Hawaii Gov. Linda Lingle said citizens must act to stop the increase in government-pension benefits or risk letting the expanding liabilities hinder future economic growth.
“Until the public rises up and says, ‘Enough is enough, you have to stop this spending,' it won't stop, and our quality of life will degrade,” Ms. Lingle said of public employee retirement benefits. The Republican said most politicians won't take the necessary steps without prodding from voters.
Ms. Lingle was one of three governors to discuss pensions, job creation and education issues on a panel Monday during the Milken Institute annual Global Conference in Los Angeles. Also on the panel were Wisconsin Gov. Jim Doyle, a Democrat, and California Gov. Arnold Schwarzenegger, a Republican.
Mr. Schwarzenegger said he's asking state unions and legislators to roll back retirement benefits for new hires to pre-1999 levels. In that year, California increased its retirement packages for government workers. State contributions to employee retirement plans have increased to $3 billion a year from $150 million 10 years earlier, Mr. Schwarzenegger said. In that time, revenues have risen just 26%, he said.
“Eventually, it will go up to $10 billion,'' he said. “We're negotiating with labor. We're negotiating with legislators so we don't have this.''
Wisconsin's Mr. Doyle said his state was in a better position in terms of retirement liabilities. The state's plans are 99% funded, even after the past few years of equity market tumult, he said.
Wisconsin doesn't have defined benefits that must be paid to retirees. A state board, not politicians, sets benefit levels and required retirees to take a 4% cut as the pension fund's investments declined in the past few years, according to Mr. Doyle.
“Wisconsin's an example of how you do it right,'' he said. “This is something built into our culture.''
Hawaii's Ms. Lingle said a previous administration took advantage of a strong economy by shifting $100 million from the pension fund to cover general fund expenses. She said the state offers benefits not normally found in the private sector, including lifetime health care for retirees and their spouses.
She said changes in benefits won't come from politicians.
“They don't get into office to stop spending money,'' she said. “It's just a point in our history where the public has to stand up. Let's not get into a hole we can never get out of."