation, it is also workers in many run-of-the-mill bureaucratic jobs.

More importantly, the federal workforce has always had a heavy contingent of skilled professionals such as lawyers. So that is not new, and thus it cannot explain the dramatically faster growth in federal compensation compared to private compensation [...].

Besides, if these diplomas are what gave is the health care reform, the financial bill making its way to Congress and the stimulus, then I would argue that we would be better off if  high-school dropouts to run Congress.

That being said, if bureaucrats have job security, their workforce grows during recession, and they make increasingly more money, being a proud public sector employee should become your little ones’ dream. In this context, wanting to be a fireman or a princess is so yesterday.

“…California remains one of the best places in the world to start a successful small business.  All you have to do is start with a successful large business”

US Rep. Tom McClintock; (R) Rocklin (CA)

This week, the ordinary American citizens known as Tea Party Patriots— the pesky nemesis of power-drunk, spendthrift politicians—have laid down a gauntlet, building on the momentum of the protests in towns all across America as well as the 1+ million Tea Partiers who took part in rallies across the country on September 12th.

Making the transition from single-event political protest rallies to a sustained political activism campaign, the Tea Party Patriots have filed an initiative to appear on the November 2010 ballot in California.  The initiative is the first official act within the true grass roots’ political activism platform we’ve titled “The Citizen Power Campaign”.

What is the first target the Tea Party Patriots’ ‘Citizen Power Campaign?’

The heart of the political machine that is bankrupting the once Golden State: politicians extracting money from taxpayers to increase the size of government and the recipients of this largesse, the public sector union bosses rewarding these politicians with generous campaign funds. This is  a rigged game where public sector union bosses amass hundreds of millions of dollars each year in political war chests to finance candidates and liberal causes that neither the rank-and-file union member not the public at large would otherwise support.   It has created a situation where no politician, Republican or Democrat, can stand up to the enormous power and influence that taxpayer money is being used for—often against the best interests of the taxpayers!

The Tea Party ballot initiative will create a constitutional amendment making it illegal for the State of California to forcibly extract monies from public employees to give to unions for political activities.

Says Mark Meckler, the California Coordinator for the Tea Party Patriots, and one of the initiative’s five Proponents, “It’s time to unplug the machine, and make liberal politicians have to pursue campaign funds the same way everyone else does: make your case to the people, and convince them to write a check!”

Of the dire circumstances California is facing, Chicago columnist Warner Todd Huston noted “[W]e have a bankrupt state trying to stay alive by cutting the costs of government…Certainly these sorts of cuts are common in real life; that where business is ruled by the reality of economic forces, but here we are in the fantasy world of government where only an upward projection of revenues, wages, and benefits is apparently possible despite any such silly thing as ‘reality’”.

That “fantasy world” exists solely because the union bosses live in a sort of parallel universe where they do not have to worry about the sources of the money they spend, nor the consequences of their largesse.  In his soon-to-be released book “Plunder! How Public Employee Unions are Raiding Treasuries, Controlling Our Lives, and Bankrupting the Nation”, political journalist and author Steven Greenhut states “By its nature, government is not subject to the profit-and-loss test…of the free market…[and] is unique…in attaining its revenue via the coercion of taxpayers.  Hence, government suffers no worries about losses or bankruptcy; it need serve no one but itself.”

This fight is crucial, as this machine has driven California to the brink of bankruptcy, with few alternatives remaining to continue funding the exorbitant union dues and pension benefits other than cutting many services and raising taxes—a historically guaranteed recipe for disaster.

The initiative will require collecting over 1.1 million petition signatures–over 700,000 of which have already been pledged by thousands of Tea Party activists across the state.  This unprecedented early momentum will mark the first time in the nation’s history that all of the required petition signatures will be collected through a purely grass-roots’ effort; meaning no money required for professional signature gathering organizations.

And this Tea Party revolution is happening much to the consternation of the union bosses in Sacramento (as well as Washington), who had been believing its own arrogant presumptions of the public being either too stupid or too distracted making an honest living to even pay attention, let alone stand up to the plundering to taxpayer funds. Bankrupting the state through diverting billions into self-serving political activities is a gross violation of the public’s trust. The union bosses will soon find that the silent majority is silent no more.

Two of the leaders of the initiative effort are career public employees and former union members. These individuals, active Tea Party Patriots, are fed up with not only the corruption they witnessed within their own union, but also the expanding size and power of government, excessive taxes,  and diminishing liberties.

Politics makes for strange bedfellows, indeed.  Should be a very interesting fight to watch, to say the least.

For more info:  www.UnplugThePoliticalMachine.org

www.TeaPartyPatriots.org

Follow the Money Graphic –