Triage is defined as the process of determining the priority of patients’ treatments based on the severity of their condition. Unfortunately for taxpayers in California, the kind of triage taking places in our cities is not benefitting those parties’ whose condition is the most severe. On the hook for enormous unfunded public employees’ salaries, pensions, health care and retiree benefits, taxpayers can expect to pay more, and get significantly less, while the unions have constructed indefensible safeguards to repel any interference with their public employee contracts. The city Stockton is a case in point.
Consider the statistics: In the 1990’s, Stockton entered into a series of agreements with municipal unions to pay the state-required worker contribution of 7 – 9% as well as its 20% employer share. Because this was unsustainable even in the in boom times, Stockton borrowed $125 million and invested in Calpers. When the market went bust, Calpers lost 24% – 30% of the loan’s principal, leaving Stockton stuck with interest payments on top of pension obligations. Also, in the next year, retiree health costs will surpass those of the city’s regular work force. The costs for these unfunded retiree health benefits are above $400 million.
The lavish but unsustainable union contracts are mugging the taxpayer and siphoning scarce public funds away for basic services such as police and firefighters. When a city like Stockton gets into such financial disarray – in a very large part because of these unfunded union obligations — bankruptcy becomes the only viable fiscal option. However, a new, union-backed state law practically prohibits bankruptcy in order to protect the very union obligations that overwhelmingly contributed to the bankruptcy in the first place.
The law stipulates that cities must try to avoid bankruptcy by first entering into mediation with creditors and unions, because, if a city declares bankruptcy, all union contracts are automatically open for renegotiation. Worse, only the results of these negotiations, not the actual mediation proceedings, are made public. On top of the burden of insolvency, cities are gagged, and bound to negotiate with their hands tied behind their back.
What is the result? In Stockton’s case, it is a direct threat to the publics’ safety. Forced to lay off around 100 officers, or about 25% of its force in the past two years, Stockton’s murder rate more than doubled from 24 in 2008 to 58 murders last year. Faced with shrinking resources, the police department must deploy to the most violent crimes, meaning fewer arrests for crimes such as burglaries, drug possession, prostitution and public intoxication.
The bottom-up approach that crime-riddled New York city used in the early 90’s set the tone that any crime – even petty crimes such as broken windows – would not be tolerated, and got dramatic results. Unfortunately, cities like Stockton are forced to allocate its shrinking resources to the absolute worst crimes, and public safety suffers.
There are real and dire consequences to the impenetrable contracts and contract safeguards that the public unions have extracted from elected officials up and down the state of California. There is a window of opportunity to place real pension reform on the ballot this year. Taxpayers should see Stockton as a cautionary tale. One that may be coming to a city near you.