Why some cities go bankrupt and others don’t
FDR was frequently misquoted by conservative commentators during Wisconsin Gov. Scott Walker’s collective bargaining battle with his state’s public employee unions.
FDR did not oppose public employee unions. He did note, however, “(that) meticulous attention should be paid to the special relationships and obligations of public servants to the public itself and to the Government.”
“Militant tactics have no place in the functions of any organization of Government employees,” he’s quoted on Amy Ridenour’s National Center Blog, as well as by a host of other “red” bloggers, and “blue” bloggers invoking the “out of context” argument.
“Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.”
So FDR’s opposition was focused on strikes by federal employees. His comments came in a letter declining an invitation to speak to the National Federation of Federal Employees. But he added, “It is, therefore, with a feeling of gratification that I have noted in the constitution of the National Federation of Federal Employees the provision that ‘under no circumstances shall this Federation engage in or support strikes against the United States Government.’”
But that’s federal employees. Not all other public employee unions have such restraint as part of their creed.
Maybe that fear of strikes is why so many municipalities are in such a financial hole.
The unfounded liabilities for worker pension and benefits forced Stockton, Calif., into Chapter 9 bankruptcy earlier this month, and San Bernardino, Calif., quickly found itself in the same capsized boat. From all accounts, other California local governments are to rush lemming-like over the same cliff.
Nevada isn’t immune, judging from fairly recent and seemingly endless news accounts out of North Las Vegas.
The deals given to public-sector unions in many locations must have been struck out of fear or political patronage. Office holders have granted benefits that grammar-school math skills should have told them they could never fulfill. Of course when those benefits, which were growing exponentially finally were to surpass finances, the office holders who granted them would be long gone.
The workers aren’t to blame. All of us would rather receive more pay and better benefits. The unions shouldn’t be blamed too harshly – they are tasked at getting as much as possible for their members.
And should the office holders be blamed? No, the voters who kept them in office bear that responsibility.
Under Chapter 9, new public employee union contracts can be drafted. New workers can be given 401(k) retirement programs instead of pensions. The promises made to retired public workers, however, cannot be reversed by Chapter 9 filings.
So the people who were not responsible as voters, still will be responsible as taxpayers.
Public services will suffer as citizens bear the burden of past debts for years to come. Scranton, Pa., is a good example. Workers there are being cut back to minimum-wage salaries. That may be necessary to balance the budget, but it will not attract the best people to serve.
Mesquite seems to be unique, or maybe it was just a little ahead of its time.
The citizenry here was up in arms not so many months back making demands about the monies being spent by city government.
Over the past three to four years, 30 percent of the city workforce has been cut. And many of the people who didn’t mind the previous level of spending in city government are no longer employed here.
San Bernardino’s ending fund balance slipped below $200,000. As property tax and other revenues dried up, the city didn’t have the reserves to make its payroll and had to seek bankruptcy.
We don’t know this year’s ending fund balance in Mesquite yet. Finance Director Debbie Cardenas says that they must await the final results from June come in. She’ll know how much money will be carried over to the new fiscal year within a month.
Mesquite has taken as bad a hit as any community in property taxes, as home prices have fallen – more than $1 million a year.
But Mesquite’s population has demanded responsible stewardship. And by all accounts, local government is providing it.
The city isn’t totally out of harm’s way by any means. The public unions here have been reserved in their demands and cooperative. One city official told the MLN, “They are not greedy like in North Las Vegas.”
But next year, all of the contracts for all of the city’s collective bargaining units come due. That will be the time for the public to be extra vigilant.
Our elected officials and administration appear to be heading in the right direction, despite the pain being caused by reduced public services.
It’s not time yet for government to increase its spending nor debt.
We’ll have to wait and see what happens when salaries and benefits again are on the table. And we’ll have to watch how the council reacts in September when the proposal to build the expensive indoor sports center comes before it.