Sunday, January 31, 2016

Bob Loewen: How Government Unions Are Destroying California

Mod: There is a lot of nonsense out there about why Sierra Madre needs to raise its utility taxes by 66%, giving this town one of the Top 5 UUT rates in all of California. The latest canard being floated by certain individuals (who really should be ashamed of themselves because I am sure they know better), is this is needed to keep things like the Halloween celebrations on Algeria and the Mt. Wilson Trail Race from going south (link). It is a whole new level of hostage taking, and sad to say there are people who are actually buying into this baloney. What follows are some relevant excerpts from an important column written by Bob Loewen (link). Bob details the real forces driving taxes higher in many cities such as Sierra Madre. Just in case you are wondering what the actual truth might be.

How Government Unions Are Destroying California: California was once the State that everyone looked up to. With the best weather and natural resources, we were full of hope and innovation. We had the best public schools, a world class system of higher education, the best freeways, infrastructure to provide fresh water to our growing population, which also doubled as a source of clean energy through hydro-electric power, a business-friendly environment where entire industries grew in entertainment, aerospace, and technology, making our economy virtually recession-proof.

Then in 1978, then-governor Jerry Brown signed an executive order that imposed union-shop collective bargaining on public agencies in California, and the rise of public sector union power began.

(Mod: Then Governor Ronald Reagan signed something similar into law in 1968 called the Myers-Milias-Brown Act. Just to keep everything accurate and nonpartisan. As most Tattler readers know, with this matter there are very few truly innocent parties in California government.)

Today, public sector unions are the most powerful political force in our State. They control a majority of our State Legislature and might control a supermajority in November if a few swing districts fall their way.  No politician, Democrat, Republican or Independent, acts without considering how it will affect the union agenda.

These government unions press 100% for a progressive agenda, and they consistently agitate for increased spending. In two areas, the quality of our public education system, and the financial health of our cities and counties, the consequences of government union power have been catastrophic.

Pensions

Police and firefighter unions do the most damage at the local level. They have attained unsustainable pensions, known as “3%@50”, meaning that a member of that bargaining unit is eligible at age 50 for a pension equivalent to 3% of his highest salary times their number of years of service. 

While the age of eligibility has been raised for new public safety employees entering the workforce, the vast majority of active police and firefighters still retain these “3%@50” benefits. So at age 50, a 20-year veteran can retire with a pension equivalent to 60% of their highest year’s salary, which can be manipulated through spiking, and a 30-year veteran is eligible for 90% of his or her highest salary.

These pension requirements are held under the “California Rule” to be irreversible. In other words, once they have been adopted, democracy is incapable of turning off the spigot. With the spigot running constantly, communities go bankrupt. First, they cut other services. Then they increase taxes. Then they refuse to pay bondholders, so no one will invest again.

Current unfunded liabilities in California:

At CalPERS: $93.5 billion (ref. page 120, “Funding Progress,” CalPERS 6-30-2015 financial report -link).

At CalSTRS: $72.7 billion (ref. page 118, “Funding Progress,” CalSTRS 6-30-2015 financial report - link).

Local Unfunded Liabilities add considerably to this total, since CalPERS, with assets of $301 billion, and CalSTRS, with assets of $158 billion, only constitute 62% of California’s $752 billion in state and local pension fund assets (link). If all of these systems in aggregate were 75% funded, which is probably a best case estimate given the poor stock market performance since the official numbers were released, the total unfunded pension liabilities for California’s state and local government workers would be $256 billion.

And $256 billion in unfunded liabilities, a staggering amount, still understates the problem for two reasons: First, these pension funds may not succeed in securing a 7.5% average annual return in the coming decades. If not, then they will not earn enough interest to prevent their funding ratios from getting even worse. Also, this doesn’t take into account “OPEB,” or “other post employment benefits,” primarily health insurance. The unfunded OPEB liability just for Los Angeles County is officially recognized at over $30 billion.

A realistic estimate of the total unfunded liabilities for retirement obligations to state and local workers in California is easily in excess of $500 billion. These benefits, which are financially unsustainable and far more generous than the taxpayer funded benefits available to ordinary private sector workers, were forced upon local and state elected officials through the unchecked power of government unions.

sierramadretattler.blogspot.com 

43 comments:

  1. This is an excellent article.
    Sierra Madre does NOT need tax increase. It will only be used to fund pensions for union workers, the rest of us will be out of pocket and inferior services.
    Vote against all tax increases.

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    1. In this day and age nobody should be able to retire at 50 with 90 percent of their salary for the rest of their life. Its unsustainable. I guess everyone knows that already. The funny thing is that the police and firemen don't retire. They just get another job. Even they know that retiring at the age of 50 is absurd. I'm not saying that police have to be walking the beat after 50 or be on the front lines fighting a fire after 50. They can have an administrative or desk desk after 50 and still contribute some service to the taxpayers in exchange for a 100k or so salary. I don't think they should be able to retire at 50 with a lifetime of Sundays. It makes no sense. I understand though why they want it. What I don't understand is why we, the taxpayers, put up with it. To pay for all this, we have to retire at 70 or beyond.

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  2. It is unfortunate this has not been discussed by our elected officials. I guess they're afraid that if they do nobody will vote for their tax hike.

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    1. I hope no one does vote for increase.

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    2. I don't care how much other cities pay their employees. That's the scam. They point to other city's pay as the new "going rate" that we all have to match. That's how salaries keep leapfrogging ahead. Mayberry should pay considerably less than working in South Central.

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    3. Measure UUT is a CalPERS tax. Very little of it will go for infrastructure. That will take a property tax hike, which will be put on the ballot in 2018. You'll start to hear about it just as soon as the UUT increase passes.

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    4. Yes, it is a Cal Pers tax. However, the president of the Friends of the Sierra Madre Library, in the las test newsletter, is encouraging everyone to vote "yes" so that the library can stay open. She also congratulates and welcomes (retired in a CalPers pension) Toni Buckner back as interim library director. For folks who are surrounded by books, they sure are ignorant.

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  3. Stop the madness. Bring in the Sheriffs.

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  4. With Jerry Brown in the role of Captain John Smith, and the state of California in the role of the unsinkable Titanic all we needed was State labor unions in the role of "the ice berg" and you can see why the state in so far underwater (salt water, you know we're in a drought!). But still the crept keeper Govenor will push high speed rail projects.....with all Union labor.

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  5. A question for those who believe the SMPD must stay because they are a part of the community and know the people in town. If that is true, then why have so many left? Is it because they know you?

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  6. How come this weekend's issue of the Mountain Views "News" is not available on-line yet? I need my weekly City Hall written tax propaganda. Do I have to actually go downtown to one of those rusty liquor store racks and pick up the dead tree version?

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  7. i picked up a copy on the porch of Lizzys Trail Inn. Her "coverage" is labeled "tell us the truth and we'll give you what you need..." (I am paraphrasing--read it, gaged and trashed it).

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    1. I used to line my budgie cage with it, but it constipated the poor things.

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  8. The only way to sop the madness is to starve the beast of money. There is simply less money available to pay the exorbitant salaries and pensions - because that's where most of the money goes. I will always vote against any tax increase whatsoever - no matter how worthy the cause because all you are doing is freeing up money to pay for the ever increasing salaries and benefits that are ruining the state of California and every city in it.

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  9. CA po co, you want to be our leader, but you failed to tell the taxpayers the truth about why you want more taxes, we the taxpayers have no interest in either of you jons livining in the community which you choose to ruin. You are forcing our community to turn to dense housing and McZmsnsions because you want more taxes. We don't want it. Move on. I will vote ... No Tax Increases And further go Repeal All UUT Taxes . if you wait to put the Repeal of the UUT on the ballot until 2018, you are in violation of California state law and will have to defend another law suit. Cheers

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    1. 8:57, Mayor Capoccia, like the rest of the council, has put in place the best protections against macmansions that have ever existed in our town. Ever.
      I'll be glad when his turn as mayor cycles out and what passes for your wit will have to come up with another name to ridicule.

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    2. Capoccia flipped on taxes. How do you know that he won't flip on development after the April election?

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    3. Almost wish he would, so you could have something new to say.

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    4. How do you know the mayor won't flip? Where is your crystal ball?

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  10. The cops that left. They think Measure UUT is going to lose?

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    1. I think they left because they love Sierra Madre too much.

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    2. I hear there were tears.

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  11. There are so many in this town who don't know the issues. They rarely come on this blog to learn anything or ask any questions. Yet they know it all! None of us have the 7500.00 to outdo the city for a brochure, much less signs.

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    1. You are assuming that those who disagree with you on certain issues don't come on the blog to learn, but by the same token, do you read or ask questions on the other side of an issue or is your mind made up and "don't confuse me with the facts."

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    2. Anything goes here. But don't expect anyone to hold your hand.

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    3. Please stop answering your own posts 10:49 nobody comes here to learn. People here are all of one mind like Fox news. We are here to complain and bond with each other through our perceived injustices.

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    4. Or so says the troll who posts basically the same nonsense over and over ...

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  12. I will vote NO on the UUT measure. If it does not pass the UUT tax will be 6%, over $1,500,000.00 a year. That is enough. We must force ourselves to learn to live within our means.

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  13. 10.59... The boys and girls at TEAPAC will be presenting more Initiatives and petions to remove city taxes starting with 1) the UUT tax and then the City Franchise Taxes. If that is not enough to wake up city hall, there will be more Initiatives which is a simple process for taxpayers. We are looking for city hall to put the Repeal All UUT tax on the June 2016 ballot, if city hall want to act illegally and put it on in 2018, we the taxpayrs will take further action. Cheers

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  14. You guys are going after the problem in the wrong way. Don't have time right now but what you are all talking about anarchy if your not careful. Anarchy is not the answer at least not for the USA. Anarchy is what enemies of our country want. Fix the system, don't kill it. More later, get the all the facts before you act.
    Thank you.

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    1. Ok, it is kind of a gloomy day and the only thing on the tube is the Pro Bowl, which is probably the most boring event the NFL puts on all year. So yeah, I could use a laugh. So tell me, how is the call for governmental fiscal responsibility "anarchy?" I would have thought driving cities into insolvency through ponzi schemes such as CalPERS would get us there a lot more quickly. But maybe you know better. Please, enlighten us.

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    2. Getting LASD, saving $800,000 a year and no longer paying additional assessments for SMPD CalPERS pensions is not anarchy. Don't be s dumb ass. You're embarrassing your family & friends.

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    3. We have anarchy now. The SMPD has deserted the city, the streets are unprotected all night, and Mayor Chooch doesn't have a clue what to do.

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    4. When losing an argument -- or discussion, resort to name calling. It always works to shut off the discussion.

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    5. Politicians are often made fun of here. Especially those who fail to deliver on their campaign promises.

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    6. When you make decisions favoring big government, big development,big pensions,crooked politicians,criminals like Matheson and pals.....you are open season here on the Tattler...if Crawford doesn't nail you ,his very skilled research team and informants will.

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    7. UM Fox Police knocking at your door comes to mind :/

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    8. Gee 12:45PM, what is that pitch and run? You don't have time to enlighten us? No facts? Nothing for discussion? I know, you said you'd get back to us. Can't wait.

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    9. Maybe 12:45 was just kidding.

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  15. I do believe these politician's are referred to as Clara Bell Clowns. Politicians are often made fun of here. Especially those who fail to deliver on their campaign promises.

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  16. 8:29 is right. The question is has City Hall changed the contract for the new recruits? If they haven't then we are again looking at failure from the top. We are in need of better leadership.

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  17. Anarchy back,,,, unions were formed so workers would not be treated like slaves and forced to work for very little money in unsafe conditions. The problem is that people are living longer now and government is not responding to that. People need to afford a decent living. When workers are not paid enough you end up with problems like in Mexico with corruption and deaths caused by poorly paid workers. Guess you could say we the tax payers are being treated like slaves, 11,000 people being held slave to paying for salary and exorbitant pensions. It is time for this city council to fix the problems former council members have created. I do hope the new hires have a new contract to reflect longer lives, also retirees pensions should be fully funded at retirement. Corruption, makes you wonder how much of that our council is confronted with and how they handle that, or if they can even recognize it when it happens. A lot of tough decisions for council to make and raising taxes is not the answer, better management is.

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