Saturday, September 15, 2012

The Cost Of Public Pension Plans: Dyer Plan Provides Big Boost To Police Pension

One of the driving forces for higher taxes in local government is the cost of paying for generous public pension benefits that government provides to public employees. The town of Dyer is currently considering a major boost in the pension benefits for its police officers that is stirring controversy not because of the size of the pension boost but the fact that a police officer who sits on the town council plans to participate in the vote for the pension boost. The Northwest Indiana Times explains:

Dyer's Town Council president said he intends to press a fellow councilman to abstain from voting on a 17 percent increase in pension benefits for police officers when it comes up for final approval.
Dyer Town Council President Jeff Dekker argues Town Councilman Joe Cinko has a conflict of interest in the vote because Cinko is a Dyer police officer and could one day benefit from the pay increase.
“I think that it's clear that he stands to benefit from this pension plan, and if it's not legally a conflict as defined by law, it certainly is an implied conflict,” Dekker said.
Those concerns came to a head Thursday when Dekker called on Cinko to abstain before the Town Council gave initial approval to the increase.
Cinko said he disagreed with Dekker's claims, saying there is no way to know whether the ordinance will be in place when any current Dyer police officer retires.
Cinko said he spoke with the town's attorney, who advised he was within his legal rights to vote on the ordinance.
"(Dekker) seems to be basing the decision on feelings of conflict of interest," Cinko said. "It's not a legal one."
According to the story, the minimum pension to be paid to police officers will increase by $4,716 to $31,949, which is more than most people get from social security benefits annually. Current police officers will only have to pay $283 more annually for the benefit increase, while the taxpayers of Dyer are being asked to pay $48,318 for the increase. The pension benefit will apply to five retired police officers who were within the department before 1977 and are drawing benefits currently, and to future retirees with at least 20 years of experience. I would lay odds that the current retirees are drawing bigger pension checks than they ever drew as full-time employees. By continuing to enact these generous pension benefit increases, local government officials are ensuring that future taxes will have to be raised or services cut to pay for their costs.

This is precisely why state and local governments all over the country are going broke. Pensions in the private sector have virtually disappeared, while government pensions keep growing. Our neighboring state of Illinois cannot seem to close billions of dollars in annual deficits because the cost of its public pension plans are far exceeding tax revenues available to pay their current costs, let alone future costs. I don't know who Dyer's town attorney is, but he obviously doesn't know the law if he is advising this police officer who sits on the town council that it is not a conflict of interest for him to vote on increasing his own pension benefit. Under a new state law, employees of a government unit starting in 2013 will be barred from serving on a council of a county or city that employs them to ensure that these public employees are allowed to engage in the self-dealing that this town council member in Dyer insists that he has the right to do. The Indianapolis City-County Council has been populated over the years with firefighters, police officers and othe public employees who have engaged in blatant self-dealing through their elected positions.


Pete Boggs said...

It won't take much more of this economy to quickly expose the misappropriation & evaporation of promised but nonexistent public pensions, due to fail in record proportion because the money simply isn't there. Any & all are invited to do the research (the math) will find those promised dollars have gone missing.

guy77money said...

As long as the Fed keeps interest rates artificially low, government municipalities will keep taking out low interest bonds to pay all these pension benefits. Once the bonds interest rates start rising then it is game over, then they will raise taxes or declare bankruptcy. We saw what happened when the credit market seized up in 2008. The problem is all these mid to small (Anderson, Bedford, Tipton,add your own town) towns in the nation that have no chance to ramp up employment and generate new tax income will keep eroding. Drink the kool-aid and enjoy this artificial rise in the stock market and don't forget to buy some gold for your portfolio. The rich will keep getting richer and the poor and getting poorer middle class will keep struggling to get by.