6 ms·

His unwillingness to not solve the state's pension problems should be applauded. the amount of unfunded liabilities is in the hundreds of billions of dollars an

His unwillingness to not solve the state's pension problems should be applauded. the amount of unfunded liabilities is in the hundreds of billions of dollars and approaching a trillion if it has not passed that already. This all happened because the number of public servants who are pulling in over 100k has skyrocketed... 100k+ in retirement.. with millions past 50k! Think about that 50k in pay plus medical. These pensions and their medical side are the reason why the ACA did not touch golden medical plans because the vast majority are in this area along with certain other larger private pension systems. By the way, the House silently dropped that provision entirely from the ACA in 2019 so they any taxation of them is gone. My favorite story to fall back on is provided below... and there are other states worse off. This type of largess should never have been allowed nor should the tax payer bail them out. People bemoan the pay of executives at private companies, well guess who is right up there in many cases. https://www.forbes.com/sites/adamandrzejewski/2018/10/26/illinois-100000-club-94000-six-figure-public-employees-and-retirees-cost-taxpayers-12b/#5b185547481a https://www.forbes.com/sites/adamandrzejewski/2018/10/26/ill...

lonelappde 6y ago
Should the Federal government return tax money it took from the people of New York to give to the people of Kentucky? Why or why or why not? The Federal government can easily tax /discredit those wealthy pensioners to fund unemployment insurance, if they do choose.
- DiogenesKynikos 6y ago
  It's amazing that the US Federal government seems to be able to provide trillions of dollars in liquidity on a moment's notice to anyone and everyone - except the states. Airlines? Of course. Junk bond investors? Sure, why not? States? "We're not going to bail out Democratic-run states."
  - mrnobody_67 6y ago
    Don't forget Carnival Cruise Lines... which doesn't even pay any taxes in the US as a corporation since it flies a flag of convenience and doesn't employ many Americans.
    - wonderwonder 6y ago
      I mean that's easily explained. The Saudis just purchased 8% of them. Wouldn't want the Saudis to lose money would you? /s
    - coderintherye 6y ago
      Carnival did not get a bailout: https://thepointsguy.com/news/carnival-did-not-receive-bailout/ https://thepointsguy.com/news/carnival-did-not-receive-bailo...
      - hjonb 6y ago
        The president and leader of the GOP wanted to give cruise lines, who are NOT paying federal taxes and fly foreign flags to dodge US taxes a giant bailout but give US cities some help? Hell no!
      - DiogenesKynikos 6y ago
        You're right that they did not specifically bail out Carnival. They bailed out the entire junk bond sector, which allowed companies like Carnival to raise money much more easily.
  - artificial 6y ago
    It would be immensely helpful to see uniforms with all of the campaign contributions each has like a race car driver so you know who butters their bread.
    - dillonmckay 6y ago
      I would vote for that constitutional amendment.
      - artificial 6y ago
        I'm down, we need a catchy name to start a movement. I'm totally ready to throw this up on a website, there's got to be a place that shows donors and maybe cross reference which bills they support with some sentiment analysis "68% Favorable to Hollywood" and make it like rotten tomatoes.
eldavido 6y ago
People need to understand, the value of a 100% of final-salary pension for people earning 100K retiring at 55-60 is likely millions. It's even worse with the games people play with PTO and other benefits (where they bump pay 20-30% in their last year to get that pension benefit for the rest of their lives). Look at the average retiree's 401(k) balance for comparison and it gets pretty clear how unfair this is. There's a huge political opportunity for someone to tell this story properly and get a restructuring done.
- arebop 6y ago
  It's one thing to "restructure" the comp package for future employees, and something else to change compensation arrangements retroactively after your employers have upheld their end of the deal.
  - treis 6y ago
    I don't think it's quite that black and white. The deal that was struck was between the government workers and the voters at that time. That deal, more or less, said that future tax payers would pay for their pension. As a group, those then future and now present tax payers don't have much of a moral obligation to follow a deal that they never agreed to. And the workers don't get to act indignant that their pensions are in question. Their unions negotiated the agreement and chose to let the buck be passed instead of insisting on pensions being fully funded. The bargain was, at least in part, corrupt. The various public unions would campaign for and help elect those that would give them more money. An obvious conflict of interest that raises questions on why a shady deal should be upheld. The pensioners are, in general, gaming the system. They artificially inflate earnings at the end of their career to pump up their pension. Nepotism is rampant and there are plenty of positions with absurd salaries for what they do. They've sold out new entrants in their field to protect their own pensions. In general they're a bag of dicks. Fuck them.
- SamReidHughes 6y ago
  The thing is, this can only happen federally because of the Contracts Clause, and fixing certain states' problems isn't a national issue.
cactus2093 6y ago
To be fair, in SF for example the median income is $96,000. And I think that's take-home salary, so the median cost to the employer with benefits is well over $100k. It doesn't seem at all unreasonable that important city workers should make at least the area median wage. Having all of the local government employees be the lowest paid people in the city doesn't seem like a good thing. It is also kind of shocking to see how many employees actually work for city and state governments. And of course government workers have a strong reputation for not being incentivized to work very hard or do more than the bare minimum. I would think the bigger opportunity would be to reduce the size of local government payroll rather than lower everyone's salaries. Related thought - I wonder, why aren't city and state governments more at the forefront of automating menial work away, given the perpetual costs of each worker on the pension system? It seems they'd have a lot to gain from it.
- notauser554 6y ago
  "And of course government workers have a strong reputation for not being incentivized to work very hard or do more than the bare minimum." This reminds me of my friend who got an engineering job for the government after university. He was motivated at the start, going above and beyond to make sure his projects were completed on time and in good order. One day his boss called him in and asked him to change his schedule. The boss said he was making his co-workers feel bad. So the new schedule was to be take a 2 hour lunch and do something else for 2 hours, like play video games, to align his work output with the rest of the department.
- alkibiades 6y ago
  so why should people in texas pay for the stupid budget decisions of san francisco when they didn’t waste their money? it’s moral hazard
  - sanp 6y ago
    And why should NY or CA residents fund most of the federal budget?
    - 6y ago
mrnobody_67 6y ago
I ran across that Forbes article yesterday as well... amazing data: "71,000 public employees at every level of Illinois government received six-figure paychecks. Additionally, 23,000 retirees pulled down more than $100,000 in annual pensions."
- altoidaltoid 6y ago
  Consider also that alot of retirees don't stay in Illinois as well. So other states are benefiting from the discretionary spending funded by Illinois taxpayers
  - mlthoughts2018 6y ago
    Why would that be a problem? The salary & pension are compensation for the career of labor. No part of the pension that person _earned_ is owed back to the original state. That doesn’t make any sense.
    - mikepurvis 6y ago
      When the pension is an unfunded liability, it does change the calculus if everyone receiving it will be spending it off in Florida and not back into the local economy that's paying for it.
- jdkee 6y ago
  Illinois also guarantees a 3% COLA regardless of inflation which leads to a doubling of direct pension benefits within 24 years. Not to mention the pension spiking among many administrators in the last four years of employment. It is criminal.
- mlthoughts2018 6y ago
  What about this seems wrong or strange? That seems completely and utterly reasonable to me.
tehjoker 6y ago
Seriously? We're going to blame old people for not wanting to live in poverty while the heights of the economy sequester trillions of dollars in a power law curve?
- ac29 6y ago
  Many pensions are not the "have $27k/yr starting at age 67" kind, but the "have $100k/yr + benefits starting at age 55" kind. Its the latter that people find upsetting - nothing close to poverty level.
  - cortesoft 6y ago
    Sure, but people took those jobs in large part because of those pensions. It is part of the entire compensation package. They often times took less money up front in return for better pensions. The problem is that this was not properly budgeted for when funding the pensions.
    - jdkee 6y ago
      "They often times took less money up front in return for better pensions." That is no longer the case when compared with comparable private sector jobs since at least the early 2000s in many parts of the country.
      - d3ad1ysp0rk 6y ago
        I have never seen this to be the case. Do you have any data?
    - Domenic_S 6y ago
      I don't blame workers for taking a good deal. I do blame the folks making crazy promises that have no way to fund without being bailed out.
      - maxerickson 6y ago
hemantv 6y ago
This is just crazy to me, this public servants takes unprecedented risks and take lower pays so they can take stable retirement. Now it comes time for due, we don't want to fund these anymore. The entitlement in HN is just too much.
- product50 6y ago
  What risk is an accountant sitting in SF City Hall taking? High risk positions - sure give them more security. Otherwise, treat them like everyone else. Also, people goto govt jobs because of job security as well - which is also a factor in lower income.
  - hemantv 6y ago
    if you are going to cherry-pick, then so be it. what about the police, fire department?
    - product50 6y ago
      Read my comment. Don't be ignorant. I literally said that for high risk positions, give them more pension.
    - treis 6y ago
      I don't think the police or fire are taking "unprecedented" risks.
      - otterley 6y ago
        Perhaps not, but I don't think it's unreasonable to ask for a risk premium in your compensation. If you're more likely to die or be critically injured earlier than someone else of the same age solely because of the work you do, and your family depends on your income, it's not unreasonable to expect to be paid more to make up for the lost expected lifetime income. (This is true for all dangerous professions, BTW - not just law enforcement and medical personnel.)
      - 6y ago
bogomipz 6y ago
Unfunded pension obligations have seemed to be a ticking time bomb for quite a long time now. Some of the per household pension debt ranges are really quite spectacular[1]. If you look at the figures for places like Alaska, California and Connecticut it's hard to imagine them getting out from underneath it. [1] https://us.pensiontracker.org/ https://us.pensiontracker.org/
deleted 6y ago
[deleted]
brohoolio 6y ago
You can easily patch the state revenue holes without fixing the pension obligations. You basically give the states the difference between what they were projecting and what the reality is. By doing this, you fix part of the economy keeping up employment until the private sector can come back online. If you let states fall down right now you are going to turn this into a depression. It just means the beginning of Lyft’s troubles. There is nothing to applaud with his actions or statements. It’s just malicious and gives the rest of the world a chance to out compete America.
lokar 6y ago
IMO the issue is pensions are worked out by elected officials who will be long out off office when the bill is due. This encourages dishonest accounting wrt needed present day finding levels. One fix would be to require that all future obligations be funded up front. Make the pension as generous as you like, but deposit the cash now. If you invest the money and do well, the state can just keep that, but don't assume positive returns.
- eldavido 6y ago
  So, I've thought about this a lot and concluded democratic governments (democratic, not Democratic) just can't do this. The incentives to cheat are just too strong. Problem is accounting standards? There's always a legal-by-the-letter-of-the-law way around these rules (loophole) you can find if you work hard enough (just look at Illinois -- "pension ramps", "pension obligation bonds", etc), and even if there's not, most voters won't care enough to dig into the discount rate and other assumptions being used to forecast pension liabilities. Perhaps our political culture has changed and people used to be more honest, or far-sighted. But, given the world we live in today, especially given the pressure state and local governments are under, I think there really is no other option than a fully-funded 401(k)-style defined contribution plan, to finally force the issue into the open. There are plenty of well-managed 401(k)s and it's the only way to get "cash on the barrelhead" that keeps everyone honest, and doesn't allow the sort of absurd can-kicking so many governments (and their electorates) have favored for the past 30 years.
ojbyrne 6y ago
I don’t think you meant what you said in the first sentence. https://en.m.wikipedia.org/wiki/Double_negative https://en.m.wikipedia.org/wiki/Double_negative

lonelappde 6y ago

Should the Federal government return tax money it took from the people of New York to give to the people of Kentucky? Why or why or why not? The Federal government can easily tax /discredit those wealthy pensioners to fund unemployment insurance, if they do choose.

DiogenesKynikos 6y ago
It's amazing that the US Federal government seems to be able to provide trillions of dollars in liquidity on a moment's notice to anyone and everyone - except the states. Airlines? Of course. Junk bond investors? Sure, why not? States? "We're not going to bail out Democratic-run states."
- mrnobody_67 6y ago
  Don't forget Carnival Cruise Lines... which doesn't even pay any taxes in the US as a corporation since it flies a flag of convenience and doesn't employ many Americans.
  - wonderwonder 6y ago
    I mean that's easily explained. The Saudis just purchased 8% of them. Wouldn't want the Saudis to lose money would you? /s
  - coderintherye 6y ago
    Carnival did not get a bailout: https://thepointsguy.com/news/carnival-did-not-receive-bailout/ https://thepointsguy.com/news/carnival-did-not-receive-bailo...
    - hjonb 6y ago
      The president and leader of the GOP wanted to give cruise lines, who are NOT paying federal taxes and fly foreign flags to dodge US taxes a giant bailout but give US cities some help? Hell no!
    - DiogenesKynikos 6y ago
      You're right that they did not specifically bail out Carnival. They bailed out the entire junk bond sector, which allowed companies like Carnival to raise money much more easily.
- artificial 6y ago
  It would be immensely helpful to see uniforms with all of the campaign contributions each has like a race car driver so you know who butters their bread.
  - dillonmckay 6y ago
    I would vote for that constitutional amendment.
    - artificial 6y ago
      I'm down, we need a catchy name to start a movement. I'm totally ready to throw this up on a website, there's got to be a place that shows donors and maybe cross reference which bills they support with some sentiment analysis "68% Favorable to Hollywood" and make it like rotten tomatoes.

eldavido 6y ago

People need to understand, the value of a 100% of final-salary pension for people earning 100K retiring at 55-60 is likely millions. It's even worse with the games people play with PTO and other benefits (where they bump pay 20-30% in their last year to get that pension benefit for the rest of their lives). Look at the average retiree's 401(k) balance for comparison and it gets pretty clear how unfair this is. There's a huge political opportunity for someone to tell this story properly and get a restructuring done.

arebop 6y ago
It's one thing to "restructure" the comp package for future employees, and something else to change compensation arrangements retroactively after your employers have upheld their end of the deal.
- treis 6y ago
  I don't think it's quite that black and white. The deal that was struck was between the government workers and the voters at that time. That deal, more or less, said that future tax payers would pay for their pension. As a group, those then future and now present tax payers don't have much of a moral obligation to follow a deal that they never agreed to. And the workers don't get to act indignant that their pensions are in question. Their unions negotiated the agreement and chose to let the buck be passed instead of insisting on pensions being fully funded. The bargain was, at least in part, corrupt. The various public unions would campaign for and help elect those that would give them more money. An obvious conflict of interest that raises questions on why a shady deal should be upheld. The pensioners are, in general, gaming the system. They artificially inflate earnings at the end of their career to pump up their pension. Nepotism is rampant and there are plenty of positions with absurd salaries for what they do. They've sold out new entrants in their field to protect their own pensions. In general they're a bag of dicks. Fuck them.
SamReidHughes 6y ago
The thing is, this can only happen federally because of the Contracts Clause, and fixing certain states' problems isn't a national issue.

cactus2093 6y ago

To be fair, in SF for example the median income is $96,000. And I think that's take-home salary, so the median cost to the employer with benefits is well over $100k. It doesn't seem at all unreasonable that important city workers should make at least the area median wage. Having all of the local government employees be the lowest paid people in the city doesn't seem like a good thing. It is also kind of shocking to see how many employees actually work for city and state governments. And of course government workers have a strong reputation for not being incentivized to work very hard or do more than the bare minimum. I would think the bigger opportunity would be to reduce the size of local government payroll rather than lower everyone's salaries. Related thought - I wonder, why aren't city and state governments more at the forefront of automating menial work away, given the perpetual costs of each worker on the pension system? It seems they'd have a lot to gain from it.

notauser554 6y ago
"And of course government workers have a strong reputation for not being incentivized to work very hard or do more than the bare minimum." This reminds me of my friend who got an engineering job for the government after university. He was motivated at the start, going above and beyond to make sure his projects were completed on time and in good order. One day his boss called him in and asked him to change his schedule. The boss said he was making his co-workers feel bad. So the new schedule was to be take a 2 hour lunch and do something else for 2 hours, like play video games, to align his work output with the rest of the department.
alkibiades 6y ago
so why should people in texas pay for the stupid budget decisions of san francisco when they didn’t waste their money? it’s moral hazard
- sanp 6y ago
  And why should NY or CA residents fund most of the federal budget?
  - 6y ago

mrnobody_67 6y ago

I ran across that Forbes article yesterday as well... amazing data: "71,000 public employees at every level of Illinois government received six-figure paychecks. Additionally, 23,000 retirees pulled down more than $100,000 in annual pensions."

altoidaltoid 6y ago
Consider also that alot of retirees don't stay in Illinois as well. So other states are benefiting from the discretionary spending funded by Illinois taxpayers
- mlthoughts2018 6y ago
  Why would that be a problem? The salary & pension are compensation for the career of labor. No part of the pension that person _earned_ is owed back to the original state. That doesn’t make any sense.
  - mikepurvis 6y ago
    When the pension is an unfunded liability, it does change the calculus if everyone receiving it will be spending it off in Florida and not back into the local economy that's paying for it.
jdkee 6y ago
Illinois also guarantees a 3% COLA regardless of inflation which leads to a doubling of direct pension benefits within 24 years. Not to mention the pension spiking among many administrators in the last four years of employment. It is criminal.
mlthoughts2018 6y ago
What about this seems wrong or strange? That seems completely and utterly reasonable to me.

tehjoker 6y ago

Seriously? We're going to blame old people for not wanting to live in poverty while the heights of the economy sequester trillions of dollars in a power law curve?

ac29 6y ago
Many pensions are not the "have $27k/yr starting at age 67" kind, but the "have $100k/yr + benefits starting at age 55" kind. Its the latter that people find upsetting - nothing close to poverty level.
- cortesoft 6y ago
  Sure, but people took those jobs in large part because of those pensions. It is part of the entire compensation package. They often times took less money up front in return for better pensions. The problem is that this was not properly budgeted for when funding the pensions.
  - jdkee 6y ago
    "They often times took less money up front in return for better pensions." That is no longer the case when compared with comparable private sector jobs since at least the early 2000s in many parts of the country.
    - d3ad1ysp0rk 6y ago
      I have never seen this to be the case. Do you have any data?
  - Domenic_S 6y ago
    I don't blame workers for taking a good deal. I do blame the folks making crazy promises that have no way to fund without being bailed out.
    - maxerickson 6y ago

hemantv 6y ago

This is just crazy to me, this public servants takes unprecedented risks and take lower pays so they can take stable retirement. Now it comes time for due, we don't want to fund these anymore. The entitlement in HN is just too much.

product50 6y ago
What risk is an accountant sitting in SF City Hall taking? High risk positions - sure give them more security. Otherwise, treat them like everyone else. Also, people goto govt jobs because of job security as well - which is also a factor in lower income.
- hemantv 6y ago
  if you are going to cherry-pick, then so be it. what about the police, fire department?
  - product50 6y ago
    Read my comment. Don't be ignorant. I literally said that for high risk positions, give them more pension.
  - treis 6y ago
    I don't think the police or fire are taking "unprecedented" risks.
    - otterley 6y ago
      Perhaps not, but I don't think it's unreasonable to ask for a risk premium in your compensation. If you're more likely to die or be critically injured earlier than someone else of the same age solely because of the work you do, and your family depends on your income, it's not unreasonable to expect to be paid more to make up for the lost expected lifetime income. (This is true for all dangerous professions, BTW - not just law enforcement and medical personnel.)
    - 6y ago

bogomipz 6y ago

Unfunded pension obligations have seemed to be a ticking time bomb for quite a long time now. Some of the per household pension debt ranges are really quite spectacular[1]. If you look at the figures for places like Alaska, California and Connecticut it's hard to imagine them getting out from underneath it. [1] https://us.pensiontracker.org/ https://us.pensiontracker.org/

deleted 6y ago

[deleted]

brohoolio 6y ago

You can easily patch the state revenue holes without fixing the pension obligations. You basically give the states the difference between what they were projecting and what the reality is. By doing this, you fix part of the economy keeping up employment until the private sector can come back online. If you let states fall down right now you are going to turn this into a depression. It just means the beginning of Lyft’s troubles. There is nothing to applaud with his actions or statements. It’s just malicious and gives the rest of the world a chance to out compete America.

lokar 6y ago

IMO the issue is pensions are worked out by elected officials who will be long out off office when the bill is due. This encourages dishonest accounting wrt needed present day finding levels. One fix would be to require that all future obligations be funded up front. Make the pension as generous as you like, but deposit the cash now. If you invest the money and do well, the state can just keep that, but don't assume positive returns.

eldavido 6y ago
So, I've thought about this a lot and concluded democratic governments (democratic, not Democratic) just can't do this. The incentives to cheat are just too strong. Problem is accounting standards? There's always a legal-by-the-letter-of-the-law way around these rules (loophole) you can find if you work hard enough (just look at Illinois -- "pension ramps", "pension obligation bonds", etc), and even if there's not, most voters won't care enough to dig into the discount rate and other assumptions being used to forecast pension liabilities. Perhaps our political culture has changed and people used to be more honest, or far-sighted. But, given the world we live in today, especially given the pressure state and local governments are under, I think there really is no other option than a fully-funded 401(k)-style defined contribution plan, to finally force the issue into the open. There are plenty of well-managed 401(k)s and it's the only way to get "cash on the barrelhead" that keeps everyone honest, and doesn't allow the sort of absurd can-kicking so many governments (and their electorates) have favored for the past 30 years.

ojbyrne 6y ago

I don’t think you meant what you said in the first sentence. https://en.m.wikipedia.org/wiki/Double_negative https://en.m.wikipedia.org/wiki/Double_negative