Public Workers Should Feel Economic Pain

During the 2009 legislative session, New Mexico policymakers faced some of the most challenging budgetary times in recent memory. That fact led to reductions of approximately $450 million to the General Fund from about $6 billion to just over $5.5 billion.

Unfortunately, despite the seemingly obvious need for public sector workers to share in the sacrifice necessary to close a yawning (and ongoing) budget gap, the public employee labor unions which represent 66,000 New Mexico teachers and public employees filed suit recently to block the Legislature’s cost-saving efforts – at least as far as they impact government workers.

The unions, through their legal actions, are saying “Don’t include us in President Obama’s vision of ‘shared sacrifice.’” Of course, with the Legislature having cut $450 million and only $80 million of that coming directly from public employees, it would seem that the public employee unions and their members were getting off easy.

We at the Rio Grande Foundation applauded the Legislature’s fiscal restraint in the face of budgetary reality, particularly when so many other states are passing major tax hikes that will only further hobble a future economic recovery. In two separate policy papers published earlier this year, we pointed out that New Mexico’s state and local government workforces are both significantly larger and better paid (accounting for overall compensation) than their peers in other states.

In one of those studies called “The Government Gravy Train” which is available on the Rio Grande Foundation website, we found that state and local governments compensate their workers (payroll and benefits) an average of 9.2 percent more than their private sector counterparts throughout the state. This is far higher than the average in most states which found government workers to be paid at about the same overall as their private sector counterparts.

The measures legislators enacted – and that have spurred the union lawsuit – include the following, common-sense measures:

  • Longer work requirements on most governmental employees and educators before they can retire with full benefits. This is especially important because government workers are able to retire with generous benefits at much younger ages than their private-sector peers;
  • Restrictions were placed on state and local government workers who retire and then return to work in a governmental job;
  • Pension fund payments by state workers and educators were increased during the next two years;
  • Higher payments are now required by governmental employers and workers over four years to a program that provides health care for retirees and their dependents.

While the economic downturn forced legislators to act, the driving force behind the Legislature’s action is concern over the long-term financial stability of the state’s two large pension funds which are supposed to cover the retirement costs of state workers. Even before the current economic crisis, taxpayers in states nationwide were coming to grips with the fact that their political leaders had over-promised and under-committed when it came to providing these resources.

Unionized government workers don’t live in the same world as the rest of us. So, while the rest of us – employers and employees alike – cut back due to hard times, government labor unions use their political clout and lobbying to get theirs even if it means others get cut even further. It would seem that this lawsuit is designed to raise the costs, both political and financial, of such legislative actions by fighting the battle in court, thus making future Legislature’s more wary when it comes to making any cuts at all to the government bureaucracy.

In reality, what the Legislature did this year should only be a first step in bringing the compensation and size of New Mexico’s public sector in line with other states and the real needs of its citizens. Hopefully this lawsuit does not deter those efforts.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.