Parks for Pensions

The Federal government is broke. Minnesota government and the City of Minneapolis can’t be broke in the same way because they lack the ability to run perpetual deficits. But I say they’re functionally broke because of their inability to set spending priorities. There’s always enough for fun projects. $30 million here, $7.7 million there, and yet there’s not enough money to keep up the roads or pay firefighters.

Anyone who works to provide a core government service is always first on the budget chopping block.

The Mayor blames the Governor for not giving out enough candy. Then the Governor blames the Feds. But the Feds are truly broke, dependent on borrowing to meet current commitments. The highest branches of the money tree are bare.

Employees of government at all levels have benefitted from the past legislative largesse. Their compensation significantly exceeds that of the productive classes:

Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis. The data are the latest available.

The federal compensation advantage has grown from $30,415 in 2000 to $61,998 last year.

Paying for past promises to public employees is one the biggest problems in the City of Minneapolis budget. I understand it is hard for those who believed the City could make good on its promises. But

Every organization has limits on how it can spend money and the promises it can keep.

Private companies find out pretty quickly when they have reached those limits. For government entities, their monopoly on force and the resultant range of options to collect more money lengthens the feedback cycle, so it takes them longer to realize their mistakes. That just means they get in bigger trouble before the crisis comes.

Minneapolis has reached the end first, probably because it is last in the chain of tax revenue hand-downs. The State and the Feds are headed the for the same trouble.

Yes, legislators have made stupid, stupid promises. In theory, that’s the citizens’ fault because they elected the stupid, short-sighted legislators. However, the citizens are not likely to accept that abstract responsibility. They are going to look at the high tax rates and poor government services in bankrupt states and decide to go elsewhere, as many in California and Michigan have done in recent years.

Almost everybody is going to lose in the debt crisis to come.

Unlike Social Security, government employee pensions are a valid contract for future payments. But if we’re going to cut the Social Security benefits (it’s inevitable, just a matter of when and how), the public—and the politicians who want their votes—are going to demand renegotiation of government pension contracts.

[Government workers] also need to prepare themselves for a backlash that’s been building for decades. … private citizens have a completely different perception. There’s a reason we have the cliche “good enough for government work”.

When you’ve had a cushy thirty year career with no worries about losing your job, don’t expect a lot of sympathy about your woes from people beset with job insecurity and burdened by high taxes and meddling bureaucrats. Especially when they don’t see what you do as particularly valuable.

I have a suggestion to limit the damage. Government at all levels has property it can sell. Stuff that is not involved in core services. The parks I linked to at the beginning, for example, are worth millions. Cancel those deals. Take some more parks—we have plenty, and we need money more than government lakes—and sell them. Use the proceeds to fund pension liabilities. Nature activists could even step up, and if they think it is so important that the lands be kept a particular way, they can buy them and become the stewards.

Or follow the Government Motors model. Just transfer assets to the government employee unions and pension funds. That would be a bit better than the GM deal, because there are no shareholders in parks and stadiums and public forests to get screwed out their assets.