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The trouble with public pensions? Ask San Diego

By Ruben Navarrette Jr., Special to CNN
  • Ruben Navarrette: Wisconsin fight over reining in pensions, budget recalls San Diego woes
  • He says Gov. Walker is facing issue before it mirrors busted San Diego pension system
  • There, politics and poor governance starved system, ruined bond rating, he says
  • Navarrette: Don't trust government with retirement funds

Editor's note: Ruben Navarrette Jr. is a contributor, a nationally syndicated columnist and an NPR commentator.

San Diego (CNN) -- Who would have thought it? Wisconsin is the San Diego of the Midwest.

Granted, the winters aren't exactly comparable. But when it comes to the political climate and financial storms swirling around budget-busting public-employee pensions and how public officials choose to deal with them, there are striking similarities.

Trust me. That is not good. The nation's eighth largest city -- formerly known as America's Finest City -- earned its nickname: "Enron by the Sea." This is one of the fiscally irresponsible cities in the most insolvent state in the country, known for nice scenery and numbers that don't add up.

The numbers don't add up in Wisconsin, either. In recent days, much of the nation has been riveted by the political and public relations battle in that state, which is as nasty as it is necessary.

Rather than simply do what previous administrations have done and kick the can down the road for future generations to deal with, Republican Gov. Scott Walker -- with the support of GOP legislators -- has forced a standoff in the Badger State in the hopes of helping close a two-year, $3.6 billion budget shortfall.

Walker wants to do this by making state workers pay more out of pocket for benefits and eliminating the collective bargaining power of public employee unions. The first provision is something that workers have agreed to; the second is a non-starter. In recent days, thousands of angry Wisconsinites have gathered at the state capitol to protest Walker's plan.

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  • Pensions
  • Jobs and Labor
  • Politics
  • San Diego
  • Wisconsin

The drama -- now in its second week -- quickly spilled over the state line. According to a new USA Today/Gallup Poll, 61 percent of Americans strongly oppose the idea of taking away the power of public employee unions to engage in collective bargaining; only 33 percent would favor such a law.

Strong fiscal leadership is contagious and spreads faster than democracy in the Arab states. Republican governors in Ohio, Iowa, Indiana, New Jersey and other states are carefully watching events in Wisconsin and considering similar laws to close their budget deficits. And, in those states, there are more protesters are ready to make their voices heard.

President Obama, who was elected with the help of public employee unions, has expressed support for the protesters. House Speaker John Boehner has taken the opposite view by declaring support for Walker. The governor has also gotten support from potential 2012 GOP presidential candidates.

But San Diegans have a unique perspective. They've seen this movie before. In fact, it's been a constant fixture in their lives for nearly eight years, ever since a whistle-blower named Diann Shipione, an investment adviser who was also a trustee of the city's employee retirement system, tattled that the city's public pension fund was about as stable as a sand castle.

On April 9, 2003, in an opinion piece for the San Diego Union-Tribune, Shipione gave the city's dirty laundry a much-needed airing. She explained that the city had been shortchanging its public pension fund to the tune of more than $1 billion and that the city didn't have the money to pay out what it already owed to current retirees, let alone the multitudes of future city retirees waiting for their turn at the trough.

Making matters worse, there were also stories of lavish pensions like the case of the retired city head librarian who makes more than $200,000 a year. Public employee unions were running City Hall, and City Council members eager to grow up to be mayor or state legislators or members of Congress happily went along in exchange for political contributions.

Hey, it's only money -- the public's money.

And, it seemed, city officials knew about the budget shortfall and the gold-plated pension checks, but they dared not say a word. It was soon clear why. For spilling the beans, Shipione was publicly attacked by the public employee unions and fellow pension trustees in a desperate attempt to discredit her. Ultimately, the truth came out, and she was vindicated.

But, by then, the city's reputation had been horribly damaged and its standing with bond markets dragged though the mud. The place that had been known for clean, conservative and austere governance turned out to be none of the above.

And those city officials who either inked these deals or looked the other way were run from office and replaced by reformers -- some of whom had made their names challenging the corruption of the old system. But there are still bills to pay and a shortage of ideas about how to pay them.

What got broken here will take generations to rebuild. And, in the process, people learned a painful and important lesson: Do not turn your back on the institution of government and trust it to manage your retirement nest egg. If you do, all sorts of things are likely to go wrong.

Meanwhile, back in Wisconsin, Walker and state GOP lawmakers deserve a lot of credit for riding herd on the pension issue and trying to correct what's gone wrong. They're tackling an issue that other elected officials have been afraid to touch, which makes them political heroes in my book.

Besides, what's the alternative? Leave things just the way they are, and keep running up the state's credit card bill? Ignore problems in the hope that they go away? That is financial suicide.

The people of San Diego know this all too well.

The opinions expressed in this commentary are solely those of Ruben Navarrette.