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Florida Court Heads Off Pension Cost Creep

Florida’s Supreme Court just dealt a major blow to public sector unions, upholding a law requiring public employees to pay three percent of their salaries toward their pensions. The law, an effort by Governor Rick Scott to get the state’s pension costs in line, has wended its way through the state’s court system, being struck down by a lower court before this ruling delivered the final word.

If the state’s projections are correct, the law will avert a major shortfall in the upcoming budget. Tampa Bay Online reports:

A ruling against the contribution law would have created a nearly $2 billion budget gap for state and local governments because they then would have had to return the employee contributions.

Backers of the law said the change was necessary in tough financial times for the state.

“The changes made to the Florida Retirement System reflect the Legislature’s efforts to maintain a sound retirement system for our hardworking state and local government employees as well as the reality that Florida taxpayers can no longer bear the full cost of this benefit,” said Senate President Don Gaetz, R-Niceville.

Public employees and their unions are extremely disappointed with this ruling, but very few workers in the private sector will feel much sympathy; most contribute much more toward less generous pension plans. Changes like this, however unwelcome they are as they come, are part of what has to be done to make pensions safe and secure for the future. Better to pay into a pension that will actually pay out the promised rate than to leave off saving only to discover that your employer has gone broke and your promised pension is slashed to ribbons by a bankruptcy court.

We’ve been vocal about the need for states to be proactive about getting pensions under control before they become the unshakable burden that we’re seeing in states like Illinois and California. With this law, Florida is now moving in the right direction. Other states should follow its lead.

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