Saturday, April 1, 2017

How Pasadena and Sierra Madre Deal With Their Debt Problems

Mod: There is a big two part article on the Pasadena Now site that discusses Pasadena's budget crisis. Much of what I am citing here comes from Mayor Tornek's most recent "State of the City" address. And he is quite blunt about what is driving Pasadena deeper into debt. As you will see, in large part it is CalPERS. There is some info on San Bernardino's immense pension debt problems as well. In Mayor Goss's recent Sierra Madre "State of the City" address many interesting things were discussed. But what was missing from that picture is this city's debt problems. Much of which also comes from rapidly increasing CalPERS debt. So why is it Sierra Madre fails to acknowledge this problem like other cities have?

Pasadena's Budget Shortfall: What's the Answer? (Pasadena Now link): The City of Pasadena has a big budget problem on its hands. Beginning with the coming fiscal year, the City’s spending will begin to outgrow its revenue. And, ironically, the answer to the problem lies smack in the middle of the reason for the problem.

The problem and the answer, experts agree, both fall under the heading of “pension costs.”

As Mayor Terry Tornek said in his last “State of the City” speech, “Our [pension] cost during this time held in the lower $30 million range. Last year, it climbed to $39 million; four years out, the forecast is a whopping $65 million; a 100% increase in five years. And based upon recent CalPers actions, the number will get even worse.”

While the Mayor and a number of other City officials have already suggested cutting back services and laying off City employees, at least two experts say that solution has already left the station.

Caltech political science professor Rod Kiewit explained that those steps wouldn’t work because “when you cut back on the number of employees, then you’ve got fewer employees paying into the retirement system, so it’s like a mini version of Social Security. You’ve got more and more retirees and fewer workers. The number of public retirees grows by about 4% a year.”

One needs look no further than the City of San Bernardino, just an hour so down the 210 east, to prove Kiewit’s point.

Several years ago, San Bernardino imposed a 10 percent pay cut for its city employees, but the firefighters union challenged the decision in court and won. The city now owes union members back pay. Pension costs in San Bernardino reached $25 million in 2012, doubling the 2006 costs in only six years.

A 2007 review by consulting firm Management Partners Inc had said that San Bernardino’s finances were at risk because public safety spending was growing faster than city revenue. The review called the public safety salaries “autopilot” budgeting, budgeting that provided “little incentive for labor groups to negotiate at the bargaining table.”

In his 2010 presentation, San Bernardino City Manager Charles McNeely projected that spending would outstrip revenue through 2015. For the current fiscal year, he predicted spending would exceed revenue by $40 million, which is about the difference city officials forecast last week.

“I don’t know how you could come out of that meeting not understanding we had a serious problem,” McNeely said at the time. “I told them, ‘You’re headed for trouble, it’s a train wreck, you can’t keep doing business this way.’”

San Bernardino filed for bankruptcy in August, 2012, buried under a deficit of more than $45 million. The City has only recently begun to re-emerge financially, having had their bankruptcy payment plan approved in December by U.S. Bankruptcy Judge Meredith Jury.

Mod: The tax strategy in Sierra Madre apparently is orchestrating a steady drumbeat for increases, all without City Hall acknowledging the real cause of this claimed need. During the 2016 Measure UUT campaign the Library was chosen as the designated damsel in distress. And if I am reading this correctly, in 2018 the expected parcel tax campaign will be based on a need to save the Fire Department. So why won't the city acknowledge its real problem? Do they think that you can't handle the truth?


  1. There is something wrong when many of us struggle to pay our ever increasing taxes while public employees get to retire as young as 50 with an overly generous pensions, cost of living increases and often full medical benefits for the rest of their lives. But as these employee costs continue to rise and we suffer with tax increase after tax increase, the reason offered is rarely the actual cause. It's always the need to keep the library or police response times or some such thing that scares the tax payer into approving the increase. The reason this subterfuge is used is to cover the fact that the public employee unions give about 95 percent of their money to Democratic politicians. That is why California has become a 1-party state. It's basically a bribery scheme. The public employees use their dues (which come from the taxpayer) to help primarily Democratic politicians get elected and those politicians, once in office, reward the public employees with ever higher salaries, benefits and pensions. As the money runs out, they just stick us with another tax increase. This same bribery scheme occurs at the local, state and national level. Just follow the money to understand this. When you vote for what may same like a legitimate tax increase for a seemingly worthy cause, know that all it will do is free up more money for still higher salaries, benefits and pensions for our public "servants". As long as we are stupid and fall for it, this bribery scheme will continue. I'm not optimistic.

    1. I know a fireman in another city who retired at 55 and because he was going to receive free healthcare and a guaranteed salary for life, he was able to take his savings and buy a Porsche, new truck, upgrade his house, etc and was able to freelance a 2nd job.

      Calpers is a ponzi scheme and we are being duped.

    2. Can CalPERS be agendized for the City Council to talk about?

    3. 4:22, I don't know of a single police union that supports dems in any way, 95% is a ridiculous made up amount. Did you research that or just throw it out there hoping no one would call you on it. It is a lie. 8:49, how long did this fireman work for his city? If he was smart enough to save his money to enjoy his retirement does that make him a crook? Quit your whining.

    4. Nice try Sargent Bilko. Anybody can google where the public employee money goes. Read the book by Stephen Greenhut called Plunder and all of you will know the tactics of the public employee unions to get our taxes raised so that they can get higher salaries, benefits and pensions. It's the best book on the subject of how the taxpayers are being fleeced. Wait till you hear the arguments for why we need a parcel tax. They will never say it's for the public employee unions. The taxpayers need to work harder and retire later so that these public employees can retire at 50 and enjoy a lifetime of Sunday's. Never underestimate how stupid people can be as they vote for another tax increase.

    5. 5:24 you're insane. the point is that he didn't need his own savings for retirement like us in the private sector

    6. So he worked under the contract of his employment and now you call him a crook, say that he is fleecing the taxpayer. Who sounds insane? Sounds a little like jealousy to me.

    7. This way of doing business is insane. A complete waste of taxpayer money.

  2. Caterpillar shuts plant in Aurora, Illinois, that employs 800
    Caterpillar Inc (CAT.N) said on Friday it will shut its Aurora, Illinois, plant, costing about 800 employees their jobs as the world's largest construction and mining equipment maker shifts production to other U.S. facilities. Caterpillar was among companies that met with President Donald Trump in February to talk about job creation, at a time when about 2,300 U.S. workers at five major manufacturing companies stand to lose their jobs within the next two years as a result of offshoring.

  3. CBS: "FBI investigation is nowhere near over."
    CBS News has learned that U.S. investigators are looking into whether Trump campaign representatives had a role in helping Russian intelligence as it carried out cyberattacks on the Democratic National Committee and other political targets in March 2016.

    This new information suggests that the FBI is going back further than originally reported to determine the extent of possible coordination. Sources say investigators are probing whether an individual or individuals connected to the campaign intentionally or unwittingly helped the Russians breach Democratic Party targets.

    In March 2016, both Mr. Trump and Hillary Clinton had emerged as their parties’ most likely nominees. According to a declassified intelligence assessment, it was in March when Russian hackers “began cyber operations aimed at the U.S. election.” In May, U.S. officials say the Russians had stolen “large volumes of data from the DNC.”

    Now, one year after the Russian operation began, sources say the FBI’s investigation is nowhere near over. It involves dozens of agents in Washington, New York and London. The NSA and CIA are also gathering intelligence from inside Russia.

    1. Looking forward to that final taxpayer funded chopper trip to Mir-A-Lago.

    2. Poll: Majority of Americans favor Russia probe

    3. Seems like we have some public employees in the audience who want to keep the gravy train running. How many librarians to we have collecting a pension. I thinks it's about 3 for one position in retirement and the active employee. They got theirs so they don't care how much city services get cut to pay for their cushy retirements. Brown should have never allowed the public employees to unionize back in 1973. Eventually every city will go bankrupt. It's just a matter of when. But don't you dare change those contracts.

    4. Why can't they unionize?

    5. No unions for public employees? Sounds like you really do want "servants." So I understand this, you expect people to work for 30 years and walk away with nothing? Ok comrade!

    6. If everyone paid into Social Security including public employees and teachers, we wouldn't be in this mess.

    7. 10:26: Things I didn't know:

      I didn't know one had to be a public employee to be in favor of honoring agreements and contracts.

      I didn't know that accepting the benefits of a contract after fulfilling its terms constitutes a lack of care about future services provided by the other party to the contract.

      I didn't know that the 1st Amendment rights to free speech and assembly applied only to private sector employees.

      I didn't know that one party to a valid, binding contract can unilaterally and materially alter the terms of that contract.

      Thanks for the info.

    8. 11:54 ? no. what taxpayers want is for the public sector employees to be responsible for their own savings and retirement like the rest of us instead of being guaranteed a future income for doing nothing in return - they are "earning" their retirement, they are fleecing the taxpayers

  4. Governor Jerry Brown (D), has said that inorder to repair our roads, he must increase transportation fees and add a gasoline tax.
    Never mind, that he could decrease the amount CalPERS collected and use that money for infrastructure and repairs.

    1. No he can't. He's hot trump he must follow the law.

    2. Hot Trump? Really? That is what you think?

    3. *not. Sorry. If you tried real hard your tiny brain prolly could of figured it out

    4. Now that is hot!

  5. So the residents of Sierra Madre, through their duly and democratically elected representatives, entered into certain contracts with their employees, but now want to renege on those valid, binding contracts and not provide the agreed benefits to the employees who relied on those contracts.

    Sounds like something Trump has done to his employees and contractors.

    1. What if the choice was keeping things as they are or the city going bankrupt and possibly being absorbed by Pasadena or Arcadia?

    2. The residents through their elected representatives can make whatever legal changes they want concerning future agreements, but the current and past agreements are binding.

      If someone owes you money and tells you "one day I might go bankrupt" or "I need to keep my money because I might be getting married (absorbed!)," would you forgive the debt?

    3. Sounds like tax slavery.

    4. Sounds like reneging on agreements.

    5. The costs of just about everything is higher in California, yet Californians pay a lower percentage of property taxes than more than 30 states. Pay up!

    6. I guess that is why the City Council won't discuss this. People like you would sue the city. Good to see that our imported help only cares about the money.

    7. 9:58 - the way you phrase that makes it a lot easier to say no.

    8. Maybe we should make Enid Joffe and John Buchanan pay for it.

    9. Say no 10:14, but don't whine when the city is sued, loses, and pays attorney fee (maybe for both sides).

      These aren't Trump "I'll pay if I feel like paying" contracts.

    10. Municipal employee unions are the real power in Sierra Madre. That is the reason for all the tax increases.

    11. too bad - this happens in the private sector all the time - public sector employees need to handle their own retirement - not tax us and our grandchildren because they want to retire at a guaranteed salary paid against our taxes


  6. Still no new City Manager's Report.

    1. out scouting locations for a weed shop

  7. When you wage war against government employees, you do the bidding of Trump-types who want to destroy the state and profit from the wreckage.

    1. No. There is a middle ground. This isn't Weimer Germany.

    2. Middle ground is gone. Nationally, we're at the beginning of Machtergreifung.

    3. In your head maybe.

    4. After looking up the term, you should have read what it means 12:27. Then look at the positions of President Bannon.

    5. 11:54 - your childish comparison to the start of Nazi Germany is ridiclous. Is you're going to make hostorical recerences get it right! Please explain the comparison.

    6. Sorry Trumpy. The comparison works. Go polish your marching boots and go goosestep off a pier somewhere.

  8. I don't have a problem with the way things are now. The deals were made (foolishly or not) and they must be honored. However, I do think the city has an obligation to explain all of this before asking for any more tax increases. Including how this all happened. It is only right.

    1. We were the foolish ones to believe the city's slick UUT brochure that showed a 2.3% annual raise for the PD. As soon as the ink dried on the ballots we cast, the PD got back-to-back 6% raises. That's five years of increases in just two years. Hold on to your wallets next year for the push to get a parcel tax. At least that one will take 2/3s of us to get through.

    2. no they don't have to be honored - it's a stupid deal made by those who profit from it - we didn't vote on it and we shouldn't be held to paying increased taxes so public sector employees can retire and get paid a salary for life

      I'm all for paying police and fire higher salaries, but they need to handle their own retirement planning - not future generations of taxpayers

  9. If the City files bankruptcy, could it reorganize on how CalPERS would be addressed?
    Maybe it is time to no longer be a full service City, just contract out all jobs and have volunteers run the Library.

    1. Get rid of the library. Change the code. There's another one a mile away

    2. Yes, it's always best to contract out to the lowest bidder who charges twice as much to do the job government employees do, and then pay even more for cost overruns due to "unforeseen circumstances" that were obvious pre-contract to the untrained eye.

      Remember when the military had military personnel cooking for military personnel? Why have them do that when companies like Cheney's Haliburton can do it for $20 plus per meal?

    3. No.We signed contracts we are bound by them.Have you no conscience? These people have families and lives we are not destitute.That's a very Trump Esque attitude.

    4. What's so great about being a full service city? I don't see any benefit.

    5. You get a large group of people you end up having to support for life. Kind of like ne'er-do-well children.

    6. it's welfare for public employees at taxpayer expense

  10. Trolls get trumped again:

    The links between Michael Flynn and Russia grew a little stronger on Friday after it was revealed the former national security adviser had hidden fees he received from a Russian propaganda media outlet.

    According to the Daily Beast, an amended financial disclosure document filed with the White House counsel’s office on Friday showed a previously undisclosed payment from Russia Today as well as other fees received for speeches to two other Russian companies.


  11. 9:58 .... Here are a few taxes we all pay, when is it enough for you ??

    When do we say enough is enough?

    #1 Air Transportation Taxes (just look at how much you were charged the last time you flew)
    #2 Biodiesel Fuel Taxes
    #3 Building Permit Taxes
    #4 Business Registration Fees
    #5 Capital Gains Taxes
    #6 Cigarette Taxes
    #7 Court Fines (indirect taxes)
    #8 Disposal Fees
    #9 Dog License Taxes
    #10 Drivers License Fees (another form of taxation)
    #11 Employer Health Insurance Mandate Tax
    #12 Employer Medicare Taxes
    #13 Employer Social Security Taxes
    #14 Environmental Fees
    #15 Estate Taxes
    #16 Excise Taxes On Comprehensive Health Insurance Plans
    #17 Federal Corporate Taxes
    #18 Federal Income Taxes
    #19 Federal Unemployment Taxes
    #20 Fishing License Taxes
    #21 Flush Taxes (yes, this actually exists in some areas)
    #22 Food And Beverage License Fees
    #23 Franchise Business Taxes
    #24 Garbage Taxes
    #25 Gasoline Taxes
    #26 Gift Taxes
    #27 Gun Ownership Permits
    #28 Hazardous Material Disposal Fees
    #29 Highway Access Fees
    #30 Hotel Taxes (these are becoming quite large in some areas)
    #31 Hunting License Taxes
    #32 Import Taxes
    #33 Individual Health Insurance Mandate Taxes
    #34 Inheritance Taxes
    #35 Insect Control Hazardous Materials Licenses
    #36 Inspection Fees
    #37 Insurance Premium Taxes
    #38 Interstate User Diesel Fuel Taxes
    #39 Inventory Taxes
    #40 IRA Early Withdrawal Taxes
    #41 IRS Interest Charges (tax on top of tax)
    #42 IRS Penalties (tax on top of tax)
    #43 Library Taxes
    #44 License Plate Fees
    #45 Liquor Taxes
    #46 Local Corporate Taxes
    #47 Local Income Taxes
    #48 Local School Taxes
    #49 Local Unemployment Taxes
    #50 Luxury Taxes
    #51 Marriage License Taxes
    #52 Medicare Taxes
    #53 Medicare Tax Surcharge On High Earning Americans Under Obamacare
    #54 Obamacare Individual Mandate Excise Tax (if you don't buy "qualifying" health insurance under Obamacare you will have to pay an additional tax)
    #55 Obamacare Surtax On Investment Income (a new 3.8% surtax on investment income)
    #56 Parking Meters
    #57 Passport Fees
    #58 Professional Licenses And Fees (another form of taxation)
    #59 Property Taxes
    #60 Real Estate Taxes
    #61 Recreational Vehicle Taxes
    #62 Registration Fees For New Businesses
    #63 Toll Booth Taxes
    #64 Sales Taxes
    #65 Self-Employment Taxes
    #66 Sewer & Water Taxes
    #67 School Taxes
    #68 Septic Permit Taxes
    #69 Service Charge Taxes
    #70 Social Security Taxes
    #71 Special Assessments For Road Repairs Or Construction
    #72 Sports Stadium Taxes
    #73 State Corporate Taxes
    #74 State Income Taxes
    #75 State Park Entrance Fees
    #76 State Unemployment Taxes (SUTA)
    #77 Tanning Taxes (a new Obamacare tax on tanning services)
    #78 Telephone 911 Service Taxes
    #79 Telephone Federal Excise Taxes
    #80 Telephone Federal Universal Service Fee Taxes
    #81 Telephone Minimum Usage Surcharge Taxes
    #82 Telephone State And Local Taxes
    #83 Telephone Universal Access Taxes
    #84 The Alternative Minimum Tax
    #85 Tire Recycling Fees
    #86 Tire Taxes
    #87 Tolls (another form of taxation)
    #88 Traffic Fines (indirect taxation)
    #89 Use Taxes (Out of state purchases, etc.)
    #90 Utility Taxes
    #91 Vehicle Registration Taxes
    #92 Waste Management Taxes
    #93 Water Rights Fees
    #94 Watercraft Registration & Licensing Fees
    #95 Well Permit Fees
    #96 Workers Compensation Taxes
    #97 Zoning Permit Fees

  12. I care,,,,,,

    Yet despite all of this oppressive taxation, our local governments, our state governments and our federal government are all absolutely drowning in debt.

    When the federal income tax was originally introduced a little more than 100 years ago, most Americans were taxed at a rate of only 1 percent.

    But once they get their feet in the door, the social planners always want more.

    Since that time, tax rates have gone much higher and the tax code has exploded in size.

    Why do we have to have the most convoluted tax system in the history of the planet?

    Why can't things be simpler?

    In a previous article entitled "24 Outrageous Facts About Taxes In The United States That Will Blow Your Mind", I listed a number of reasons why our federal income tax system has become a complete and utter abomination that is entirely out of control...

    1 - The U.S. tax code is now 3.8 million words long. If you took all of William Shakespeare's works and collected them together, the entire collection would only be about 900,000 words long.

    2 - According to the National Taxpayers Union, U.S. taxpayers spend more than 7.6 billion hours complying with federal tax requirements. Imagine what our society would look like if all that time was spent on more economically profitable activities.

    3 - 75 years ago, the instructions for Form 1040 were two pages long. Today, they are 189 pages long.

    4 - There have been 4,428 changes to the tax code over the last decade. It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.

    5 - According to the National Taxpayers Union, the IRS currently has 1,999 different publications, forms, and instruction sheets that you can download from the IRS website.

    6 - Our tax system has become so complicated that it is almost impossible to file your taxes correctly. For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household. All 46 of them came up with a different result.

    7 - In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household. All five of them came up with a different result.

    8 - The IRS spends $2.45 for every $100 that it collects in taxes.

    9 - According to The Tax Foundation, the average American has to work until April 17th just to pay federal, state, and local taxes. Back in 1900, "Tax Freedom Day" came on January 22nd.

    10 - When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.

    If it was up to me, I would abolish the income tax and shut the IRS down.

    But neither major political party in the United States is even willing to consider such a thing.

    So the monstrous system that we have created will continue to get even bigger and even more complicated.

    We are literally being taxed into oblivion, and most Americans don't even seem to care.

    1. How much money are you willing to chip in annually to our country?

    2. A lot. They're called taxes.

  13. Guess this is easier!

    These are not all the taxes but

  14. 1:00pm. Are you talking about the fee's charged by the Clinton Foundations speeches made by Bill, Hillary and Chelsy?

    1. Oh, look. It is Not So Breit Bart.

    2. Can't distract your way out of this fool

    3. Trump Guy is the most popular fireplug in dogtown.

  15. Having the City of Sierra Madre management constantly have "their" hand out, begging for more money, appears pretty destitute in my book.
    Just about everything is contracted out now.

  16. I kinda like the USA I'm not broke,I'm free to do whatever I want within certain boundaries. I pay my taxes, even with a tyrant as president I doing quite well. Stop complaining and pay up or get out.
    " Trump, while lamenting the condition of the middle class, said the U.S. has "the highest tax rate anywhere in the world."

    All sets of data examined for individual and family taxes prove him wrong. Statutory income tax rates in the U.S. fall around the end of the upper quarter of nations.

    More exhaustive measures - which compute overall tax burden per person and as a percentage of GDP - show the U.S. either is in the middle of the pack or on the lighter end of taxation compared with other advanced industrialized nations.

    So many Down Low Trumpies here......

  17. Again. What other advanced industrialized nations? Are you comparing size of population? Wages? Goods received from "lighter" end of taxation? Debt size? What?

  18. You can't distract you way out of it 8:21. Stop whining about taxes and pay up!

    1. Ask your parents about taxes.

  19. BANKRUPTCY FOR SIERRA MADRE. Just a question of when.