Ideology can be a costly indulgence
The recent news that the Town Council approved a budget including funds to address the town’s pension shortfall brought to mind a Palm Beach Daily News cartoon that ran on March 18, 2012. It referred to remarks that Wisconsin Gov. Scott Walker made at the Town Council meeting when invited by council President David Rosow.
As a notorious Republican union buster who was facing a recall election over quashing public employee collective bargaining in Wisconsin, Walker’s appearance during the final stages of drastic cuts to Palm Beach employee benefits was blatant ideological bluster. Getting an “attaboy” from Walker reeked of public gloating, which certainly didn’t help already devastated employee morale.
To be fair, there were no easy solutions to
Palm Beach’s employee pension situation. The town’s pension-related costs were spiraling out of control after 9/11, and benefits and salaries had increased significantly.
Combined with pension fund losses and decreased property tax revenue due to the recession of 2008, a perfect storm was brewing fiscal disaster on the horizon.
In 2009, the council directed then Town Manager Peter Elwell to develop a revised employee benefits strategy. The resulting plan scaled back defined pension benefits in favor of a savings plan similar to private companies. It also called for freezing employee pay for three years and reduced pay increases going forward. Automatic survivor benefits and cost-of-living increases also were eliminated.
Most everyone — even the Palm Beach Daily News editorial board — agreed that Mr. Elwell’s plan was drastic but necessary in light of the new economic reality. Other municipalities had similar looming shortfalls, so the council dismissed competitiveness as an issue. Mr. Elwell thought he could get employees on board for the greater good. All were wrong.
For three contentious years, police and fire-safety union officials tried to negotiate a better outcome, but were repeatedly sent packing by a council that knew it had absolute legal authority. If ever there was a reason to cover costs by raising taxes, it would have been the recessionary pressures between 2009 and 2012, but this council was ideologically opposed to the idea.
Upon finalizing the new plan, Mr. Rosow said he felt bad for the employees, blaming previous councils for leading them down a garden path. But devastated employees no doubt recalled his gloating with Gov. Walker.
Morale took a nosedive and a mass exodus of public safety employees ensued that has had town officials scrambling to provide service ever since.
As a result, Mr. Elwell’s plan was scrapped in 2016 and the town reverted to a more traditional and competitive defined benefits pension plan. Unfortunately, the damage to public safety department recruiting and retention appears to be lasting.
General consensus in hindsight is that the 2012 pension cuts were too drastic and noncompetitive.
But one wonders if more lasting effects of the blunder could have been avoided with a process that included a little deference and less bellicose ideology.