After the overwhelming approval of a 1 percent city sales tax
increase in November 2007, I wrote the following in a Free Lance
Guest View article:
”
I sincerely hope that five years from now we will have a
thriving economy supported by a reliable, recurring, income stream
and Measure T supporters will be able to say,
”
I told you so.
”
One of the first items on the city’s agenda is going to be
negotiations with the local employee unions … we are hardly out
of the woods and this is no time for the city to agree to
unsustainable wage or benefit increases.
”
After the overwhelming approval of a 1 percent city sales tax increase in November 2007, I wrote the following in a Free Lance Guest View article:
“I sincerely hope that five years from now we will have a thriving economy supported by a reliable, recurring, income stream and Measure T supporters will be able to say, “I told you so.” One of the first items on the city’s agenda is going to be negotiations with the local employee unions … we are hardly out of the woods and this is no time for the city to agree to unsustainable wage or benefit increases.”
The council did not take that advice and now, after two raises – one of which was retroactive – and their continuing failure to rein in those benefit costs, we are facing years of disastrous 12.5 percent budget cut. After the cut, the forecast is for $2.8 million of red ink in Fiscal Year 2013-2014. Unfortunately, I’m the one who gets to say I told you so.
Measure T started out as a big lie and that still bothers me. Supporters promoted increased services, but the real purpose was to fund salary and benefit increases for public employees. Those benefits are many times richer than most in the private sector and can easily add 40 percent to personnel costs. The three incumbents who supported the measure and the city manager certainly knew that, but they participated in the charade.
I do not blame the council for now grasping the Measure T funds as a life preserver – drowning people do not concern themselves with details. As long as it floats, it works. However, I do blame them for not patching the hole in the boat when they had the chance; heck, they went out of their way to make it worse to gain political support.
After months of negotiations, the new agreement with the peace officers claims a “saving of the equivalent of 5% of salary and salary related benefits through October 31, 2011.” However, other costs are pushed off into the future once again. The public documents contain no detailed financial analysis. In fact, there are cash payments to offset some givebacks and larger, unfunded, retirement benefits – some savings.
Without the proposed budget cuts, the bleeding will start earlier and we will drown in $8.5 million of debt. Even those grim forecasts are optimistic because CALPERS has only temporarily lowered its retirement collections rate. If you predicted 8 percent long-term returns on your savings, a good advisor would say you’re being unrealistic, but CALPERS does it all the time and the city – not the retirees – takes the risk that they will run short.
In early 2008 the city had two options. The first was to take some small cuts, build an effective reserve, implement austerity measures, get more cost sharing on medical insurance and phase in significant changes for future retirees. The second was to just keep doing the same things we did before. We selected the latter course because it was politically easier – now we have to pay the piper. Layoffs are almost inevitable and the city is once again selling its future for a payday loan.
The excuses will now flow, especially, “How did we know there would be an economic crash?” No boom lasts forever; had this crash not happened we would still be in trouble – we spend more than we make. The fact that other cities have the same problem is little comfort when one realizes that we’ve had years to avoid this mess. Then again, that would have taken leadership and sacrifice, but leadership and sacrifice are even harder to find than money.
Marty Richman is a Hollister resident.
