Weissert Warns of Pending Fiscal Tsunami

More than half of Florida’s local government pension plans are less than 70 percent funded, a situation that will drive the Sunshine State to an inevitable catastrophe, according to the nonpartisan, nonprofit Florida TaxWatch research institute.

Robert Wissert, the RCCCPBC’s guest speaker for April, warned the crowd that the archaic “Defined Benefits Plan” for municipal employees may fly under the radar, but it is the Tallahassee group’s top priority.

“By law these promises must be kept, yet Florida’s localities are underfunded to the tune of $4 billion,” Weissert said. “The Leroy Collins Institute at FSU rated 23 of PBC’s 29 pension plans at an F or D status, meaning either your taxes go up or services go down or a combination of the two.”

He called the Defined Benefits mandate anachronistic, the type of system that led to the downfall of the steel, auto, and airlines industry.

“It was devised by politicians and unions without any citizen input, and no business uses this anymore,” he explained. “Everyone has switched to 401(k) plans and the like. But the obligations must be met.”

The TaxWatch Research Director cited examples of how retirement systems have been abused, including one instance where a 911 operator in Miami Beach engaged in “spiking” – piling up overtime in her last years on the job – to retire on her $55,000 salary  for a yearly benefit of $165,000.

He also noted that the million-member Florida Retirement System for state employees was funded at 87 percent, but it still received $500 million in contributions from taxpayers. By contrast, Illinois’ system was $100 billion in debt, Detroit retirees were receiving 19 cents on the dollar, Puerto Rico’s plan was only 6 percent funded, and municipalities in CA, KS, and MS have declared bankruptcy due to exorbitant pension commitments.

“The actors in drawing up these plans – the actuaries, the union lawyers, the politicians – never left a chair for the taxpayer. They knew that today’s payments would be based on tomorrow’s promises, and that ‘government’ could legally reach into your pockets to pay for them,” Weissert continued. “But other factors – voter apathy, bad collective bargaining laws, investment restrictions, insurance premium caveats, and ridiculous employee benefits – also contributed.”

“So how do we get out of this mess?” he asked rhetorically.

“Reform requires action at the state level, with reasonable alterations to our constitution, at the legislative level with changes to Florida’s statutes 112, 175, and 185, and massive awareness programs in localities, with media coverage, homeowners and condo rallies, educating politicians, and talking to all types of civic groups,” he answered. “People and communities must learn the liabilities they are shouldering.”

Otherwise, he warned, a fiscal tsunami will engulf every Florida community, leaving our children and grandchildren to bear the brunt of it all.