Les Jones

Because Tim Hutchison needs a bigger pension

Wednesday, October 14th, 2009 | East Tennessee | Permalink | 1 Comment |

The former Knox County sheriff is gearing up to run for Knox County mayor.

I’m not a Tim Hutchison (R) fan. I work in Knoxville, but I don’t live there and therefore don’t vote there, don’t pay taxes there, and don’t send my kids to school there. I try to ignore Knoxville politics as much as possible. But even as a casual observer of Knoxville politics I find plenty to dislike about Hutchison.

• Hutchison used imminent domain to demolish a block of downtown Knoxville buildings for a new city jail. The jail was never built. A study determined Knoxville didn’t need a new jail. The buildings and the businesses in them were gone all the same.
• Under Hutchison the sheriff’s department “pension was changed from a defined-contribution pension plan, similar to a 401(k), to a defined-benefit plan, which has a specific payout. As has been noted, under the new plan, former sheriff Tim Hutchison’s pension goes from $20,000 to $80,000 a year.” The plan was estimated to cost $100 million over 20 years. Within a year the costs were revised upwards due to a deteriorating stock market. The only mitigating factor in Hutchison’s defense was that Knox County voters actually voted for that disaster in a referendum.
• As sheriff Hutchison refused to cooperate with “America’s Most Wanted” when they offered to feature the Johnia Berry murder to help find leads. At that point AMW had led to the arrest of 887 fugitives. Hutchison never caught the killer. His successor caught the guy after someone identified him from a police sketch and turned him in for the reward. Luckily the idiot had never bothered to leave Knoxville despite his face being on billboards, yard signs, and Food City grocery trucks all around town and a $70,000 reward being offered for his arrest.
• Hutchison had a grudge match with some member of the county council or whatever it’s called, in which they constantly filed lawsuits against one another at taxpayer expense.

My wife and I are trying to decide if our next house is going to be in Knoxville, Maryville, or Alcoa. One persuasive argument against buying a house in Knoxville is that the government is so lousy. Tim Hutchison is a prime example of how lousy it is.

Tags: penions, unions

Are govt. pension funds really guaranteed by law?

Sunday, March 1st, 2009 | Economics | Permalink | No Comments |

Liberty Unbound - Promise Now, Pay Later: Among the states, the question isn’t who’s most likely to succeed. It’s who is most likely to default.:

In the precedent decision Spina v. Consolidated Police & Firemen’s Pension Fund, the New Jersey state supreme court had declined to apply conventional contract rights to a retirement plan because a defined-benefit plan must, by its nature, assume solvency that a contract doesn’t. “We think it more accurate to acknowledge the inadequacy of the contractual concept” as applied to retirement plans, the Spina court concluded. In other words, any contractual “guarantee” in a retirement plan is inherently suspect.

This is a key point: if you make a contract with a bankrupt entity, that contract is suspect. There’s no guarantee of solvency. Claims of pension moneys being “guaranteed by law” are dubious. If the plan is bankrupt, its solvency is obviously not guaranteed. Public officials (and, for that matter, pensioners) who count on these supposed guarantees are being reckless.

He follows that with excellent examples of politicians mismanaging state pension funds for political advantage. I love this summary of the government pension problem:

The best solution is to privatize state pension funds and put them in the control of the beneficiaries. It’s the only reliable way to keep politicians’ hands out of the pension cookie jar and, ultimately, out of the taxpayers’ pockets. It would force local governments to budget for and fund (in real time) new benefits granted or new employees hired. If the pensioner hands all of her money over to Bernie Madoff, that’s her folly. The current crisis is a joint-and-several folly forced on all of us. It would be a little harder for politicians (the Madoffs of the “guaranteed by law” swindle) to lie to and steal from taxpayers if state employees controlled their own pensions.

Tags: penions, unions