Here’s another way health care costs weave their way into our lives – the town of Richland Hills, Texas is increasing property taxes to pay for a 20% rise in health insurance costs. While the increase in the mill rate (the cents per hundred dollars of property value) will only go up 0.6, it’s another example of the growing awareness of the impact of health care costs on a community.
The same is occuring in communities as different as MIssoula Montana, Boxborough Mass, and the state of New Jersey.
This is a national problem. Today’s NYTimes reports that property taxes have gone up two to three times faster than personal income in the tri-state area. As a resident of Connecticut and eight year veteran of my Town’s Board of Tax Assessment Appeals, I have first hand knowledge of taxpayers’ growing concern, and even anger, over rising property taxes. Now, new laws will require municipalities to report their future health care liabilities, a requirement that had a significant impact on public companies’ valuations and financial reporting.
And may well lead to even more taxpayer unrest; public entities typically provide health care benefits that are considerably more generous than those dispensed by the private sector. One of the stated reasons is these benefits are a form of compensation that makes the jobs more attractive given the wages, which tend to be somewhat below the private sector. While the latter may be true, the rationale instantly brings to mind the disaster unfurling at US auto manufacturers, who used the same logic decades ago to provide very generous health benefits in lieu of salary increases.
And look what’s happened to them.
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It is time to bring public employee health benefits as well as employee contributions toward the premium into closer alignment with what private sector employers provide.
Whether public employees receive lower wages than private sector workers for jobs comparable in skill, responsibility and stress, I don’t know. I do know that job security in the public sector is far superior, and that is certainly worth something. I also know that health and pension benefits are also far more generous than private sector offerings.
Taxpayers expect to pay public employees total compensation (wages plus benefits) sufficient to attract and hold employees who can perform their jobs in a competent and professional manner. They don’t want to pay far more than necessary to do this. When there are dozens and sometimes hundreds of qualfied applicants for many of these jobs, it suggests that the compensation package is too generous.
If we scaled back health and pension benefits while leaving wages unchanged and found that we are no longer able to attract a sufficient number of qualified employees to fill the openings, we can always raise wages to correct the problem.
If public employee unions object to finally reigning in out of control healthcare and pension costs, it is incumbent upon them to suggest a viable alternative besides their old standby of raise taxes ever higher, especially on high income people who they see as always ripe for further soaking no matter how much they are already paying. Taxpayers are finally starting to shout enough is enough!
I represent the Teachers Unions in CT and what we are seeing is the inability of the Towns and thier brokers to negotiate with carriers. In CT for exmple the Towns with do not go out to bid have received an average of 15% increase. However Towns that were sent out for bids received single digit increase. One Town in Fairfield Co. received a -24% decrease. With the disclosure of the fees and valuation from the carriers we can expect lower increase to come at least in CT.
We only notice the link between taxes and employee benefit costs when it is made explicit like this. However, it’s ALWAYS there. I subscribe to an email group that bundles every newspaper article in Texas that is about cities. All Texas cities have a fiscal year beginning 10/1. This is the time of year that budgets are discussed. Invariably, there are DOZENS of stories about how employee benefit costs are breaking budgets. Furthermore, I just emerged from a meeting with my actuaries about GASB 45. The fun is just getting started.
The comments by BC are a clear example of someone who only understand that the taxes are rising and does understand the aspects of Public Sector Employee issues. As he stated he does not know! To say bring the health care costs and the cost share of the employees in line with the private sector then you should pay the Teachers, Police, Fire Fighters higher salaries. He states skill should equate to pay levels well I do not what talks more skill pushing paper or holding off a crazed person with a knife of a building on fire. If that statement is true then they should all be paid the same are a CEO of a managed Care company. Each Town or Board of Ed needs to start with first understanding the costs of the benefit. The representatives of these Towns and Board are not knowledge with health care or the costs associated. As for these so called consultants who advise these Town Representatives they are all in the back pockets of the managed care companies, such as Aon, Marsh and HRH. The managed care companies must be questioned as to their costs I know in CT some Towns have not had a bid check for more than 20 years! It’s time for these Town Representatives and their Consultants to actully work for thier money.