Wednesday, September 8, 2010

Webster's online dictionary defines a conundrum in a couple of different ways. The first has to do with a riddle and the second is "an intricate and difficult problem." For the purpose of this missive we will consider the latter.

For years The Citizen has advocated holding the line in the public fund budgets and we will continue that time-honored tradition again this year by imploring our elected officials to find every means possible to keep spending -- and our taxes -- in check.

We have pointed out on numerous occasions that in an environment of declining housing values, holding budgets to rollback still means a sizeable increase in the taxes residents and business owners will pay, so it no longer suffices as a goal for budgeting.

Much of the rhetoric for "holding the line" on expenses is driven by larger businesses, not individual taxpayers. Fully paid retirements, health care, life insurance and cost-of-living salary increases previously were de rigueur throughout business and government alike. The concept of the worker being dedicated to the business that employed him and the business owner being committed to the welfare of the employees had become our way of doing business. An employee could expect to be cared for in return for an honest day's work for the business owner.

Somewhere around 1980 that all changed for businesses. In an effort to pull out of hyperinflation and no earnings, businesses began eliminating the employee benefits to shore up sagging balance sheets. Their actions worked and we emerged from the malaise to profitability once again.

The problem for workers in the private sector was that benefits never returned to those of the previous years. They were offered a 401(k) instead of company retirement plans, normally with healthy matching funds at first. However, the cost-of-living increases were forever gone and employees were lucky to keep up with the annual inflation. Where was the money to come from to fund the 401(k)? At the same time, the healthy matching funds for the 401(k) slowly began to shrink away as employers noted the lack of participation in the matching funds.

Meanwhile, public entities have continued with the benefit plans and salaries of yesteryear. Today, many federal, state and local government employees receive fully paid retirement, health and life insurance as well as annual cost-of-living increases -- and more, in some years -- just as we all used to receive 30 years ago.

Now to the conundrum. It appears that someone took a wrong turn with employee wages and benefits, but who? Over the last 30 years, private sector businesses have recorded unimaginable profits as compared to earlier times. The current recession is largely due to the greed on Wall Street to explode shareholder value and the simultaneous marketing of the American Dream to own a home.

The money seems to have been there to fund better employee benefits but businesses continued to hold the line on staffing costs while exponentially increasing executive and shareholder compensation.

Who is at fault here, the government that has continued to care for the employees they employ or the businesses that have divorced themselves from that responsibility? Should the local government budgets be cut at the expense of funding their employees' benefits or should businesses pony up not only the taxes but the funds to match the salaries and benefits that government employees enjoy?

Whatever your opinion, it does present an intricate and difficult problem.

-- The Citizen