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State and Local Government / Transparency

Let Them Pay Taxes!

By Caitlin Hartsell on Jul 1, 2009

The Springfield News-Leader reported today on the task force created to address the pension deficit in Springfield. The pension plan for the police and fire fighters has a $200 million deficit that is expected to grow by $20–50 million by next year. The task force recognizes that it “had promised benefits it could not afford.” The only solution to this debt currently under consideration by the task force is an additional sales tax between 1/4 and 1 cent.

The article mentions that “the group previously has united behind proposals to restructure the pension fund board and move new police and fire employees to the state LAGERS retirement system.” The pension plan needs to be restructured, but this might not be the best method for doing so. The Show-Me Institute’s executive vice president, Joseph Haslag, has written about the issue recently, offering his idea for a comprehensive means of eradicating the problem, by restructuring the defined-benefit plan over time into a defined-contribution plan. This would create a system of portable benefits that lacks the budgetary pitfalls Springfield currently faces. Instead, the task force is trying to patch up the immediate budget deficit without really addressing the flaws of the program that led to the city’s problematic situation in the first place.

The public already rejected a ballot measure in February that proposed adding a 1-cent sales tax for this same purpose. Instituting such a tax now would contravene the public’s expressed wishes. Although the article reports that a 6/8 or 7/8 cent sales taxes increase “might be more palatable” to some, even these increases would be unwise during the current economic downturn. The most viable solutions for Springfield’s task force don’t require taxpayers to bail them out.

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Caitlin Hartsell

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