Voter anger at generous (and unfunded) retirement benefits for government workers resulted in successful ballot initiatives and the election of governors promising change.
One little-noticed result of the Nov. 2 elections – the first since the Great Recession of 2007-09 – was greater voter pressure for capping a giant gusher of government red ink: the $4 trillion in pension liabilities for state and municipal workers.
Few politicians, even Democrats backed by the public-worker unions, could afford not to propose reforms for these retirement benefits that are often abused, underfunded, and usually far more generous than those in private business.
In two key states, California and Illinois, voters approved many local ballot initiatives calling for pension reform. And in six states, newly elected governors have proposed one of the most radical steps: 401(k)-style plans for government employees as an alternative for traditional guaranteed pensions.
Such victories will build on pension changes already begun in a handful of states, where reform has been mainly directed at new hires. In two states, Missouri and Illinois, the retirement age was recently raised to 67, while 16 states have either cut benefits for new employees or required current workers to pay something for their benefits.
Many cities are also being forced to act in order to avoid big cuts in spending. In Los Angeles, for instance, Mayor Antonio Villaraigosa has announced that pensions would be lower for new fire and police workers.