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Archive for February, 2011

“The community cannot tolerate the notion that it is defenseless at the hands of organized workers to whom it has entrusted responsibility for essential services.” A.H. Raskin, former labor reporter for the New York Times.

The issue of collective bargaining rights for public employee unions is a partisan fight.

That wasn’t always the case.

“All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.”

Those were not the words of Chris Christie; they were uttered by FDR, a champion of the labor movement.

President Jimmy Carter supported and signed the Civil Service Reform Act of 1978 that firmly established job performance as the basis for compensation (the complete Act can be found here).

It became a partisan issue once public unions figured out they could influence the outcome of collective bargaining by funneling campaign contributions to sympathetic candidates and ballot measures. 

That support overwhelmingly went to Democratic candidates, although the Republicans have had loyal allies from labor, too.

I happen to be a Democrat – a Blue Dog Democrat, for sure – and I am embarrassed by the incestuous relationship my party has with public unions.

Our situation in California is more dire than Wisconsin’s.  At least there is a balance of power in Wisconsin when it comes to negotiating compensation with the unions. There is none here.

Governor Walker does not really need to impose a cap on wage negotiations based on the CPI – I have a problem with tieing such matters to indexes or other standards.  For example, Los Angeles City Council member salary increases are based on raises paid to Superior Court Judges.  You see where that  got us – governance by overpaid and underperforming officials.

Legislative discretion that takes into account the budget, the long and short-term direction of the economy, and the ability of the taxpayers to absorb personnel costs is what is really needed to determine compensation. 

But Governor Walker is right to pursue restrictions. Collective bargaining is incompatible with protecting the general public from wage and benefit inflation.

In negotiations between private sector unions and companies, there is an arm’s length relationship.  Neither side can influence the other; they can only resolutely represent their respective constituencies.

In the public sector, campaign contributions not only muddy the waters, they turn them into stagnant pools. In states that allow unrestricted collective bargaining, the majority party will honor its commitments to its key financial supporters; not to the general population.

Most of us would like nothing better but to ban contributions to candidates or causes from unions, corporations or other entities with limited agendas. However, the Supreme Court ruled otherwise.

In Wisconsin, labor is referring to Governor Walker’s bill as an attempt to bust unions. Nothing can be further from the truth.

Unions still have the right to organize and raise money to endorse or oppose candidates.  Who knows, they might even be successful in running the Republicans out of Madison. 

But exerting financial leverage should have nothing to do with collective bargaining because it’s the taxpayers’ money at stake.  The only way to avoid a conflict of interest is by establishing parameters that prevent either side from extorting the other.

Without controls, states and local governments will not have the ability to reduce structural deficits created by compensation and benefit plans.  That is a point opponents of Governor Walker conveniently overlook.  It is not just about this year’s budget, but all that follow.

Concessions made by unions for the current year or contract period can easily be reversed down the road, setting up future budgetary crises.  A government should have the ability to raise, freeze or reduce compensation as well as increase or decrease employee contributions to benefit plans within a reasonable range.

Without that power, the taxpayers will be at the mercy of selfish interest groups.

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I commented earlier about a Valley Village resident who allowed North Hollywood High School students to paint a mural on her property’s fence.

It was not exactly a Monet.  The style was pure graffiti.

She has been cited and fined by Building and Safety and ordered to remove the display.

The property owner was interviewed by KCAL and gave her side of the story.

Click on the link below and you be the judge.

 http://losangeles.cbslocal.com/video-news-on-demand/?clipId=5604151&flvUri=&partnerclipid=&topVideoCatNo=193012&c=&autoStart=true&activePane=info&LaunchPageAdTag=homepage&clipFormat=flv

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C’est un récit extrêmement émouvant.

The public should get ready to eat cake, because that’s going to be our diet unless we institute serious pension reform.

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Walker no Chris Christie

Wisconsin Governor Scott Walker shot himself in the foot today.

Unfortunately, although it may be his foot,  it hurts a good cause:  reining in the costs and influence of public unions.

The AP reported he was the victim of a prank phone call where he was tricked into disclosing the closeness of his association with the billionaire Koch brothers.  Walker also used an analogy involving how he would take a baseball bat to the unions.

Well, at least it was not a “political bullet to the head” as a local campaign manager recently boasted.

Whatever animosity Walker feels, however, does not  lessen the need for serious reform to public union benefits and the inequities of collective bargaining.

I believe the Republican controlled legislature was going to compromise on the collective bargaining restrictions in the Budget Repair Bill.  As long as they had a majority there was little chance that the unions could push through unreasonable wage increases, so it would have been a no-brainer.  In the meantime, they could use the absence of the Democratic senators to push through non spending related legislation – pure political expediency, but probably very little in the way of substance would have been passed.

While Walker has chosen a hunker-down approach in Madison,  New Jersey Governor Chris Christie has handled the pension crisis in his state with straightforward resolve, taking his message to public meetings and answering direct questions from union members.

That’s the style we need in California because pension reform is going to move to the top of the agenda very quickly.

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I have never watched Megan Kelly before.  Maybe I have seen some brief clips of her, but until today I have not been aware of her skills at conducting an interview.

I have to credit her with a balanced combination of patience and perseverance.  She is in a class high above the vitriolic voices one is accustomed to hearing on Fox and MSNBC.

Her guest did not want to answer a direct and reasonable question, but she hung in there without getting nasty.

http://video.foxnews.com/v/4550309/union-president-defends-wisconsin-teachers-sick-out/

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Pity the voters in CD 8.

They have a choice – a Hobson’s choice – which in this case is vote for a candidate or don’t vote at all.

You see, the results will be the same regardless of whomever they choose – a classic “take it or leave it.”

Parks, for all of his tough talk about the budget, has done little to deal with it.

His campaign website published this response to the Los Angeles Times candidate questionnaire: 

The most important issue in the city is its fiscal solvency! The city’s general fund of $4.2B and can not sustain its current payroll, pension , health care and worker compensation commitments now and in the distant future. Next F/Y 2011/2012 the city will spend 1/4 of its general fund budget for pension and health care benefits for its employees. Health care has increased over 100% in the past 10 years. The only tools available to the city is to restrain expenditures, increase fees and eliminate personnel positions as over 93% of the city’s budget are personnel cost. Although, much has been done : eliminating over 4000 positions of which approximately 400 were layoffs and 2700 were given early retirement packages , initiating furlough cost saving measures, eliminating , merging and reorganizing departments , reducing, and eliminating city service contracts , increasing fees/fines to reach a full cost recovery for some city services which has eliminated  over $1B of expenditures  in the past two fiscal years.

Some of these measures have been one-time saving while others have been structural. In the future much still remains to be done for short and long term benefits :pension reform- higher employee contribution and change in the pension profile, healthcare cost reduction, reducing city subsidy and shared cost by the city and the employee for future increases, continued reduction in city staff, hiring freeze for all employees including police officers, reassessment of 70% of the city’s general fund  budget allocated to pubic safety service , ensuring the city revenue producing positions are protected to gain maximum return on revenue recovery. These are just a few of the many budgetary actions that will be needed over the next several years to address the current $60M shortfall and the pending $350M shortfall for the upcoming fiscal year.

He does not mention that many of the layoffs were actually transfers to the DWP, Harbor and Airport departments, essentially moving compensation off-the-books as discretely as Enron hid its liabilities by moving them to unconsolidated special purpose entities.

Parks seconded Garcetti’s benefits reform proposal, a rather tepid attempt to reduce pension and benefit costs that seems more window-dressing than substance in order to deceive voters into believing action is being considered. 

Come on.  Requiring a 2 percent contribution for health benefits is a tweak, not reform.

Garcetti’s “reform” measure mentions eliminating double-dipping, but not for existing instances, such as Parks’ LAPD pension and council salary. If Parks were a true leader on reform, he would take one or the other, but not both.  I would respect a decision by him to receive his pension (the higher of the two) and work for a $1 per year, plus expenses, on the council.

Parks has questioned Forescee Hogan-Rowles’ knowledge of the city’s budget crisis.

I’ll assume Parks knows more, but what good is knowledge if you do not apply it?

Our current situation speaks for itself – we are facing a $350 million deficit, and that’s just for next year.  Parks, as the chair of the Budget and Finance Committee, as done little or nothing to change the course of the city’s mindless and irresponsible management of finances.

I realize he can’t be held responsible for the actions (or inaction) of  everyone on the council.  For certain, there are fiscally challenged members who probably can’t balance a check book. However, he has not used his position to take the crisis to the public in no uncertain terms.  His colleagues might be more receptive to real reform if they were being besieged by constituents’ concerns over the lack of progress on this issue.  We need someone with a little Egypt in him to raise public awareness and produce a tremulous outcry over the gross mismanagement of the city.

What do we get from Parks?

Timorousness.

Hogan-Rowles is not exactly a breath of fresh air.

Her heavy union support guarantees little in the way of pension and benefit reform, without which the city will move closer to insolvency.  Everyone will lose if it comes to that.

It’s nice for candidates to promise better service and responsiveness, but it is an empty promise if there is no money.

So what are the voters of CD 8 to do?

Here’s my advice: write in Thomas Hobson.

They can then make a true “Hobson’s Choice.”

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MonteBELLo.

That’s the sign the auditors should see when they very likely descend on this small city of 65,000 located on the fringe of Los Angeles.

According to the Los Angeles Times, there are financial troubles brewing in Montebello.  Off-the-book accounts are part of the problem.

Financial junkies will recall that off-book accounts were at the heart of Enron’s demise.

A key excerpt from the above link states, “The board of directors was not attentive to the nature of the off-books entities created by Enron, nor to their own obligations to monitor those entities once they were approved. ”

Unlike the City of Bell, there have been no allegations of criminal intent, but it sure does smell at least like gross negligence or incompetence, the results of which could be as significant as if a crime were committed.

At a minimum, $900,000 is missing from one of the off-book bank accounts and another has also had withdrawals of an undetermined amount.

Other allegations include transferring CRA monies to cover the general fund and improperly tapping into federal affordable housing funds.  In the latter case, the transaction may have been recorded in a deceitful manner.

Montebello reported operating revenue of $37 million in 2009.  The suspect transactions could run over $20 million, including a loan of $19 million from the city’s redevelopment agency.  Unwinding all of it could force the city into bankruptcy.

Neither the auditors’ opinion nor the management discussion accompanying it hinted at problems.  If anything, management’s narrative was rosy and hawked the city’s achievments.

What is also interesting is that Montebello received the Certificate of Achievement for Financial Reporting Excellence for the audited statements issued as of June 2008.

This is the same award that has graced the financial reports of Vallejo, Bell and….the City of Los Angeles.

As I have mentioned before, this award has no place in a financial reporting package.  It could lead the average users of the statements to conclude the numbers are reliable when the opposite might be the case.

I wonder if Wendy Greuel has her award framed and hanging in her office?

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