Kansas is currently providing a text-book classic example of the way Republican governors and legislatures are assaulting public employee pensions. Remember, the GOP frames the discussion as a choice (a false choice) between government services and pension stability – NOT as a choice between tax cuts for the rich/corporations and government services.
So, how is Kansas a prime example? In 2012 Governor Sam Brownback signed a bill to provide massive tax cuts to everyone but employees, some retirees, and individuals whose investments are so modest they cannot afford to create trusts or partnerships in which to shelter their incomes. [LJworld] And then came the perfectly predictable news, “Brownback’s policies blew $258 million hole in income tax revenue.” [KCStar] Now that the gap has been blasted in the state budget, what does Brownback propose to do?
“Most Kansas state agencies will have their funding cut by 4% as a way to address a projected budget shortfall. Governor Brownback announced his initial budget actions today.
The Governor will implement an allotment plan for most state agencies, reducing their spending by 4% in the second half of the fiscal year.
In addition, the plan calls to transfer $95 million from the state highway fund and take $40 million from the KPERS fund.” [KAKEtv] (emphasis added)
There we have it. A false choice between a cut in services and a pension raid versus the rollback of those exceptionally generous tax cuts for wealthy individuals and corporations in the state of Kansas. Were those cuts a bit too generous? It would appear so:
“…the act dramatically changes the Kansas tax system, shifting the income tax burden from the wealthy and prosperous to working people. The act provides that all income of business owners is tax-free (except in the unusual case where a regular corporation is used). Although the act was promoted as a boost to small business, there is no limit on the size of business that can be exempt from tax.
Income of professionals — such as doctors, lawyers, architects, and accountants — practicing in partnerships will be tax-free. In a law firm, for example, the partners will pay no tax, while the clerical staff will continue on the tax rolls.
Income received from partnerships and trusts will be tax-free. Wealthy Kansans who own real estate, stocks, bonds and other investments will simply transfer those assets to a partnership or trust, thereby freeing all their investment income from tax.” [LJworld] (emphasis added)
There we have it. Instead of admitting that the tax base was demolished and replaced with an extremely regressive tax structure, instead of admitting the tax base is no longer adequate to provide Kansas with essential public services, Governor Brownback is asserting that even more Austerity Political Economics will be applied – rather like announcing the hole in the bottom of the boat is fixed by making it larger. [More at IBTimes]
We might all be a bit more comfortable if Kansas were the only state raiding its public pension funds to cover budget shortfalls. It isn’t.
The Great New Jersey Turnaround, during which in 2011 Governor Christie made a deal to salvage his budget using a restructuring of public employee pensions as part of the package – a package he is now trying to disclaim:
“The 2011 law shifted more pension costs to public workers, but it also gave them a contract right to full payments from the state budget into their underfunded retirement plans every year. Now, lawyers for Christie are calling that budget obligation unconstitutional, “void and unenforceable” and economically reckless.” [NJ.com]
His own plan is now “void, unenforceable, and unconstitutional?” It isn’t too hard to figure out that the New Jersey governor can no longer deliver on his promise, so the lead paragraph in the newspaper should come as no surprise:
“Gov. Chris Christie is asking a state judge to dismiss a flurry of lawsuits challenging a budget veto that reduced funding for public worker pensions from a once-promised $2.25 billion to $681 million.” [NJ.com]
Kansas, New Jersey, Michigan, Wisconsin [Prog] have all experienced raids on the public employee pension plans. In Michigan pensions were raided to pay for film studio bills. [CapConf] The raids have been numerous and counterproductive. [Alternet]
Trickled On: Indeed, the stock answer to all budget problems from Republican corners appears to be to cut services and raid the public employee pension funds – Heaven Forefend the solutions would incorporate cutting tax loopholes and raising taxation on the wealthiest citizens and businesses. America’s most accomplished looters are living their Austerity Economics fantasies on the backs of secretaries, dispatchers, file clerks, police officers, sheriff’s deputies, firefighters, teachers, school lunch cafeteria workers, public health nurses, public hospital employees, city sanitation workers, city bus drivers, state and local highway department employees, emergency medical technicians, and the list goes on…
The messaging coming from GOP/conservative quarters is almost breath-taking. Public employees are “pigs at the public trough” who are “thieves from honest taxpayers,” they are not the dispatcher in the sheriff’s office who talks a frantic father through the birth of his daughter, or the firefighter who risks his or her life to protect our property. They aren’t the clerks in the county court house who insure that the records of your lawsuit don’t get lost in the jumble. They aren’t the people in the recorder’s office who insure that they title to your property is legal and proper. They aren’t the highway department workers out at 4:00 a.m. clearing your way to work.
It’s easy to rail against “faceless, nameless bureaucrats,” it’s not so easy to disparage the efforts of public health nurses, or insult the efforts of the voting registrar’s office. It’s easy to pontificate against those “faceless, nameless” ones, except that they do have names and faces and they work in comptroller’s offices making sure companies doing business with the state or city get paid. They have names when they file incorporation papers for you with the state, they have names when they plan and advocate for highway intersection improvements, and they have names and faces when they when they are trying to handle ungodly case loads for children needing foster care.
We have one recent example of what can happen when private interests take over the jobs of public employees. Just for a moment, remember when the mortgage servicers and lenders tried to do an end run around county recorders? The electronic MERS system was supposed to speed up the transaction time for mortgage lenders previous to the collapse of the housing bubble, in many cases by-passing the humble office of the county recorder. How well did that work out? By 2012 the system got a major smackdown:
“Today, Washington State, which is a non-judical foreclosure state, gave MERS a serious setback. Its finding in Bain v. Metropolitan Mortgage, that MERS may not foreclose in Washington, is not as bad as it sounds, since MERS instructed in servicers to stop foreclosing in its name in 2011. But the reasoning of the ruling is far more damaging. And the court has opened up new grounds for litigation against MERS in Washington, in determining that its false claim to be a beneficiary under a deed of trust is a deception under the state’s Consumer Protection Act (whether that can be proven to have led to injury is a separate matter).” [NakedCapitalism]
This problem wasn’t confined to the state of Washington. Some 62 million mortgages were involved. [Yes] Problems at MERS became so severe that fewer than 30% of the mortgages had accurate records of home ownership. [NYT] No one is now advocating the Speed Is Everything privatization of mortgage handling – there’s been too much litigation, and entirely too much confusion. [Wash] Yes, life was more predictable, litigation less extensive, and confusion less apparent when public employees handled the recording of deeds.
However, even public recognition of previous disasters in privatization, acknowledgement of public service workers as public servants, and attention to what happens when public services are cut in the interest of saving the fat wallets of corporate America, won’t be enough to stop the Great Cookie Jar Raid by the Republicans.
They won’t stop until someone applies a sharp slap on the wrist, or they are reminded that “you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.” [WJB]