The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Scheming to Avoid Paying for City Pensions

Sep 16, 2013

Last month, a federal judge decided that the city of San Bernardino, California is eligible for bankruptcy protection. The judge declared that the city is insolvent and unable to pay many of its bills.

The pension checks of the city workers are among those bills and are the main target of the bankruptcy.

A year ago, San Bernardino suddenly filed for municipal bankruptcy, after disclosing a deficit in the city’s budget. But before the bankruptcy filing, city officials had repeatedly reported for years that the city had enough money in its budget. It looks like a staged “sham” bankruptcy.

The mayor blamed the pensions for overwhelming the city budget, and San Bernardino stopped making its $1.2 million bi-monthly payments to California Public Employees' Retirement System (CalPERS) for a year.

Now, the city wants to treat pension funds like debts to other creditors. If the court goes along with this move, the city can substantially or totally cut the pension payments.

This is the scheme being followed by officials of cities in California, Michigan and elsewhere in the U.S.: The cities first approve tax breaks to businesses, then declare bankruptcy, blame the workers’ pensions for the bankruptcy, and try to get court approval to avoid paying for the pensions. This scheme is currently targeting the city workers. If it works, other pensioners, public and private, will be on the same chopping block.

To secure our pensions, we’ll have to fight for them.