During the good years, the city blew money on fancy things like a hotel and a sports arena. They also promised city employees complete healthcare coverage for life. And you don’t need the interview quotes from retired employees in their 50′s to remind you that many of these city employees get these benefits while retiring a lot earlier than folks in the private sector.
Stockton’s bankruptcy has many causes, but every explanation includes “soaring pension costs.” It’s just another example of what I call backward government, where services that are public goods get crowded out by services for a small set of connected individuals. I hope I’m not overstating the level of backward government in this case, but the evidence seems pretty strong.
The city already tried cutting “the police force by one-fourth, the fire department by one-third and 40 percent of other city employees,” but salaries and benefits for current and former employees still “account for about 68 percent of the city’s general fund.”
Specifics are hard to find, but there are many reports that the city “slashed essential services and maintenance to dangerous levels.” The depleted police force is correlating with an increase in crime to one of the highest rates in the country, even as overall national crime rates continue to drop. HuffPo says “the water is undrinkable” and “rats roam the building” at City Hall.
Perhaps it’s not surprising to read reports that the free healthcare benefits for retirees may be dropped completely. (It’s also not surprising to read about the labor unions dragging their feet at every step even while the rest of the city suffers.)
It’s hard to break contracts of unreasonable benefits that were promised long ago. But it’s even harder to keep them when the money just isn’t there.
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