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SOLUTION: Reduce State Spending

Freeze State Employee Pay

Leaders must take swift and decisive action to reduce state spending.  States can and should stop hemorraging cash. Employee compensation is the largest set of expenditures in every state budget. The average hourly wage of public employees ($39.66) is 45% higher than the average hourly wage of private employees ($27.42). A salary freeze on civil service is wholly justified. Future increases should not exceed the average hourly wage of private-sector workers.

What Works: Fixing State Budgets
Blueprint for a Better Budget

Rein in Public Employee Pensions

Replace defined benefit plans with defined contribution plans. Defined benefit plans guarantee specific levels of service regardless of cost, whereas defined contribution plans establish a fixed payment toward services. Some 84% of state and local workers enjoy defined benefit plans compared to 21% of private-sector employees. Instituting defined contribution plans would end the endless cost escalations of non-salary compensation.

Watch Bob Williams here addressing the underfunded state pension fund problem facing so many states.  He states that the public cannot afford the benefits and suggests defined contribution programs as a solution.

All our pension articles and solutions can be found here.

Read these items for more information about public employee pensions:
The Beholden State: How public-sector unions broke California
What Works: Fixing State Budgets
Underfunded Teacher Pension Plans: It's Worse Than You Think
Budget Solutions 2011: A New Way Forward from the Illinois Policy Institute
The Trillion Dollar Gap: Underfunded State Retirement Systems and the Road to Reforms
Blueprint for a Better Budget

Permanently Limit Spending.

Everybody but government must live within their means. States must be forced to do the same. Whether by constitutional amendment or statute, the Legislature and governor should be prohibited from increasing spending at a faster rate than inflation and population growth.

More informatino about permanent spending limits can be found here:
New Budget Tools for a balanced Minnesota
What Works: Fixing State Budgets

Market-based wages for government workers.

Repeal "prevailing wage" mandate. The costs of publicly financed projects are vastly inflated, unnecessarily costing taxpayers tens of millions of dollars, by requiring state contractors to pay workers no less than union wage. Allowing the market to set wages would minimize the expense of public works and allow government to fulfill more priorities at less cost.

Read more here:
Cato Tax & Budget Bulletin: Public Sector Unions
Budget Solutions 2011: A New Way Forward from the Illinois Policy Institute