For those of you old enough to remember the TV show, The Many Loves of Dobie Gillis, (a
salute here to former state senator Sheila Kuehl who was a star on that show),
character Maynard G. Krebs (played by Bob Denver) often referred to his
favorite movie, The Monster That Ate
Cleveland. In reading Vanity Fair
Magazine’s November article, California and Bust, it describes a
monster that is devouring San Jose – public employee retirement obligations.
When writer Michael Lewis asks a financial expert what state
is the "scariest" financial place, she answers immediately: California. Lewis
writes about California’s fiscal problems by interviewing former Governor
Arnold Schwarzenegger, San Jose Mayor Chuck Reed and leaders in the City of
Vallejo fighting with the city’s bankruptcy problem.
Lewis’s visit with former Governor Schwarzenegger will
probably garner the most headlines from the piece, but the examination of what
San Jose is dealing with should send up a signal to all California cities of
the trouble they face and may already be neck deep in if they examined their
books.
From the article: (in
italics)
"Pay of public-safety
workers: the police and firefighters now eat 75 percent of all discretionary
spending."
Mayor Reed says the public safety unions gain strength
through victories in binding arbitration:
The problem with
binding arbitration for police officers and firefighters, says Reed, is that
the judges are not neutral. "They tend to be labor lawyers who favor the
unions," he says, "and so the city does anything it can to avoid the process."
And what politician wants to spat publicly with police officers and
firefighters?
And:
"Our police and
firefighters will earn more in retirement than they did when they were
working," says Reed.
Retirement obligations are busting the San Jose budget says
Reed:
This year they would
be $245 million: pension and health-care costs of retired workers now are more
than half the budget. In three years’ time pension costs alone would come to
$400 million, though "if you were to adjust for real life expectancy it is more
like $650 million." Legally obliged to meet these costs, the city can respond
only by cutting elsewhere. As a result, San Jose, once run by 7,450 city
workers, was now being run by 5,400 city workers.
At the rate things are going, writer Lewis, perhaps only
partly facetiously, wonders if the future of San Jose is, "A single employee to service the entire city, presumably with a focus
on paying pensions."
Mayor Reed, who has sought emergency powers to deal with the
pending crisis, calls the circumstance the city finds itself in: "a corruption of the attitude of public
service."
Indeed, a warning for all California governments and their
taxpayers.
You can find the entire Vanity
Fair article here.