Conventional wisdom has it that our local political leadership needs our support the most when economic times are bad, but I see it the other way around. History shows that we have made our biggest mistakes during the good times because that’s when the public often loses interest in what’s going on. I believe the political leadership needs more support during the good times so they can tackle our long-term economic problems and refrain from making bad decisions brought on by the euphoria of temporary riches.
The bad decisions of good times have had a devastating long-term effect on our state, as detailed in a recent report by the U.S. Census and an article in the Wall Street Journal. Controlling for the cost of living – primarily housing and transportation – the U.S. Census has determined that California has the nation’s highest poverty rate, 23.5%. The Wall Street Journal article showed that, contrary to “conventional wisdom,” California’s high tax rates have not driven the wealthy out of the state; it’s the middle class that’s been leaving in droves.
The exodus of the middle class is taking place because they cannot afford the taxes and do not qualify for public assistance – they have become geographically poor.
When times are bad, the imperative priorities take care of themselves. Lacking resources forces the leadership to examine decisions carefully and be fiscally conservative with an eye toward long-term effects. Yes, mistakes are still made, but they are usually short-term and/or one-time errors and the immediate pain gets lots of attention and corrections. On the other hand, when times are good the political leadership comes under enormous public pressure to commit to spend public resources on expensive long-term programs, and to make up for the bad times. According to this argument, only good times are normal. Who says so?
During good times, the giveaway group usually makes the costly errors that cripple our future. No one wants to hear about prudence then; anyone standing doorway and urging caution is considered a sourpuss and a miser.
Just look at the public employment benefit burdens that are devastating the city and county budgets. All of them were put in place when times were good – during the dot-com, housing, or local development bubbles – and none were installed with escape mechanisms for the bad times that always come. They assumed good times would last forever.
When revenues came back to earth, both the city and county have had to implement pay freezes and furloughs for the very same employees who were granted the long-term benefits. This makes no sense; it’s a policy that punishes the public that fails to get the service levels it paid for.
Talk is already going around that we are coming out of the recession because housing prices are going up, and when that happens the impetus for reform will be gone and resistance will set in. We must not let that happen again. We have to make sensible changes. They can take the form of COLA caps and healthcare cost reductions such as those the administration is proposing for military retirees. Surely, if it’s good enough for our honored veterans, it’s good enough for our public employees.
Another idea is the notion of triggers that automatically reduce public benefit contributions when revenues fall. That way, everyone can share in the risk as well as the rewards of the economy and the public can count on all the services they are funding.
Marty Richman is a Hollister resident.
