Tag: California

Categories
folly responsibility

The Stockton Bust

Stockton, California, had seen a flurry of new home projects right up till the mortgage market crash. But, boy, did that come to a screeching halt. The crash led to foreclosures, which led to lower revenues from property taxes for the city. And though the city tried some spending cuts, they haven’t been enough. The Stockton City Council just voted, six to one, to seek federal bankruptcy protection.

Reasons for the bankruptcy, however, are not confined to reduced revenues. Add “soaring pension costs” and “contractual obligations” to the list of disaster factors.Stockton Bankruptcy - an illustrative image, not a photojournalistic artifact

And it’s pensions and medical insurance that make up the elephant’s share of “contractually obligated” must-​pays. We’ll see if official bankruptcy will allow the city to get out from under that mess. The Chapter 9 plan includes dropping medical benefits for currently fully-​covered retirees.

Who’s to blame? Politicians who negotiate really cushy deals for their (our) employees. The contracts obligate future taxpayers to pay out huge pensions for future retirees, rather than being funded (through insurance and investment) at the time of salary disbursement. The problem is that politicians love to make promises others must keep. Specifically, in this case, they contract defined benefit pensions not defined contribution pensions.

It makes no sense to do this, of course. It encourages irresponsibility, and is (to use a buzzword that should be used often against its usual purveyors) unsustainable. As proven by the Stockton bankruptcy.

Stockton is, so far, the largest American city to go belly up. We can expect further such busts, since the cause of Stockton’s problems — under-​funded pensions coupled with full-​coverage, gold-​plated, lifelong health insurance for government retirees — remain endemic throughout the country.

This is Common Sense. I’m Paul Jacob.

Categories
initiative, referendum, and recall term limits

Trick and Treats

After more than a year of big labor throwing industrial-​size kitchen sinks at Scott Walker, Wisconsin’s Republican governor became the first of the three governors in U.S. history to face recall and retain the office.

Walker more than survived; he prevailed, beating his Democratic rival by seven percentage points, 53 to 46. In a light blue state, it was a thorough thwacking of the public employee unions, the biggest, bluest special interest.

According to exit polls, Walker even won better than a third of union households.

The man had kept his word not to raise taxes. Further, ending collective bargaining for most government employee unions, along with other reforms, saved lots of money for state and local governments and school districts. This, it turns out, prevented public sector layoffs and helped secure future health and pension benefits.

Walker’s success will be repeated elsewhere.

Hey, already happened! On Tuesday, in San Diego and San Jose, California, voters overwhelmingly passed measures to get a handle on out-​of-​control public employee pension costs. These measures were, of course, fiercely opposed by government unions.

As cities are cutting programs to pay pension benefits for retirees, a post on the Calpensions blog explains, “Public pension amounts in California are based on what unions are able to obtain through collective bargaining, not what is needed for a reasonable retirement.”

Among Tuesday’s many treats, there was one really rotten trick. California’s Prop 28 passed, weakening the state’s legislative term limits. Most voters, misled by the official ballot summary, thought the measure would result in tougher term limits.

Can’t wait until the next election, which falls nearer Halloween. Hope for more treats than tricks.

This is Common Sense. I’m Paul Jacob.

Categories
initiative, referendum, and recall term limits video

Video: California Term Limit Scam

CAUTION: A carefully concocted measure designed to fool the voters. Pass this on. It is important.

http://​www​.youtube​.com/​w​a​t​c​h​?​v​=​r​u​T​n​1​k​k​v​v​6​Q​&​f​e​a​t​u​r​e​=​y​o​u​t​u​b​e​_​g​d​a​t​a​_player

Categories
links term limits

Townhall: California’s Cross-​dressing Ballot Initiative

California politicians are at it again, as you can see on Townhall this weekend. And come back for the links:

Categories
initiative, referendum, and recall insider corruption term limits

Professional Politicians & Crony Capitalists

Yesterday, I explained how the official title for California’s Proposition 28 tricks voters who favor tougher term limits into supporting a measure that will dramatically weaken those limits.

The title’s slipperiness is anything but accidental. It was designed to fool, hiding the fact that the measure doubles the time legislators can park themselves in the state assembly and ups senate tenure by 50 percent. Instead, voters read that Prop 28 “reduces” (ever so slightly) the time a politician can serve in both chambers, from 14 years to 12 years – something affecting less than one in ten office-holders.

“The proponents of the measure are longtime opponents of term limits who have long wanted to roll back California’s voter-​approved legislative term limits,” says Jon Fleishman of the Flash Report, who serves as volunteer co-​chairman of “No on 28.”

Still, the sham ballot title is only one part of the Prop 28 scam.

The biggest financial backer behind Prop 28 has been billionaire developer Edward Roski. While at the very same time legislators were awarding Roski’s company the special environmental exemptions he needed to build a sports stadium, Roski just happened to plunk down over a million bucks to the politician-​prized petition drive, helping the measure get on the June 5th ballot.

“That’s crony capitalism and that stinks,” argues Fleishman.

“In a state with a 12-​percent-​plus unemployment rate,” Philip Blumel, president of U.S. Term Limits, points out about legislators, “the jobs they’re fighting the hardest to keep are their own.”

This is Common Sense. I’m Paul Jacob.

Categories
too much government

Down and Out and California

Barring drastic action, the Golden State will run out of cash in March.

There is no provision in the Constitution for dealing with a bankrupt state. But then, there’s nothing explicit dealing with federal bankruptcy, either. The founding fathers didn’t expect their republic to permanently accumulate debt. Indeed, Thomas Jefferson wished to foreswear all sovereign debt. He considered the practice parasitic.California's Direction

Our leaders are supposed to run our governments so to avoid debt crises.

But, because politicians do just the opposite, they run into cash flow crunches. Last year, California’s statesmen borrowed $5.4 billion to cover the lean time before Spring’s tax revenues flowed in. They had figured they would be good through June, but miscalculated. Now they’re scrambling for an extra $3.3 billion.

Time to fudge the books! Pay late. Not answer the phone or respond to dunning notices.

Of course, the real problem is over-​spending. California’s politicians spend too much.

Alas, it doesn’t look like they are about to reform.

Gov. Jerry Brown still pushes the huge “investment” of high-​speed rail, for the grandest example. The project’s supporters have over-​estimated ridership, underestimated costs (the most realistic official accounting now puts the system at $98 billion), and have been forced to restrict the extent of the line, excluding both San Diego and the state capital. Brown’s response? Making up for cost overruns by hijacking funds from the state’s “cap-​and-​trade” (the nation’s only carbon-​footprint-​based) tax.

Ah, politicians: Spend, spend, spend, even as the institutions they are responsible for lurch into insolvency.

This is Common Sense. I’m Paul Jacob.