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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: chartseer who wrote (126892)	3/22/2012 12:31:51 AM
From: Hope Praytochange	6 Recommendations Respond to of 224729

Stockton Woes Send A Message On Pension Reform Local Government: As one California city slogs toward bankruptcy, others may soon try to avoid the same fate by passing pension reforms — that is, if a pro-union state government will let them. The financial problems plaguing many of the nation's cities are taking a particularly heavy toll on Stockton, Calif., a blue-collar port city that struggles even in good times. Perched on the edge of central California's delta, about an hour south of Sacramento, the city has had some of the highest home foreclosure and unemployment rates in a state that ranks high in both categories. As if that weren't enough, Stockton is also a cautionary tale on how not to run a city. It seems to have committed just about every fiscal sin known to local government. In those infrequent years when things were good, it spent (and promised) like there was no tomorrow. Now tomorrow has come, and the city is broke. Its spiffy sports arena and its new $35 million high-rise city hall won't help it pay its debt. That debt includes, but is not limited to, a $400 million liability for its retirees' health care. It has 94 retirees with pensions of $100,000 a year or more. It also has had to cut its police force by almost a third. In a couple of months, Stockton (population: 292,000) may break a dubious record as the largest U.S. city ever to enter bankruptcy. The only reason it isn't there now is a recently passed state law requiring a 60-day mediation period, which is set to end in late April. That mediation law is a story in itself, and a good indication of where California's state government stands on matters of municipal finance and pension changes. It was passed by union-friendly Legislature to protect the retirement benefits of public-sector union workers. What the unions fear most in bankruptcy is its effect on contracts. If the bankruptcy court so decides, cities can be freed from their collectively bargained obligations. This is what a city in Stockton's situation needs to save itself. The state is doing what it can to keep such a thing from happening. It would prefer that the city's bondholders absorb all the pain. State officials are also doing what they can to stifle serious pension changes. Earlier this year, the union-backed state attorney general, Kamala Harris, drafted a ballot summary for a pension reform initiative that managed to put it in the worst possible light. Faced with an uphill battle just to get the facts out, the proponents called it quits for this year. The state's Public Employee Relations Board has filed a lawsuit to remove a San Diego pension reform initiative from that city's June ballot. San Jose is also slated to vote on a reform measure in June, but union allies in the state Legislature are trying to delay the vote with a state audit of the city's pension projections. Their reform plans are serious responses to a real crisis. Not only would they set up more sustainable plans for new hires, but they would cut benefits for current workers as well. In the face of all this manipulation, Stockton may be doing California a favor just by showing what happens when reform is thwarted. San Diego and San Jose are much larger cities — the second and third largest in the state — and their fiscal collapse could send real shock waves through the state economy and world of municipal finance. They see the Stockton syndrome, and they can see how to avoid it. The real question is whether the public-sector unions that wield so much power in the state will let them save themselves.