Steven Malanga of The Manhattan Institute has an article tracking the impact of compensation in municipal budgets. New Haven’s Mayor John DeStefano, long a public sector union ally, now finds himself in the position of trying to reduce the fast-rising costs associated with employee compensation. In the city’s $475 million budget, pension and health care benefits are projected to rise by $12 million this year. Other cities facing out of control employee costs include Costa Mesa, California, Pittsburg, PA, New York City, Chicago and Newark, N.J.
But so far attempts at money-saving by city officials has mainly been met with union protests. A self-defeating stance.
As Malanga notes, the local level is where these costs are most strongly felt. Municipal managers are increasingly being forced to choose between offering basic services and keeping up with fast-rising benefits costs – in some cases the result of state-level statutes that enhanced benefits and failed to consider the costs.
In a forthcoming paper we find that one culprit is decades of budgeting in the dark. These costs appear to be a surprise because budgets don’t indicate in a meaningful way to the public how much a municipal government is carrying in pension and health care costs. Budgets reflect what the municipality chose to pay in a given year and not how much is needed to keep the system funded. In fact, in the case of New Jersey, these numbers aren’t always made clear to the local governments due to state reporting conventions.
For more on the pressures in local budgets, read the original article here.