The Growing City Budget Crisis:Pensioners Come Ahead of Taxpayers and Vital Services
By: Lee Bellinger - Executive Bulletin
Rising local taxes and declining local services have a lot of people scratching their heads wondering why cities seem to be taking in more and more money while cutting services right and left... even essential services like police departments.
The issue really comes down to one thing... pension plans. I know... pension plans are a pretty boring topic, but in this case these plans are bringing local governments to their knees, and it's only a matter of time before you feel the effects at home.
During the years of gangbuster growth, city governments were fat with cash. Being governments, they didn't sock it away for unexpected expenses or even cut tax rates to leave more of that money in your hands. No, no. They found new ways to spend it.
A favorite way to spend it was on pension plans for public employees. Now times are lean, and city governments all over the country find themselves on the hook for public pension plans that they can't afford anymore, but that they're contractually obligated to pay. In California and beyond, for example, the pension load is so great that taxpayers are burdened with paying for the equivalent of two or more cops (retired) for every one on active service!
City governments can't easily opt to not pay for pensions, which means that the money they take in is going to pay for services already rendered, leaving not nearly enough left over to pay for current services needed. Here are a few statistics to give you an idea of why you need to step up and make your own security preparations:
- In an average year, the city of New Haven, Connecticut sees revenue growth of approximately $4 million. The demands of their pension programs add $12 million to the budget each year.
- Anaheim, California spends more than a fifth of its budget on pension costs, and those costs will climb by 50% over the next four years.
- In San Francisco, pension costs amounted to $63 million in 2000. By 2015, pension costs will have increased to $650 million.
- In New York, the state will need to increase property taxes by 3.5% a year for the next five years to manage school-related pension costs.
- In Detroit, taxpayers employ 13,000 active public workers, but also must pay pension costs for 22,000 retired workers.
As you can see, cities from coast-to-coast and cities big and small are facing a budget crisis like we've never seen before. Services are already starting to crumble.
In Newark, New Jersey, the city recently laid off ten percent of the police force in response to the budget crisis. Crime has already started rising in response. In Washington D.C., the city has frozen police hiring and shut down its training academies. Oakland, California has lost about 15 percent of its force in the last year and is likely to lose more in the coming months.
Things are bleak for city law enforcement all over. Now is a good time to figure out what all this may mean to you.
Work on Your Personal Security Plan... and Hurry!
When it comes to security, the most effective action is proactive rather than reactive. Preventive measures are at the core of a successful personal security plan. After all, you'd rather prevent a crime than respond to one if at all possible.