Archive for 2010 December

New York’s grumpy (but well compensated) sanitation workers

New York Mayor Michael Bloomberg and his Sanitation Department have been taking lots of heat for their tardy street-clearing efforts in the wake of a post-Christmas blizzard that dumped 20 inches of snow on the Big Apple.  Many streets had yet to be plowed days …

Stop the presses: Paterson discovers pension bomb

In his waning hours as governor of New York, David Paterson has penned a Daily News op-ed warning of “a new crisis on the horizon that threatens the solvency of local governments and the recovery of the U.S. economy: teetering public pension funds on the …

Spendthrift schools going broke?

The Christian Science Monitor published a provocative opinion piece on school spending by Walt Gardner, former Los Angeles public school teacher and lecturer at the UCLA Graduate School of Education, who now writes the Reality Check blog for Education Week. In it Gardner argues that many school districts have squandered resources, including federal stimulus money, and spent profligately during the boom years on projects like LA’s $578 million  Robert F. Kennedy Community Schools complex.

Gardner sticks mainly to what he knows, which is LA, but you can find lots more questionable spending, including a rapid increase in personnel and administrative costs in some places and big increases in pay and benefits which drained some budgets.

In New Jersey, as I’ve written, public school enrollment stagnated this decade along with the state’s overall population, but school districts still increased their hiring by 14 percent from 2001 through 2008.

Privatization’s potential pitfalls

A sampling of pieces from London’s Daily Mail shows that privatization is not a free-lunch answer to public-sector woes, even as cash-strapped American states seize on the strategy to rescue themselves from deficits.
Five inches of snow lightly coated London two Saturdays ago – and paralyzed Heathrow for days. …

Pensions eclipse Decatur’s budget

In 2001 pension costs consumed 30 percent of Decatur, Illinois’ property taxes. In 2011 they will consume 70 percent, a total of $80 million. According to the City Manager and Finance Director elected officials have been making the annual contribution, “but the unfunded liability keeps …

The pensions-taxes link

The Wall Street Journal reports today that localities around the country are drastically raising property taxes to cover their workers’ pension and healthcare costs. Upper Moreland, Pennsylvania raised rates by staggering 13.6% in 2011.  Nearby Philadelphia raised its rates by 9.9%.  Upstate New York cities, …

Governor Christie tackling pension obligation

A new release from New Jersey’s Treasury indicates Governor Christie will move ahead with his plan to tackle New Jersey’s massive unfunded pension liability and health care obligation for public sector workers. The state reports, using a discount rate of 8.25 percent, that New Jersey’s …

Why I worry more about cities than states

Yesterday, I went on the Fox Business Network to talk about the risk of a wave of municipal bankruptcies in next few years. As is often the case, the interview request came in asking about state defaults. In this case, they wanted to know if I thought any states would go into default in 2011.

I think the answer to that is quite clearly no–indeed, I agree with Meredith Whitney who, for all her doomsaying, does not expect state-level bond defaults in 2011 or beyond. But Whitney is right that we should worry a lot about defaults by cities and other municipal governments

Right on Crime

The Texas Public Policy Foundation has a new project called Right On Crime, that advocates criminal justice reforms mostly in the “alternatives to incarceration” category. These include diversion and treatment programs, and also improved probation and parole practices that reduce the need to send people to prison, or back to prison. TPPF has really been at the forefront of a trend among conservative organizations and elected officials in revisiting the assumption that locking more people up for longer is better, so it’s nice to see them launching this national project.

Why mention Right on Crime here? Because special interests that fall in the Public Sector Inc. box have been an important force for retaining mass-incarceration policies. For example, in 2004, California voters appeared poised to pass Proposition 66, which would have revised that state’s Three Strikes Law, applying mandatory 25-years-to-life sentences only to convicts whose third crime was a violent or serious felony. The state prison guards’ union dumped hundreds of thousands of dollars into a campaign to defeat the measure, and it narrowly went down

It doesn’t get much uglier than this…

In today’s New York Times, reporters Michael Cooper and Mary Williams Walsh tell the tale of Pritchard, Alabama, a town whose pension fund has run dry after years of warnings that the fund was headed toward insolvency. Now Pritchard has stopped making payments to retirees, forcing some of them into bankruptcy. So, say the reporters:

Pritchard is now attracting the
attention of bankruptcy lawyers, labor leaders, municipal credit
analysts and local officials from across the country…

“Prichard is the future,” said Michael Aguirre, the former San Diego
city attorney, who has called for San Diego to declare bankruptcy and
restructure its own outsize pension obligations. “We’re all on the same
conveyor belt. Prichard is just a little further down the road.”