How bloated public pensions sank California’s bankrupt cities

Financial Post ^ | 08/06/2012 | Alison Vekshin, James Nash and Rodney Yap

[SeekAndFind]

Stockton, California, Police Chief Tom Morris was supposed to bring stability to law enforcement when he was appointed to the job four years ago.

He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than US$204,000 — the third of four chiefs who stayed in the position for less than three years and retired with an average of 92% of their final salaries.

Stockton, which filed for bankruptcy protection on June 28, is among California cities from the Mexican border to the San Francisco Bay confronting rising pension costs as they contend with growing unemployment and declining property- and sales-tax revenue. The pensions are the consequence of decisions made when stock markets were soaring, technology money flooded the state, and retirement funds were running surpluses.

“We didn’t have very many people looking out for the taxpayers when these deals were negotiated,” San Jose Mayor Chuck Reed, 63, said in a telephone interview. San Jose, the state’s third-largest city, approved a ballot measure in June to contain annual retirement costs that soared to US$245-million from US$73-million in the past decade.

Bloomberg News compiled data from the California Public Employees’ Retirement System for more than a dozen cities facing the financial strains of rising pension costs and declining revenue. The data show how local governments struggle to support six-figure lifetime benefits for some retirees even as they cut police and fire services for city residents.

[Gaffer]

I’m not saying that Stockton fits the overall CA profile of neglectful excess, but I can tell you what I think befell California as a whole with respect to overinflated salaries, retirements, bailouts, etc.

These ‘officials’ spent their time pandering to the egos of the voter. Whether it be an extremely liberal approach to doing not-a-damned-thing about illegals, to imposing ridiculous conditions on building, living, or working via a myriad of insane regulations and laws, or just insulting the common good man’s morals.

Unfortunately, the illegals and the self-interested, self-satisfied, power-hungry liberal Democrats outnumbered the sane people in California. When California started pandering to illegals, queers, nutjobs, environmentalists and powermad liberals for the sake of votes, they saddled the worthy in the state with economic slavery and an IMPOSSIBLE debt - to which, the smarter ones have responded by leaving that state as Lott did with S&G.

[SMARTY]

Yup...no one can (or WILL) give an accurate accounting of the number of ‘undocumented’s’ in California.

However, ‘undocumented’s’ consume municipal services just like everyone ELSE who lives in the community... police, fire department, social services, use of public facilities, delivery of utilities, educational, etc.

If you can’t tell me how many people (documented or otherwise) consume services, of course it is impossible to forecast or BUDGET properly!!!

It ain’t rocket science!

[ops33]

If they can just get a high speed rail line all their problems would be solved!

[GaltMeister]

If they can just get a high speed rail line all their problems would be solved! ---------------- They can use the high speed rail to run the corrupt politicians out of town!

[AnotherUnixGeek]

The pensions are the consequence of decisions made when stock markets were soaring, technology money flooded the state,

I keep hearing this rationale for insane public pension plans, but the stock market and technology money never once reached a point where this kind of pension spending made even the remotest sense.

The simple fact of the matter is that our political class in the US is composed of people who aren't bright enough or competent enough to make it in private industry. And we let these people make funding decisions with our tax dollars, with the expected results.

[irishjuggler]

The simple fact of the matter is that our political class in the US is composed of people who aren't bright enough or competent enough to make it in private industry. And we let these people make funding decisions with our tax dollars, with the expected results.

Very true. The other problem is that the people making these funding decisions are typically public employees who are themselves eligible for the very gold-plated benefit packages they're creating. The foxes are in charge of the hen house.

[vette6387]

“Yup...no one can (or WILL) give an accurate accounting of the number of ‘undocumented’s’ in California.”

But if we are to believe some of the “estimates” put forth in the press, the number is around $5 Billion a year! That’s what your cheap lettuce costs you Mr. and Mrs. Californian! When the Blacks started yammering about the Bracero Program back in the 60’s, they claimed that the Mexicans were taking “their jobs.” So that very productive “guest worker” program which benefitted everyone was cancelled. But guess what, the Black’s really didn’t (or wouldn’t) pick lettuce or anything else that required “real work,” so the farmers and the consumers were screwed. The illegals have moved in to fill a need. From what I have seen, the Mexican farm workers do very difficult work, work that the Black man won’t do because he prefers to continue to rely on productive people to pay him to sit on his ass an do the only thing he really knows how to do, and that’s procreate!

[roadcat]

Very true. The other problem is that the people making these funding decisions are typically public employees who are themselves eligible for the very gold-plated benefit packages they're creating. The foxes are in charge of the hen house.

Bingo! Very true, and you stated it nicely. I've seen this up close, having worked in government. The leaders in unions come up with surveys of what workers are getting in other local municipalities, saying they need to be on a par with others. The surveys are skewed to support their viewpoint. Because of various city charter rules, managers must get paid more than those they manage (often at least 5 percent above the highest paid worker). The ones making the benefit funding decisions know they'll get a large bump in pay, automatically, when the lesser workers receive theirs. They don't care about the ability of the city to handle the burden. Also, most of the leaders in the unions come from the rank and file workers, and quickly rise in promotions and pay for themselves. They are not there for the rank and file workers, but for their own self-interest.