California's New Governor Doesn't Touch Pensions in Big Budget Cuts

[shortylickens]

Arnolds not governor?
When did this happen?

 

[alphatarget1]

Meanwhile many members of the productive middle class who are unable to find jobs in California continue to move to states where there are jobs, leaving California the land of the super rich (movie stars) and super poor who gang up to continue to f*#! the middle class.

Many of my friends from high school moved out of California when their parents cashed out on the equity on their homes because they know their best interests isn't served by CA Democrats. Taxing productivity and rewarding failure (i.e. Octomom) is what the Democrats are the best at doing.

I have never seen a car with Texas plates in California, and there are tons of cars with California plates in Texas. People are voting with their wallet and feet, leaving the paradise once known as California ruined by liberals.

 

[her209]

Arnolds not governor?
When did this happen?

Since Jan 3, 2011
http://www.latimes.com/news/local/la-me-0104-jerry-brown-20110104,0,2360360.story

 

[alphatarget1]

What I think is people who have 401ks or retirement savings in any institution should just lose them as those places shouldn't pay out any money even though you paid into it and that money should be used to balance the budgets of local state and the federal government.

Totally different. You are more or less responsible for the investment decisions you make with your 401k/IRA. Defined benefits (pensions) fail from the start when politicians underfund it.

CalPERS generated a pretty good return for their pensioners in the past 10-20 years, but it won't be enough to cover everything.

 

[IBMer]

Totally different. You are more or less responsible for the investment decisions you make with your 401k/IRA. Defined benefits (pensions) fail from the start when politicians underfund it.

CalPERS generated a pretty good return for their pensioners in the past 10-20 years, but it won't be enough to cover everything.

They are still obligations that were part of the compensation paid to those people. Its one thing to say we should get rid of pensions from now on. Its completely another to say we shouldn't pay the pensions that are already an obligation. California already subsidizes university tuition way more than most states that's a good place to start cutting.

 

[piasabird]

Easier to fire a few people. If you start laying off firemen, police, and teachers people freak out and think higher taxes is a good deal.

 

[alphatarget1]

They are still obligations that were part of the compensation paid to those people. Its one thing to say we should get rid of pensions from now on. Its completely another to say we shouldn't pay the pensions that are already an obligation. California already subsidizes university tuition way more than most states that's a good place to start cutting.

In other words, you are OK with Wall Street CEOs making out like bandits at the expense of shareholders because they were obligated to get paid thanks to the board of directors of their perspective companies?

I certainly did not agree with the backroom negotiations between union bosses and politicians at the expense of taxpayers. I did not vote for the politicians who screwed us productive taxpayers. I don't feel I have an obligation to pay for these union loons' pensions with my tax dollars, so I left the state.

 

[IBMer]

In other words, you are OK with Wall Street CEOs making out like bandits at the expense of shareholders because they were obligated to get paid thanks to the board of directors of their perspective companies?

I certainly did not agree with the backroom negotiations between union bosses and politicians at the expense of taxpayers. I did not vote for the politicians who screwed us productive taxpayers. I don't feel I have an obligation to pay for these union loons' pensions with my tax dollars, so I left the state.

You don't just get to pick and choose which contract you want to follow. Change the future so pensions aren't used as compensation but you can't simply choose not to pay those that you have obligated yourself too.

 

[chowderhead]

Meg Whitman promised to exempt police and firefighters and 1st responders from pension reform.
http://articles.latimes.com/2010/oct/17/local/la-me-police-pensions-20101017
Brown would not make that promise and thus Whitman got their union support.

3/4 of the retirees got $36,000 or less in 2010 in retirement benefits.
http://www.sfgate.com/cgi-bin/article.cgi?f=%2Fc/a/2011/01/11/BAOF1H6VJ1.DTL
Most of the high earning pensions are the firefighters and police officers so they needed to be included in any future pension reform plans. I used to dislike governor moonbeam but he has been so far even handed in trying to get out mess California has been in for the past 10-15 years.

 

[werepossum]

Please explain your answer because I'm just as retarded.

And I know a fair amount about pension law.

I know little about pension law, but I too thought Throckmorton's point was valid. Given that pensions are previously negotiated contracts whereas buying groceries is a new negotiated contract, I think you'd have a better chance of cutting your grocery bill in half than in cutting existing pensions. The grocer might well need to move inventory at any price to pay his bills, whereas pensioners have no such need to compromise. The system is indeed unsustainable, but short of California defaulting I don't see what Brown can do about pensions. I am not and have never been a fan of Brown, but I suspect he cut pretty much everything he could cut simply by proposal.

The pension system will have to be sharply revised for California as well as nationwide, but unless Congress changes this by fiat (and it survives the court challenges) probably only future pensions can be renegotiated. I think from a moral standpoint government workers should have no pension system other than Social Security & 401K since government workers' wages have achieved parity with (and arguably exceed) equivalent private sector wages, but that has no effect on previously negotiated contracts.

If this severe recession lasts more much longer, we may see what happens when a state defaults.

 

[olds]

1. You can't cut pensions of current employees.
2. arnie already cut the pensions of new hires.

 

[olds]

A) Bankruptcy.
B) Re-negotiation. Your union can either choose to approve a change to the contract or get fired. Of course this guy's a slave to SEIU so it's not going to happen. But there are options.

A State can't declare bankruptcy. Please stop posting till you educate yourself.

 

[chucky2]

I'm curious about this...why couldn't a state declare bankruptcy? They can't print money out of thin air like the Fed, and if they're so under water, I doubt even China would loan them money (what could it be backed by?)....so if they can't pay their bills (IL prime example), won't be able to pay bills in the future, then wouldn't they in effect be bankrupt?

I know if I can't pay bills forever, and am always making interest and late payments, months late, most people would call that bankrupt.

What's so different about a state?

Chuck

 

[olds]

I'm curious about this...why couldn't a state declare bankruptcy? They can't print money out of thin air like the Fed, and if they're so under water, I doubt even China would loan them money (what could it be backed by?)....so if they can't pay their bills (IL prime example), won't be able to pay bills in the future, then wouldn't they in effect be bankrupt?

I know if I can't pay bills forever, and am always making interest and late payments, months late, most people would call that bankrupt.

What's so different about a state?

Chuck

There is no section in code that allows them to.

 

[werepossum]

I'm curious about this...why couldn't a state declare bankruptcy? They can't print money out of thin air like the Fed, and if they're so under water, I doubt even China would loan them money (what could it be backed by?)....so if they can't pay their bills (IL prime example), won't be able to pay bills in the future, then wouldn't they in effect be bankrupt?

I know if I can't pay bills forever, and am always making interest and late payments, months late, most people would call that bankrupt.

What's so different about a state?

Chuck

California can indeed declare itself to be bankrupt. However it cannot declare bankruptcy, meaning there are no legal, statutory protections available to a state as for an individual or corporation. I'm not sure, but I don't think a state can even dissolve its incorporation as can an incorporated township. Most likely is that California declares itself insolvent and the federal government comes in to pay California's bills and honor its obligations.

 

[olds]

Even better than not taking a look at pension benefits, he wants to cut state employee pay 10% across the board. Since state employees have a portion of their pay withheld to pay for pension obligations he's actually proposing making the system worse by cutting funding to the program (similar to the SSI tax cut just passed).

He hasn't proposed that at all.

 

[olds]

He's only talking about cutting non union employees pay.

This isn't true either.

 

[chucky2]

There is no section in code that allows them to.

Is there a section that won't allow them?

Chuck

 

[olds]

Well it was the Devil they knew instead of the Devil they didn't. The Unions aren't going to be happy with jerry when it comes time for Contract takes.

That harpy Meg Whitman probably wouldn't have had the courage to make the cuts needed.

This.
It's not like there were any good choices. We had to vote for the lessor of the evils.

 

[chucky2]

California can indeed declare itself to be bankrupt. However it cannot declare bankruptcy, meaning there are no legal, statutory protections available to a state as for an individual or corporation. I'm not sure, but I don't think a state can even dissolve its incorporation as can an incorporated township. Most likely is that California declares itself insolvent and the federal government comes in to pay California's bills and honor its obligations.

So the Fed Gov is on the hook for all the states obligations if the state declares itself insolvent? Why then doesn't CA and IL just declare themselves insolvent (from my understanding, certainly that's where IL is at) and dump in on the Fed's lap?

To me insolvency and bankruptcy sounds in the end like the same thing: You don't have money to pay your bills in the short or long term.

Chuck

 

[olds]

Easier to fire a few people. If you start laying off firemen, police, and teachers people freak out and think higher taxes is a good deal.

This is actually the correct way to reduce the states work force and expenditures. But no one has the balls to do it.

 

[olds]

Is there a section that won't allow them?

Chuck

I read more of the thread and the question was answered above.
http://forums.anandtech.com/showpost.php?p=31062461&postcount=37

 

[chucky2]

I read more of the thread and the question was answered above.
http://forums.anandtech.com/showpost.php?p=31062461&postcount=37

Presuming that really does cover it either way, then what happens when a state runs out of money? Someone above says they report themselves as insolvent. I get the difference, but to me the effect is basically the same: No money to meet or fund obligations.

So what happens then? Where does either the state get the money, and/or, the obligations go away and/or reduced?

Has a state ever before declared itself insolvent?

Chuck

P.S. Law or not, I would not put it past a state declaring bankruptsy, legal or not, to try and get out of Billions of dollars of obligations. People owed those obligations could chose to wade through lots of legal wrangling, or, try and cut a deal with the state. At that point, I don't see the state having much to lose...

 

[Infohawk]

A State can't declare bankruptcy. Please stop posting till you educate yourself.

When people say that they mean they can't declare bankruptcy under federal law. That's fine but you still have to option to not honor your debts. And when you're a state or a country there's nothing anyone can do about it.

 

[chucky2]

That's sort of what I'm getting at myself...so it's not legal to do so.

The state does it anyways.

Who's going to force them to pay? After the months, years, decade of legal push and shove that will go on of course...and the state has unlimited money for lawyers in light of the Billions on the hook to not pay out.

What would they have to lose?

Chuck