As 20 years of fiscal mismanagement by government officials comes to a head, we repeatedly hear public servants warn of their underfunded pension funds ("Baltimore Co. weighs pension bonds," Oct. 14).
While the private sector has had a decline in real wages over the last 20 years and the evisceration of pensions, government compensation has continued its upward climb. A recent article by CNN's Fareed Zakaria points out that the municipal bankruptcies we keep hearing about aren't about taxes being too low or spending on services being too high but about pensions.
Mr. Zakaria notes that California's pension-related costs rose 20-fold in the decade since 1999, and that this frightening trend is true almost everywhere in America. For decades now, local governments have doled out patronage by increasing pension benefits that impact the budget years later, when the officials who gave the benefits are safely retired themselves.
While Baltimore County is not Stockton, Calif., or Harrisburg, Pa., plenty of similarities exist, and talking about papering over the cracks in county employee pensions with long term borrowing is really throwing down the gauntlet.
In the private sector, the old defined benefit pension has long ago been replaced by the defined contribution plan. Yet the government plans are paying two or three times more than pensions in the private sector.
This is a ridiculous situation that needs to be solved the old-fashioned way: By restructuring the government plans so they are in line with those of the private sector.
In the private sector this necessary function is facilitated by bankruptcy or simply termination of the employees. It may be that public bankruptcies will become the most expedient way to solve this problem as well.
When the impact of actual returns of less than 4 percent on pension fund investments finally becomes public knowledge, Baltimore County will look a lot more like Stockton. Public administrators are wrong if they think they can win at this game of "chicken" where they keep lining their pockets and cutting taxpayer services when they can't raise taxes.
The day can't be far off when some taxpayer advocacy group is going to have its day in court and the public officials responsible for this mess will be held personally accountable for their breach of fiduciary duty.