How Government Workers Profit at Taxpayer Expense

The purpose of government is to provide services to the public, not enrich the people who work for it.

Stockton, California city workers who attended the unveiling of a new report detailing the trends in public-employee compensation in California on Wednesday night complained about cuts in their compensation packages that are causing hardship for them and their city.

But the report, prepared on behalf of the Howard Jarvis Taxpayers Foundation, and released at a meeting of the San Joaquin County Taxpayers Association, left me searching for the world's smallest violin—that fictional instrument I like to play whenever my kids or anyone else starts whining about something that's largely their own fault.

The city of Stockton is bankrupt, following more than a decade of a Bacchanalian feasting on taxpayer dollars, including the creation of a lifetime medical benefit for city employees, and the provision of the most-generous "3 percent at 50" pension system to its highly-paid public safety officials.

The city burned through its pension-obligation bonds—the equivalent of a family taking out a loan to pay the mortgage—and is now trying to stiff its bondholders. There was no obvious complaint by city unions or employees during the tax feast, but now that they are facing "cuts"—some real, but others involving rollbacks in expected raises and limits on special-pay gimmicks—they and their members are playing the victim.

But the numbers tell the story.

Consider this nugget from the blandly titled, "California State Employee Compensation Trends," prepared by Steven B. Frates of the Center for Government Analysis: "Total expenditures by the state government of California to finance salaries and pension benefits for state government employees increased almost three times as fast (29 percent) as the per capital personal income (PCPI) of all Californians (9.8 percent) from 2005 to 2010."

As Frates put it in plain English: "They [public employees] were getting richer three times faster than the general population."

Californians are stuck watching those dreadful union-financed campaign ads calling for support of Proposition 30, which would push our income-tax rates to the stratosphere and boost sales taxes also. The main reason, we're told, is that California is slashing public school funding and laying off teachers.

But had the state's public employees been granted raises and benefit increases merely at the 9.8-percent rate of income growth experienced by the rest of us, the state government would have saved $2.1 billion in 2010 alone—enough to pay for nearly 25,000 new teachers, which is higher than the number that have been laid off. (That's provided the state government wouldn't have squandered it on some other program, of course.)

We've heard Gov. Jerry Brown and the Democratic majority bemoan the draconian cuts in government. But even in the thick of the financial mess, state government has been hiring. The total number of state government employees increased 5 percent from 2005 to 2010, which is slightly higher than the job-growth percentage in the general population.

State Sen. Mimi Walters (R-Laguna Niguel) kicked off the evening with an under-the-Capitol-dome look at the state's pension reform efforts. She confirmed what this writer and others have been saying. The governor announced his 12-point pension-reform plan in 2011 but did nothing to promote it. After Republicans offered legislation advancing the Democratic governor's pension plan, the governor's fellow party members refused to give it a hearing.

On the last day of session, the Democrats cobbled together something that Walters calls "pension change" rather than "pension reform" given that it does little, mostly applies to future workers, and is not a constitutional change—meaning that future legislators can easily kill these modest changes. It does nothing about the unfunded health-care promises of the sort that sent Stockton into the poorhouse.

The state's leaders view pension reform as a PR activity to convince the public that they are "doing something" so that voters are more willing to approve yet another tax hike. But the compensation report showcases the reality of the pension problem. Between 2005-2010, the growth in pension expenses soared 45 percent for all categories of state-government employee. The cost of pensions for public-safety workers increased 94 percent. Data for locally employed government employees is no doubt similar to this state data.

The data is two years old, so the situation is no doubt worse, but the California Public Employees' Retirement System likes to stonewall and delay. As the report noted, "CalPERS' tardiness in posting relevant data in a timely manner is unseemly in an open democratic society." Everything about this pension mess is unseemly, indeed.

Those of us who oppose tax increases know how the government spends money. This data on pay and pensions for public employees reveals, as Frates said, that the government's priority has not been providing better services, but in boosting salary and benefits for those who work for government.

What will happen if California voters approve Prop. 30? Check out the many bills that moved through the Legislature this session, as legislators crafted new proposed programs and benefit increases for their public-employee constituents.

Before the event, I gave Frates a tour of central Stockton. We drove by the impressive port on the edge of the Delta, past the Ivy-League-looking University of the Pacific campus, through the leafy old neighborhoods near Victory Park, and around the mostly vacant downtown, with its restored Fox Theater and historic buildings. It's a beautiful old city, but Frates noted the decrepit situation: pothole-filled streets, litter, old shopping carts, graffiti, and scary characters hanging out in city parks and on street corners.

The purpose of government is to provide services to the public, not enrich the people who work for it. The compensation report, and the conditions in the city where it was released, remind us that if elected officials do the latter, we get far less of the former.