Back in the early 2000’s, in the aftermath of the internet bubble’s collapse, California’s state and local governments endured a period of austerity that resulted in “furloughs,” where, typically, employees would take Friday’soff in exchange for a 20% cut in their pay. That is, they worked 20% less, and made 20% less in pay – but theirrateof pay was not cut.

This display of “sacrifice” was an eye opener for private sector workers, especially salaried employees of small businesses, who endured cuts to their rates of pay at the same time as their hours of work increased. Most people in the private sector back in the early 2000’s felt lucky to have a job, even if it meant working harder and making less.

There’s a lesson to be learned from the period of state and local government “furloughs” in California: California’s government functioned just fine with 20% fewer hours spent at the job, overall, and California’s government workers got by, overall, making 20% less money. So since we know these cuts arefeasible, it isinteresting to estimate just how much money Californians would save, if there were a 20% reduction to… Read More

“Alright, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, the fresh water system and public health, what have the Romans ever done for us?” – John Cleese, Monty Python’s Life of Brian, 1979

Any discussion of California’s neglected infrastructure has to recognize the three factors most responsible, libertarians, environmentalists, and government unions. Picking libertarians as the first example is not by accident, because libertarians are perhaps the most unwitting participants in the squelching of public infrastructure investment. By resisting government involvement in any massive public works project, libertarians provide cover to public sector unions who know that public works fundingcompetes for tax revenues with their own pay and benefits.

When it comes to squelching public infrastructure investment, however, nobody can compete with California’s environmentalist lobby. Their lawsuitshave stalled infrastructure development for decades. And the identity of interests between government unions and environmentalists is multi-faceted. The most obvious is that when there is no… Read More

“You will find that powerful financial and investment institutions are the ones promoting the attacks on your pensions. Firms like Berkshire-Hathaway and the Koch brothers are backing political candidates and causes all over the country in the hopes of making this issue relevant and in the mainstream media. Why? Because if they can crack your pension and turn it into a 401(k), they will make billions. Your pension is the golden egg that they are dying to get their hands upon.By the way, it was those same financial geniuses that brought about the Great Recession in the first place. After nearly collapsing the entire financial system of western civilization, they successfully managed to deflect the blame off of themselves and onto government employee pay/benefits.” – Jim Foster, Vice President, Long Beach Police Officers Association, posted onPubSec Alliancewebsite

These comments form the conclusion to a piece published by Foster entitled “What does “unfunded liability” mean?,”… Read More

California’s politics remain polarized, but not justvia the traditional division of Republicans vs. Democrats. As reported here two months ago in the post “Issue of Government Unions Divide Candidates More Than Party Affiliation,” there were two California State Senate contests that remained unresolved after the November 2014 election. One of them, pitting Republican John Moorlach against Republican Don Wagner for the 37th Senate District, was settled on March 17th. Moorlach, who has fought to restore financial sustainability to public employee pension systems, was opposed by government unions. Wagner, also a conservative, but less outspoken than Moorlach on the issue of pension reform, was endorsed by government unions. Moorlach won.

The other race, originally pitting three Democrats against each other for the 7th Senate District, has narrowed to a contest between two candidates that will be settled on May 19th, Democrat Steve Glazer vs. Democrat Susan Bonilla.

It will be interesting to see how voters in a largely Democratic district respond in a… Read More

“His idea [Mayor Chuck Reed’s] of pension reform is, you sign up for one pension system, we’re going to change it now in mid career, and now you’re going to get something different.” Lou Paulson,President, California Professional Firefighters (ref.CPFVideo, April 1, 2015)

The biggest problem with Mr. Paulson’s comment is the double standard he applies. Changing pension systems “mid-career” are just fine when they improve the benefit to Mr. Paulson’s unionized government workforce, but when it comes time to roll back these financially unsustainable changes, he cries foul.

The most obvious, indeed egregious example of a “mid-career” change to pension systems that improved pension benefits began during the internet bubble year 1999, whenSB 400was passed by the California State Legislature. SB 400 changed the pension benefit formula for California’s Highway Patrol officers from “2% at 50″ to “3% at 50,” a 50% increase… Read More

Current policy solutions enacted to address California’s water crisis provide an object lesson in how corruption masquerading as virtue is impoverishing the general population to enrich a handful of elites. Instead of building freeways, expanding ports, restoring bridges and aqueducts, and constructing dams, desalination plants, and power stations, California’s taxpayers are pouring tens of billions each yearinto public sector pension funds – who invest 90% of the proceeds out-of-state, and the one big construction project on the table, the $100B+ “bullet train,” fails to justify itself under virtually any credible cost/benefit analysis. Why?

The reason is because infrastructure, genuinely conceived in the public interest,lowersthe cost of living. This in-turn causes artificially inflated asset values to fall, imperiling the solvency of pension funds – something that would force them to reducebenefits. Beneficial infrastructure is also a threat to crony capitalists who don’t want a business climate that attracts competitors. Affordable land, energy, and water encourage economic growth. Crony capitalists and public sector unions alike hide… Read More

Increases to the minimum wage in California are moving closer to reality. As reported on March 30th byMyNewsLA.com, “Los Angeles County Supervisors Sheila Kuehl and Hilda Solis will ask their colleagues to approve spending up to $95,000 to have the Los Angeles Economic Development Corporation review a series of studies of the issue performed in relation to the city of Los Angeles’ proposal to raise the minimum wage to $13.25 an hour by 2017 and to $15.25 an hour by 2019.”

California’s minimum wage is currently $9.00 per hour. The federal minimum wage is currently $7.25 per hour.

Largely lost in the debate over the “fight for fifteen” (dollars per hour) is America’s inflation adjusted minimum wage based on historical precedents. It’s an interesting topic that deserves discussion, becausehistorical minimum wagesexpressed in 2015 dollarsvary a great deal.… Read More

The city of Eureka on the far north coast of our state is part of a fabled land, far removed from the rest of drought stricken California. The winds that the ridiculously resilient ridge of high pressure push north find welcoming mountains and canyons in and around Eureka, drenching them with rain, nourishing endless grovesof thetallest trees on earth, the magnificent coast redwoods. Gushing rivers run through thick green forests scented with maritime air. Downtown, the mansions of the 19th century lumber barons defy time, marvelous, intricate, stunning. And on postcard perfect shorelines, the rugged Pacific surf surges against the rocks. It’s hard to imagine a more beautiful place.

But when it comes to government unions making sure their compensation crowds out any hope of fiscal sanity, Eureka is as ordinary, and as challenged, as every other city in California.

A few weeks ago the California Policy Center released a study “California City Pension Burdens” thatcompiled key financial indicators for every city in California. When it came to pension… Read More