Press Release: Building Budget Problems One Tax Break at a Time
... Journalist and author David Sirota recently published a report titled, "The Plot Against Pensions: How Pew and the Arnold Foundation Plan to Undermine America’s Retirement Security". Sirota’s report was published by the Institute for America’s Future, and in it, he examines the strategy of business lobbyists to manipulate discussion about public pensions in states including Florida, Kentucky, and Rhode Island.
This strategy embraces the determination of groups like American Legislative Exchange Council (ALEC), Heritage Action and the Arnold Foundation that have coordinated well-funded efforts to exaggerate the costs of public programs, while concealing or ignoring the failure of local governments to solve budget problems through better money management and cost sharing revenue increases, particularly to businesses.
Sirota wrote, "The plot forwards the illusion that state budget problems are driven by pension benefits rather than by the far more expensive and wasteful corporate subsidies that states have been doling out for years. That ends up 1) focusing state budget debates on benefit-slashing proposals, and therefore 2) downplaying proposals that would raise revenue to shore up existing retirement systems."
According to the Florida Department of Revenue, there were 199,727 for-profit businesses registered in the state in 2012, but just 11,501 reported any tax liability. More than 94% of Florida businesses paid no income tax in 2012. And while business lobbyists insist that tax breaks help create jobs, recent research by groups like the Tax Foundation show little evidence this is true. States with significantly higher business tax rates like New York, Massachusetts, Connecticut, Illinois and New Jersey all have lower unemployment rates than Florida, which has the 10th lowest tax rate in the nation.
The need to sustain strong state and municipal services is a far more important investment for a healthy business and job-creating environment, yet the New York Times reports that states, counties and cities are giving up more than $80 billion each year to companies in the form of subsidies and tax expenditures. In Florida, that amounts to nearly $4 billion each year, and 16 cents of every budget dollar.
Business lobbyists and financiers are driving a narrative that public pensions are unsustainable, while committing state money to Wall Street hedge fund managers who will make millions on the fees, far outstripping the cost of public pensions. Worse, these efforts often depend on the reputation of previously independent think-tanks to sell the merits of selective research. In Florida, the LeRoy Collins Institute issued a Report Card on municipal pensions in 2012, assigning letter grades based solely on the plans’ unfunded liabilities – a methodology lapse later disputed in hearings in Tallahassee.
The Florida Retirement System, ironically, is consistently listed as one of the best funded state retirement plans in the country; and most of Florida’s municipal plans are solidly funded as well. In fact, as the recession continues to recede, recovering equities markets have been replenishing public funds, and local pension reforms already have resolved significant problems in funding and investment practices.
Increasingly, it appears the public pension "crisis" is nowhere near as catastrophic as the pending retirement security crisis facing all Americans; it also appears anti-pension legislation is driven not by local fiscal crises, but by political agendas that favor business interests.
View the "Building Budget Problems One Tax Break at a Time" Infographic
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For information about the funding and structure of municipal public pension plans, along with extensive research by national retirement security advocates like the National Institute of Retirement Security and Boston College Center for Retirement Research, please visit www.publicpensioninstitute.org, a website of the Florida Public Pension Trustees Association.
Raymond Edmondson, Jr., CPPT
CEO, Florida Public Pension Trustees Association
800-842-4064 or Ray@fppta.org
FPPTA Media Relations Consultant
FPPTA Public Relations Consultant