Editorial: Cost of Retiree Health Benefits Could Affect Taxpayers
Although only 15% of workers in California are public-sector employees, a new rule requiring public agencies to account for the cost of future retiree health benefits will affect every citizen if the state is forced to cut expenditures for programs, a San Francisco Chronicle editorial states.
According to the Legislative Analyst's Office, if public agencies continue current spending formulas, they will pay $31.5 billion annually in retiree health costs by 2019, the editorial states. Under current tax rates, that cost is "not the kind of number the state budget can handle -- at least, not if the public is expecting parks and schools as well," according to the Chronicle.
The editorial notes that the rate of employers offering retiree benefits to private-sector workers has decreased by 50% since similar accounting rules were implemented in 1992.
The new rules for public employees could meet resistance from private-sector workers if the costs start to "tax important state services -- such as infrastructure, safety and public schools -- that the state's struggling private-sector workers are depending on for their own futures," according to the Chronicle (San Francisco Chronicle, 12/21).