Other voices: Raises threaten taxpayers as well as public employees
December 26, 2007
The year 2007 has been a monumental year for pay raises in Nevada County. The county, the City of Grass Valley and the City of Nevada City all recently awarded employee pay raises (search TheUnion.com for the details). The Sierra Environmental Studies Foundation recently released a report detailing the threats that such raises generate for local taxpayers and public employees.
Why are such pay raises important to you as a taxpayer? In 2005, 16.9 percent of all those employed in Nevada County worked for local government agencies. The average wage for employees in the Nevada County private sector was $32,500 in 2005. The average salary for those employed by local government agencies was 33 percent higher – $42,761. A whopping 27.1 percent of all wages earned by county residents were paid by taxpayers. In other words, your taxes are employing approximately 17 percent of the work force at 33 percent higher wages (source: Employment Development Department, labor market information ES5202 Data).
It is extremely important to note that public employees also have greater entitlement benefits than employees in the private sector – namely, taxpayer-funded pension plans. The County of Nevada, the City of Grass Valley and the City of Nevada City all participate in taxpayer-funded public employee pension plans. Each entity promises retirement income benefits to public employees upon retirement. CalPERS provides administration and investment advice to aid the municipalities in properly funding their employee pension plans. Today, our community’s pension plans are drastically underfunded. In layman’s terms, our current and past leaders have not set aside enough funds to fulfill their promises to our public employees.
The County of Nevada currently has unfunded liabilities of more than $48,000,000 (pension plan only). The City of Grass Valley and Nevada City have unfunded liabilities of more than $4,000,000 and $677,000, respectively.
Our elected officials have, and continue to pass along, legacy debt to future taxpayers. Current elected officials are not solely responsible for the dire condition of our pension plans. Past elected officials and managers of our government entities failed to identify the crisis and to implement solutions.
Government bodies across the nation are addressing the unfunded liability epidemic. An increasing number of government employers are adopting retirement plans similar to 401(k) plans in the private sector and some are even retracting previous pay raises.
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The full report will be offered at http://www.sesfoundation.org starting this weekend.
Michael McDaniel lives in Nevada County.
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