Attacks on
Pensions, Safety Net Programs, Distract from Corporate Giveaways that
Exacerbate Economic Inequality
By
Greg LeRoy, Good Jobs First
EDITOR’S
NOTE: Though Rhode Island was not one of the states included in the study, it
might as well have been. The problems detailed in this free-for-download
report could fairly describe Rhode Island’s problem, especially when you
consider that giving money to 38 Studios, and paying state funds to investors
who bought 38 Studios bonds has taken precedence over keeping the promises made
to state retirees.
Washington
D.C. -- State lawmakers who are considering drastic cuts to the retirement
benefits of state workers are simultaneously giving away billions of dollars in
corporate tax subsidies and loopholes, often in amounts far exceeding the cost
of pensions, according to a new report.
Putting State Pension Costs in Context by Good Jobs First examines 10 states where
elected officials are threatening to undermine retirement security by cutting
the pension benefits of their teachers, firefighters, police officers, and
hundreds of thousands of other public employees. The states included in the
report are Arizona; California; Colorado; Florida; Illinois; Louisiana;
Michigan; Missouri; Oklahoma; and Pennsylvania.
“In
states across the country, politicians are attempting to solve the budget woes
caused by Wall Street and the Great Recession by cutting the pension benefits
of public employees,” said Philip Mattera, Research Director of Good Jobs
First. “It is often stated that budgets are a matter of priorities. And our
research shows that corporate interests are generally prioritized over
teachers, firefighters, police officers, and thousands of other employees who
dedicate their lives to public service.”
The
average retirement for a member of the Louisiana State Retirement fund is
$19,000 per year. Yet, Louisiana gives away about $1.8 billion a year to
corporations through corporate subsidies and tax loopholes—totaling about five
times the annual pension cost for state workers.
Pennsylvania
loses nearly $4 billion annually as a result of corporate subsidies and
loopholes—more than two and half times the cost of public pensions.
Pennsylvania’s state pensions average a modest $24,000 a year. In Michigan,
corporations also enjoy about $1.8 billion in subsidies and tax breaks – more
than three times the cost of meeting the state’s commitment to retirees. The list
goes on.
These
ten states were chosen for analysis because their legislatures are underfunding
pensions or elected officials are threatening to cut pension benefits.
Actuarial analysis provided the normal cost of funding pensions on a yearly
basis, which excludes the costs of making up for past underfunding.
The chart
below compares the normal cost of pensions to the public cost of corporate tax
subsidies and loopholes in each of the ten states examined. Data was derived by
examining the latest state tax expenditure reports, state budget documents, and
reports by state tax and budget watchdog groups.
“As
a matter of honest accounting and fair budgeting, state leaders should examine
all forms of spending before they single out pensions or any other expense,”
said Mattera. “Corporate tax breaks and loopholes are often poorly understood
and little-noticed because they do not get debated as appropriations, nor do
they often get sunsetted or audited. But over time they add up to hundreds of
millions, or even billions, of dollars per year.”