California Union Bill Looks to Ban Outsourcing Public Services: New at Reason

A new union-backed bill in California would drive up struggling counties’ costs of providing public services.

Steven Greenhut writes:

Municipal governments exist to provide essential services, such as law enforcement, firefighting, parks and recreation, street repairs and programs for the poor and homeless. But as pension, health-care and other compensation costs soar for workers and retirees alike, local governments are struggling to fulfill these basic functions.

There’s even a term to describe that situation. “Service insolvency” is when localities have enough money to pay their bills, but not enough left over to provide adequate public service. These governments are not insolvent per se, but there’s little they can afford beyond paying the salaries and benefits of their workers.

As a city manager quoted in a newspaper article once quipped, California cities have become pension providers that offer a few public services on the side. It’s a sad state of affairs when local governments exist to do little more than pay the people who work for them.

Not surprisingly, the union-dominated California state legislature has been of little help to local officials dealing with such fiscal troubles. The state pension systems have run up unfunded liabilities, or debts, ranging from $374 billion to $1 trillion (depending on the financial assumptions one makes). But legislators have ignored meaningful pension reform. This has forced local governments to cut back services or raise taxes to meet their ever-increasing payments to California’s pension funds.

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