Michael Sweet was quoted in the Investor’s Business Daily article “Public Pension Fight: Unions Win, Budget Woes Remain.” Full text can be found in the March 9, 2015, issue, but a synopsis is below.
Is public pension reform dead? Defined benefits for public sector workers, which make up a large and growing portion of many stretched municipal budgets, have been on full display in many recent high-profile cases.
In Detroit bondholders accepted large cuts while most pensioners saw only their cost-of-living increases dialed back.
Stockton, California emerged from bankruptcy a few weeks ago and throughout the trial, the city steadfastly refused to consider cutting its pension obligations at all. Bondholders took haircuts, some as much as 83 percent, even as its pension costs rose 21 percent in its 2015 budget.
For Michael Sweet, “This cycle is over.”
Sweet believes unions have proved so strong and inflexible in court cases and in their hold over elected officials that there’s little hope for reform of any type, even as obligations swell and become more challenging for municipalities.
“The discussion will start again the next time you have a Detroit-like bankruptcy filing,” Sweet said. “That’s five to six years away, and all of a sudden people will be talking about it again. And the hole will be deeper.”