Our anti-tax, anti-government, union-busting, “my way or the highway” (but diminishing in numbers and voice so I shout louder) hard-right ideologues are placing all the blame on public pensions when it comes cities filing for bankruptcy. Please.
It doesn’t take a Ph.D. to figure out that the housing collapse and biggest economic bust since the Great Depression is a major factor when it comes to pro-development cities such as Stockton and San Bernardino filing for bankruptcy. The cities were overbuilt and in debt with projects when the “bubble burst.”
To be sure, costs (including public pensions) were a factor, but this was brought on by a steep and sudden dropoff in revenue.
And it’s definitely not a Nevada County problem as the local “the sky is falling” so my-candidate-can get-elected-not-yours ideologues seem to infer. (We recently did a “refi,” and the veteran housing market notary told us that local real estate agents were reporting a strong uptick in their business. In fact, some agents are reporting a record number of home sales this year, albeit at a lower median home cost.)
Marketwatch.com acknowledges the “revenue side” of city bankruptcies in a cogent analysis, but it also brings up the fallout from Prop. 13, a “sacred cow” to the hard-right ideologues, as a culprit. (The Jarvis Taxpayers Association is a friend to the hard right in the foothills).
“‘Bankruptcies are very rare,” said Jeffrey Esser, executive director of the Government Finance Officers Association in Chicago. “Three does not make a trend. But keep an eye on California and see if there are others.”
“He points out that this most-recent recession has been the strongest since the Great Depression, and thus the hardest hit ever for California cities under the 1978 landmark measure that slashed property taxes in the state, Proposition 13.
“’Proposition 13 put severe constraints on revenue,’ he said. ‘Yet the cost of running government continued to go up.’ (The cost of everything, not just government, continues to go up, I might add).
“His sentiments were echoed by Dick Larkin, senior vice president and director of credit analysis for Herbert J. Sims & Co. Larkin said in a note to clients Wednesday that he doesn’t see a wave of insolvency across the country.
“’I am worried, however, that this phenomenon may grow in California, which still feels the effects of 1978’s Proposition 13 that dramatically lowered property taxes,’ he wrote. ‘Were that to happen, bond issuers in the state (including the state itself, which plans a $10 billion note issue in a few weeks) may be painted with a ‘scarlet letter’ of ‘B’ for bankruptcy.”
I predict the next California cities that file for bankruptcy will be the ones hardest hit by the housing collapse.
The article is here.
I wonder if this grumpy group would be much happier in Oregon or Northern Nevada than California.
Filed under: Uncategorized
Prop 13? Not at all…
TEACHER PENSIONS!
FIRE PENSIONS!
POLICE PENSIONS
“Mike,”
Did you stop and think that with every new housing or commercial development came a new school and firehouse (along with some public debt in some cases), so that when revenue suddenly collapses, you can’t sustain them. Did you ever stop to think what the benefits of sustainable development vs. unsustainable development were to these pro-development city policymakers. Especially when Prop. 13 was a given in the decision-making equation. I’m not a proponent of repealing Prop. 13 and I support growth and manageable development, but I’m tired of all the “cost-side” analysis that doesn’t acknowledge the steep drop off in revenue that we’re experiencing. Please hold the city policymakers accountable for that too. And please sign your name next time!
I’m 60 years old and did not fall off a water mellon truck my friend…
CLEARLY bad “Leadership” is also blame, but the Unions have held our Country Hostige.
UNIONS used UNION funds to buy those favorable to lining their pockets. Leadership? UNIONS!
We need a Regan who finally stopped Air Flight Controllers Untion by FIRING THEM ALL!
Yoo hoo, Mr. Feller “Mike,” again please sign your name. Spell check is a reader’s friend, too. It’s a cool feature in our digital age.
Only pension that they want to protect is theirs. Love your intro/label/description of the loud but fewer…..
OK Jeff….Mike Reynolds…Spell check comment is noted.
If you actually looked at a County or City Budget you would see the magnitude of Pension Liabilities instead of guessing.
You live in Nevada County, write about Nevada County but haven’t looked at the budget? More Journalistic speculation?
Maybe you are more intelligent than Moodys who agrees that pension liabilities are at the core of the deficits.
BTW- Maybe you can understand this. A Retired Fire Captain lives by me. Real nice guy. Retired at 53 at $90,000.00 a year. If he lives to age 83, he will have received $2,700,000.00 is pay without medical.
Do you mean to tell me that repealing prop 13 would generate the funds to pay him? THAT’S ONE MAN! Almost 3 Million!
Before you get on the “Dangerous Job Bandwagon”…
How about a Lumberjack or a Fisherman? They risk their life for your home and food. I don’t know one on the $2,700,000.00 retirement program.
“Mike Reynolds,”
In fact, public pensions are an old saw for me. I wrote about them long before they were used as a political tool by conservatives who want their guy to get elected. Listen up to both sides, not just one. It’s a nonpartisan issue. Then make an informed decision instead of a politically expedient one. Also, this issue is as old as the hills. Why weren’t you banging the drums years ago? My hunch: Because it didn’t fit your political ideology. No, buddy, I’ve got your number, not the other way around. Thanks for coming here, though.
Unfunded Liabilities is a straw man argument. There is only one agency/ corporation that has to fund well into the future liabilities and it is going bankrupt because of it, it’s called the US Postal Service. Here is a link about it
http://www.nytimes.com/roomfordebate/2011/12/06/how-to-help-the-post-office/the-us-postal-service-is-crippled-by-congress
“In 2007, a Congressional mandate that the Postal Service prefund future retiree health benefits for the next 75 years and do so within a decade — something no other public agency or private company has to do — was implemented, and it’s cost the agency $21 billion since then. That alone accounts for 84 percent of the Postal Service’s red ink.”
Isn’t it amusing that those who are getting really nice pensions and benefits are bad mouthing the system in an effort to keep others from working for and enjoying the same?
Hey Pal….
I did bang the drums years ago. Remember? It was the same time you were complaining that if Prop 13 didn’t go threw that Little Old Ladies would have to move from the houses they lived in for the last 35 years.
Those EVIL Republicans! Throwing Old Ladies out of their homes.
OK Pal…Playing both sides? YOU ARE THE BEST! You make a living at it.
What?
No cute comment of the 3 million that will be paid to my neighbor?
What?
No clever comment on the dangers of other jobs that feed and house you & your family?
Another Lefty reduced to personal attacks when confronted with TRUTH!
Time to go write another BASH on FOX…while MSNBC plays the race card.
I read you for amusement only..Not a single FACT ever comes threw you.
I knew posting was a complete waste of time..
Were you one of the 23 who voted for Biagi? My guess..YES!
Hey Jeffrey…
One more point before Dinner…
Quote:
“Did you ever stop to think what the benefits of sustainable development vs. unsustainable development were to these pro-development city policymakers.”
Did you ever hear of CEQA? Pro Development? Are you over 30?
I guess you only write fiction…Reality in is another post..
Try “sustainable” 30 year 100K pensions…Oops..
Can’t write about that can you!
Guns and our Bibles…Obama got that right….
John 8:32
32 Then you will know the truth, and the truth will set you free.”
It’s appropriate that you comment here as the Rolling Stones celebrate their 50th anniversary: “You can’t always get what you want.” I hope commenting here gets out your aggressions. We won’t charge you either. BTW, I voted for Prop. 13.
I have zero aggression Jeff.
Why is Truth Aggression?
Because it “Rocks your World”
“WE” Who is we? Now the Left is GOD?
I leave it to Christ to judge me….
I think of Bob Seger when I think of you..
“Who wants to go to Fire Lake”…I guess it’s “WE” who want Fire Lake
It surely isn’t me..
Good job on 13….
Are you sure you didn’t fall off of the watermelon truck??
Nighty, night “Mike Reynolds.”
Why is there such an insistance to ignore the financial schemes of the bankers and Wall Street that is behind all of this?
I’m no fan of Prop 13 but it took the bankers and Wall Street just 8 to 10 years to bring down the entire house.
What I find very “interesting” is that only 4.2% of the population are still under the protections granted under prop 13.
It certainly was useful when it was passed 35 years ago, but do less than 5% of our population deserve to get municipal services that everyone else is subsidizing?
Is it reasonable that my mom, who lives between San Jose and SF is still paying @$800 per year while her neighbors are paying $8000-$10000? Are they getting 10 times the city services that she’s getting?
I find that Mr. Renolds “truth” is a very obscure view on the real world and he, like almost every other right wing group try to use it as a sounding board to legitimize their positions.
Brad…Most of the new homes built in Nevada County are rural, where the homeowner is responsible for his own water, sewage, electricity connection, driveway…etc. The homeowner initially pays big building fees….and property taxes that include the firemen, landfill and schools. We’re looking at a terrible food fight. What’s yours is mine, and what’s mine is mine too.
Where were the public pensions invested? Maybe that has something to do with it?
Wow Mike! You say it like it is. Wonderful! Prop 13 made it possible for people to be able to afford to keep their old home if property next door sold for big bucks. No property value reassessment and big tax increase for the old place. If the old place was eventually sold the new tax would be based on what the buyer paid for it. The tax and spend fanatics harped about prop 13 from the get go, but they never commented on the taxes they collected on all those expensive new homes. Nor did the say anything about the big jump in tax revenues when the old places were sold for big bucks. With the stroke of a pen that ol’ rural house formerly appraised at $18,000 jumped to $400,000…A pretty good deal for the government that didn’t have to invest a dime. Thanks again Mike for your very intelligent, straight forward comments.
Bonnie, if you think someone displays intelligence when they repeatedly use the word ‘threw’ for through, can’t spell watermelon and spews (I could see the spittle on my screen) disconnected and incoherent falsehoods is intelligent, that says a lot about you.
A careful reading of American History 100 years from will reveal that in the boardrooms across the country, decisions were made in the late 1980′s and early 1990′s to offshore many of the jobs that made Americans able to afford to pay the taxes for the pensions, easily. The American workers also had a hand in the situation, readily buying all the cheap products produced in China, some of it good, some of it bad, all of it produced by laborers in a country where living on less than $10 day was the norm, who were paid accordingly. Recycle more, by from China etc., new, less.
Then came the banks, eager to find new and creative ways to hornswoggle every possible penny in earnings, savings, and inheritances from the American public. Lobbyists in Congress and leaders like Phil Gramm (R) of Texas, plowed the road for them. Of course the real estate folks, the local loan officers, and all the way to top management put forth the boldest lie ever, when the house of cards began to fall.
“How could have we have known???”
Now comes the idiot parade, out scapegoating unions and public pensions, and of course Obama, for the financial collapse, while blythely ignoring all these factors and the two wars dumped in Obama’s lap, unpaid for, to which I can only say, “Send in the clowns, don’t bother, they’re here.” Good old Tea Party, managed to derail a $79/year parcel tax for Placer County Fire Protection District, less than 12 miles from where the fires are burning, in the election of June 2012. Way to go! May only the “no” voters houses burn.
BTW, for our own place, we have high pressure pump, hoses and nozzles. If you have a pool, or know someone who does, and you are more than a couple of miles from NSJ, and a fire is approaching, don’t hesitate to call, 530-277-foto (3686) We can complete soak a property, if the pool is big enough. It seem silly to watch houses burn with pools of water right beside them, saw this in the Santa Barbara fire of a year or two ago, multimillion dollar homes, poof!
Only the “Infinity” pool left…
Bonnie,
I find it rather inquistive that you are “OK” with socialized control of your county via Prop 13, but then you write negatively about the same type of program on health care, and almost every other issue.
Can you explain this difference to me as I’m wonder how this works for you?
Maybe it just works for you as you’d actually be responsible for paying for the serivce you receive but don’t have to pay for?
I have posted this before but seems kind of fitting for the current thread. It is from my friend Laura website
“Old Prop 13: Keep the good. Fix the bad.
There is a wonderful part of Prop 13 that deserves to be kept. Voters approved Proposition 13 in 1978 to allow residents, especially seniors on fixed incomes, to stay in their homes rather than lose them due to rising property taxes. Let’s keep that good part!
Behind the scenes, however, that old Prop 13 rigged the game to set up tax giveaways for mega-corporations and billionaires. Here are 13 ways Prop 13 has been unlucky for California:
Corporations benefit. Two-thirds (2/3) of the total benefit of flattening property tax went to commercial/corporate properties.
New homeowners get hurt. They pay more than long term neighbors.
Disparity grows. Prop 13 requires a 2/3 vote to raise taxes, but maintains a simple majority to lower taxes. So the legislature lowered tax rates in boom years, benefiting primarily the richest of the rich individuals and corporations – and now we’re stuck since 67% is needed to get fair taxes back.
Minority rule. Just 34 of 100 legislators can stall any budget until their districts get greater benefits – and lower taxes.
Safeguard for the super-rich. Not the rest of us.
Income tax swings. State budgets depend more on income tax, which is less stable.
Sales tax grows. Now almost 10%, it hits middle class, lower income, and even the affluent harder than the richest of the rich.
Housing market tightens. Long-timers stay put, and localities, in their rush to increase sales tax and decrease expenses, focus on retail malls and big box stores, not housing.
Goodbye services. City budgets are squeezed, and all residents feel the effects, on fire and police departments, libraries, parks, schools.
Parking fees and potholes. Both increase – as cities scramble for sources of revenue.
Opportunity shrinks. California’s schools went from being best in the nation to 47th out of 50 in terms of per-pupil spending – and in educational opportunities offered.
Tuition hikes. Tuition fees have gone beyond the reach of many would-be college students – 32% hike this past year alone.
Kids and grandkids pay. The “no new taxes” mantra led to bonds funding everything from water quality and transportation to hospitals and schools – inadvertently promoting the philosophy, “We want it, but we don’t want to pay for it, so let’s put it on credit, and have our children and grandchildren pay!”
When we stop playing the game where most of us lose, and start paying FAIR taxes for a change, we can face our problems, and solve them.”
To Mike Reynolds: I started teaching at 41 and retired early due to health. You mention abuses, which do exist. My immediate boss, so to speak, will be one of them, and her husband, drawing six figure, or nearly that, retirements, from careers totally funded by the U.S. taxpayers, yet they both are so far right wing, I’d have to label them akin to John Birchers. More hypocricy from tea people polemecists.
Ben has discussed prop. 13 expertly. I’ll only add that it’s a no brainer, as someone who arrived in CA in 1986, that capping this tax would be problematic for funding gov’t–though at 65 and a 100% disabled Vietnam Marine combat vet, I kidda like it. But all of your comments, when discernable, which is rare, are myopic, typical of an ignorance of economic globalization, Bush’s war ravaging of our resources, human and economic, seemingly stubborn adherence to the nonsense of supply side ecoNOmics, etc.
You attack unions without sourcing. I’ll defend unions with sourcing:
The wealthiest Americans have a long-held delusion, passed along through their media outlets to the rest of us, that they pick up the bill for most of our country’s needs, and that middle-class public workers and unions benefit from their generosity. But facts, not emotions, are needed to provide the truth. And there are plenty of eye-opening facts that refute the far-right claims.
Fact #1: Government employees make up 16.7% of U.S. employees and receive 17.6% of the pay.
The public vs. private “who gets higher pay?” battle has convincing arguments on both sides. Yet a careful analysis of Census Department data confirms that government employees earn less than 1% more than private sector employees. Recent (2009) compensation figures reveal that:
- 107 million private sector workers earned $4,829 billion, an average of $45,000
- 2.8 million federal government workers earned $192 billion, an average of $68,000
- 4.6 million state government workers earned $226 billion, an average of $48,700
- 14 million local government workers earned $612 billion, an average of $43,000
With all benefits included, the 21.4 million government employees make up 16.7% of U.S. employees and receive 20% of the total compensation. The higher benefits exist mainly at the federal level. For the states, government employees make up 3.6% of the U.S. workforce and receive 3.9% of the total compensation.
The federal pay advantage is largely due to higher education levels and more advanced professional skills. The Economic Policy Institute, Bureau of Economic Analysis, and Congressional Budget Office all acknowledge this. 44% of federal jobs are professional positions (lawyers, economists, engineers), compared with 32% in the private sector. Close to 50% of full-time federal and state and local government employees have college degrees, compared to 35% for private employees.
Fact #2: Union members make up about 12% of the workforce, but their total pay amounts to just 9.5% of adjusted gross income as reported to the IRS.
There are 14.8 million union employees, with a $50,000 median salary. The IRS reported total adjusted gross income of $7.8 trillion in 2009.
Fact #3: CEOs and financial employees, with 11.3% of adjusted gross income, made more than ALL 15 million unionized workers in the United States, and twice as much as ALL 7.4 million federal and state government workers.
This fact highlights the extreme income inequality in the nation and within the private sector. As noted above, the AVERAGE private sector worker makes about the same salary as a state or local government worker. But the MEDIAN U.S. worker salary is almost $14,000 less, at $26,363. While corporate executives and financial workers (about one-half of 1% of the workforce) make multi-million dollar salaries, millions of private company workers toil as food servers, clerks, medical workers, and domestic help at below-average pay. In government, on the other hand, a lower turnover rate and a higher incidence of union membership contribute to wage stability.
Fact #4: The total annual pension contribution of the 50 states is about the same as the total state taxes avoided by corporations.
According to the Pew Center, the latest available annual pension contribution by the 50 states amounted to just under $60 billion.
According to a Citizens for Tax Justice report on the state tax avoidance of 265 large companies, only 3% of the required 6.2% was paid. At that rate, the nonpayment on $1.8 trillion in 2010 corporate profits would amount to just under $60 billion.
Federal tax avoidance is much worse. While corporate profits have doubled to $1.8 trillion in less than ten years, the corporate income tax rate, which for thirty years hovered around the 20-25% level, suddenly dropped to 10% after the recession. It has remained there for three years. That’s a $270 billion nonpayment. Makes the pension payment look puny.
Conclusion
Public sector and union workers make modest salaries with hard-earned benefits. Rather than trying to reduce public sector pay, industry leaders should be addressing wage inequality in the private sector by bringing employee compensation closer to the level warranted by 30 years of productivity growth
That’s only half of it! Corporations that are property owners almost never have to pay an increase over the 1% mandate. A corporation that sells a group of properties in the corporate name or transfers property to another entity under the corporate vial, or is taken over by another corporation; will see no property tax increase. We (CA Fed of Labor) have been trying to address this in CA for over a decade with no luck. Lobbyists have such a strangle hold that we can’t find enough “friends” to move it. We’ve even discussed doing an initiative but to spend more than $2 million just to get it on the ballot and then to fight it in a campaign was too much for the majority on the State Fed
Chip,
You are exactly right about the corporate giveaway.
I have a interesting question for everyone…..
When has the US Government, when fighting wars, ever had politicians screaming for a tax break?
Seems to be a bit mis-guided!
Here’s a good article on the problems behind the San Bernardino BK:
http://www.latimes.com/news/local/la-me-san-bernardino-20120713,0,3298664.story
Okay we’re all expressing our opinions according to personal experience. Maybe Mike’s spelling wasn’t perfect, but his down to earth common sense more than makes up for it. There are those who nitpick over petty things, but ignore the big picture just to prove “their superiority” which exists mostly in their own minds. I remember and still notice what prop 13 was for. Those who lived in a rinky dink house they could afford were doomed to be forced out of their homes by the tax assessor reapraising the value of their rinky dink based on what the next door property sold for. Okay, that’s one issue if you really do care about ordinary people who didn’t make big bucks buying and selling property. Next…When unionizing Calif. gov workers during the 1970′s was looming on the horizon during then gov Jerry Brown’s dominion, I got the feeling that it couldn’t help but lead to what we are experiencing today. Our government is a powerful labor union government within our government of, by and for itself. The rank and file do what they’re told in fear of being black-balled, losing their position, or being fired. Greed is a natural human motivator. Over the years it’s been interesting to notice that during elections urging voters to pass higher taxes benefitting various public service groups… we hear a lot about “it’s for the kids, the sick, the old and the poor.” The unions spend millions of their member’s dues on their ads on television. But when it comes to government budget cuts it’s another story. It’s interesting to watch greed manifesting itself in those who call others greedy. Kind of like some higher power saying, “Let’s see if you’re any better than those you call greedy. Were you among those who voted on public television for the spotted owl instead of the loggers? Did you care about the hundreds of families who lost their livelihood because of lies? Did you know that the gov now has to kill bigger owls who are eating the spotted owls? Anyway, what I’m try to say is that all we’re experiencing is an example of what goes around eventually comes around. If what we’ve done is good so will be the reward. If it is not good, than the eventual fruitation of our choice might not be enjoyable. Anyone who ever managed their own household economics, or a business successfully knows it’s a matter of doing the math and living within your means. That’s not what our “public servants” are doing….and that’s why so many cities are filing bankruptcy. You can argue and argue that more tax increases will solve the problem, but it never will solve the greed problem, and amounts to flushing more and more money down the toilet. It’s an old civilization problem that caused an endless movement of people emmigrating around the earth trying to escape the tax tyranny they create over and over again.
With all due respect Bonnie, your comments do not persude, much less provide any evidence of support. What I posted at the end of my comments wasn’t my opinion. If you read itl it’s an analysis, much coming from the CBO and the other stated sources. The purpose of including this information is to negate the idea that assertion equals fact, or put differently, all opinions should be valued equally.
Starting pay for teachers varies, according to district, but educational requirements in CA are the same and, sad but true, most Californians wouldn’t be able to meet the educational requirements, or even make it through student teaching. And the idea that union members do what their told to do is so absurd its not worth discussing. And before my short term as a union teacher, I successfully developed a condominium project in the ski country of VT in the early ’80s, a horrible time economically. Unions may spend millions on TV ads, but what they have to spend is dwarfed a hundred times over by secretive PACs, mostly Republican multi-Billionaires, Corporations donations, and now the latest, public service shams. Yes, I know, bring up the one Democratic billionairee, George Soros, but please dig deeper than slander man Glenn Beck before repeating that slime about him. So some deep research first.
And BTW, if the people of CA decide to vote for the sales tax increase, so be it. It was the Republicans who tried to rule by minority and stop the people from deciding.
The world has changed and I haven’t seen a single proposal from the tea people or republicans to facilitate our adapting to new conditions–just more tax cuts for the wealthiest. Their mantra has proven to be cries to a false god. They are the ones who will destroy–are destroying–this country with their insatiable greed.
Regarding owls and loggers, you miss the point totally. Just as our bodies must live in a proper balance, so does this earth. Years ago, seeing the clear cutting of so much redwoods and a redwood mill on the coast about made me cry. It’s not just about the spotted owl. It’s about attitudes. Like people I know in Texas that used automatic rifles to wipe out a prairaie dig colony because their burrows were dangerous for the cattle–cattle raising BTW being about the biggest environmental disaster ever known. I feel for anyone that loses their job, but jobs have to be sustainable.
And I don’t want to be harsh, but your last statement, for the most part, is preposterous. Avoiding taxes does not account for the great migrations of peoples over the years, noway, nohow, not at all. That is not an opinion, that is fact. If you want examples, just ask, and in another post, Ill provide some. Here’s one to ponder–the Mongols.
BM wrote;
“Did you know that the gov now has to kill bigger owls who are eating the spotted owls?”
Apologies to Greg Z for my irritation, but Bonnie still makes me laugh.
I know it’s not worth it, but Bonnie, could you elaborate on this one? I’m dying to know.
Chris…the owl problem has been on the news, and there’s plenty on the internet about it if you care to look. http://news.discovery.com/earth/battle-barred-owls-to-save-the-spotted-owl-120302.html
That’s a good one!
A group of folks get together, pool their resources, and spend some of it on stuff that will make them richer. If they have formed a corporation, they are good Americans. If they have formed a union, they are nasty communists. Isn’t that about the size of it?
And if they are bankers, commodity speculators, Enron type CEOs, CFOs, etc. Teddy Roosevelt saw the danger to society that the dubious policies of the rightfully labeled Robber Barons were causing. In his eyes, a possible revolution due to the vast income inequality in America. Still, despite years of murder, mayhem, brave men and women fought for living wages, forming unions, building a middle class, creating a non-feudal state America. Now, the right wants to take us back to pre-Teddy Roosevelt days.
c