Morning Call story. Any thinking conservative would reject this notion out of hand. Let me explain.
Lehigh County's public sector pensions are made up of two different kinds of plans, defined benefit and 401ks.
Under the defined benefit plan, taxpayers guarantee the benefit, regardless whether the economy tanks. This is the pension plan that has most municipalities in trouble. But Scheller and Mazziotti won't mess with that plan. They can't. It is illegal to a pension plan once it is set.
The solution here is to limit defined benefits for future hires, as Mayor John Callahan did in Bethlehem. Scheller has proposed something similar to this in Lehigh County, and it certainly sounds reasonable.
Where Scheller and Mazziotti really go astray is with the 401k pensions. Under this kind of plan, which is much kinder to the County budget than a defined benefit plan, employees kick in 5% of their salary. The County matches the employee contribution. Legally, they can go anywhere between 4.0% and 5.5%, but the County's pension board has always stuck with the higher amount.
Why? It's not because County officials are padding their own pensions, as Scheller suggests. The reason is to encourage employees to participate in a 401k type plan for their retirement over the defined benefit. It helps to sell that to the employees if they know the County's match won't be touched or subjected to political manipulation.
How much money would the County save by reducing its contribution from 5.5% to just 4%? By my calculation, the will save just $47,000 to generate a great deal of bad will and ensure that everyone stays in the defined benefit plan.
In 2014, the gross wages covered by County real estate property taxes is around $62 million. Using the 5% required employee contribution times 1.5% (the difference between 5.5% and 4.0%) the reduction would be less than $47,000.
What really frosted me was when Scheller told The Morning Call that, unlike those wealthy County workers, has no guaranteed pension fund.
I believe her. She doesn't need one. And since she brought the subject up, let's go into what she does have.
- For one thing, a 7,100 square foot, 15 room, 6 bath mansion.
- For another, ownership of a family business successful enough to allow her father to donate $50 million to a college in 2012.
Yet she wants to deny those that are saving for retirement the ability to earn an extra 1.5% on their contributions. She is actually encouraging employees to stick with defined benefit plans.
Scheller also complains it's a conflict of interest for pension board members to vote on these matters because most of them participate in the pension.
Under that reasoning, she can't ever vote on a Budget because it affects her tax bill. Under that goofy logic, she certainly had a conflict of interest when she voted for reassessment that reduced her tax bill by $3,400.
To save a $47,000, Scheller and Mazziotti would guarantee that County workers avoid the 401k like the plague.
Sure, $47,000 is a lot of money. But guess what? Lisa and her husband donated more than that ($65,000) to two candidates last year - Ott and Mike Schware.
This is no reform. This is nonsense. Allentown blogger Michael Molovisky claimed she had the "taxpayer's back," but quite the reverse is true. He plan would alienate the workforce, drive thm into the wrong kind of pension and save a mere $47,000 in a $360 million budget.
If Scheller wants to close the $8 million deficit that she helped create, all she has to do is find 170 more items like this.