October 2011 Archives

Earlier today, New Jersey Senate President Stephen Sweeney made headlines when announcing that he could support merit pay for teachers. Unfortunately, his favored style reform has failed in the past and should not be supported by education reformers.
I had previously written for PSI about North State sheriffs who are joining local ranchers in a battle against federal regulators who are trying to bust four Klamath River dams, which will destroy what remains of the agricultural industry. Here is my column from Sunday, in which I detail this brewing rural rebellion:

These rural folks, living in the shadow of the majestic Mount Shasta, believe that they are being driven away so that their communities can essentially go back to the wild, to conform to a modern environmentalist ethos that puts wildlands above humanity. As the locals told it during the Defend Rural America conference Oct. 22 at the Siskiyou Golden Fairgrounds, environmental officials are treading on their liberties, traipsing unannounced on their properties, confronting ranchers with guns drawn to enforce arcane regulatory rules and destroying their livelihoods in the process.
Here we see local officials standing up against state and federal ones and rural residents fighting a mostly urban environmental movement. Perhaps we're seeing a renewed sagebrush rebellion.

The U.S. Census has released its 2009 survey of state and local expenditures, and not surprisingly, it shows a massive decline in revenues, down 22 percent from 2008, including a 19 percent decline in corporate tax collections and an 11 percent decline in collections from personal income taxes. Despite the decline, spending increased 4.8 percent. One category of growth, salaries and wages, increased by 3.3 percent (not including the cost of pensions and health insurance). That was actually modest growth compared to most years in the previous decade. From 1999 through 2009, according to previous Census' surveys, salaries and wages rose nearly 60 percent to $827 billion. In that same period inflation grew by 27 percent and the U.S. population, which typically drives local government hiring, increased by 13 percent.

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I'm finding increased public frustration with the way that police unions and officers often stand up for their misbehaving brethren. The New York Times reported:

A three-year investigation into the police's habit of fixing traffic and parking tickets in the Bronx ended in the unsealing of indictments on Friday and a stunning display of vitriol by hundreds of off-duty officers, who converged on the courthouse to applaud their accused colleagues and denounce their prosecution.
I covered a jail-beating death in which internal affairs officers coached their fellow officers on what to say to avoid getting in trouble. In another case, the district attorney found that deputies changed their stories and engaged in a code of silence to protect a fellow officer accused of repeatedly tasering a handcuffed man. After Chicago cop Anthony Abbate was accused of savagely beating a petite barmaid who refused to serve the drunken cop additional booze, fellow officers shielded him at his arraignment and ticketed the cars owned by reporters who were trying to cover the trial. When police behave like gang members protecting their misbehaving members rather than like professionals who are serving the public, then this undermines their credibility. Unfortunately, the police unions protect their worst members and encourage this mob behavior.
I had just polished off an article on the politics of pension reform and headed off to a Hillsdale College event in Atlanta to talk about Gov. Jerry Brown's sell-out to the unions, when the governor released a pension-reform plan that goes much further than any pension-reform advocate had expected. Before the release, I had opined on this site that the plan would be faux pension reform. But Brown's plan basically echoed the Republican Senate plan released in June. It doesn't go far enough to fix the problem, as a former Schwarzenegger official explained, but it's not bad either. It increases retirement ages for new hires, requires cost-splitting for current employees, creates a hybrid plan that mixes defined benefits with defined contributions, eliminates some of the more egregious pension-spiking gimmicks and starts to reform the corruption-plagued CalPERS by reforming its board. The real question is whether the Brown plan will get a fair hearing in the Legislature. I wonder how much political capital the governor will expend to push it forward. He has a habit of announcing plans and then letting them languish. Still this could be a good start.
In years past, the operative cliche for California politics has been that it provides a coming attraction of national policy. But as the Golden State has continued drifting well to the left of the nation at large, it now seems to be modeling a bizzaro world in which progressive fantasies get to run wild without meaningful checks from an opposition party.

Nowhere is that clearer than in the state's "damn the costs, full speed ahead" environmental policies. For proof, just take a look at recent headlines. Last week, the California Air Resources Board signed off (unanimously) on the first statewide cap and trade program in the nation, which will cover 85 percent of the state's carbon emissions within four years. The California Small Business Association estimates the costs of implementation at $183 billion, "one and a half times the total budget for the state of California." Needless to say, the increase in energy costs will hit the state's poorest citizens the hardest.
The New York State United Teachers (NYSUT) union gave its bosses some pretty hefty raises last year, according to the Albany Times Union.  At least five top-ranking earners saw a double-digit raise in 2010.  President Richard Iannuzzi saw an increase of nearly $45,000, increasing his annual salary to more than $240,000.

But that's not all -- Iannuzzi also collects a pension from the state of New York, a taxpayer-funded pension of more than $102,000 annually (according to data available at SeeThroughNY.net).  Kathleen Donahue, the NYSUT VP who earns over $200,000 for her work with the union, collects a $60,000 taxpayer-funded pension. It isn't illegal...
408px-Disability_symbols.svg.pngLast week I posted an item about the Bureau of Labor Statistics' recent report on injuries and illnesses among workers, which showed that public sector workers missed work at far higher rates than those in the private sector, even when they work in similar jobs. One explanation, I noted, was that in many places public sector workers enjoy more generous sick time and richer disability benefits than private workers. "Incentives matter, including those that pay you not to work."

There's plenty to add to this, as even a casual glance at the news on any given day will reveal. One problem is that disability systems have become a favored target of negotiations between unions and politicians. Too many of these systems are rigged in favor of employees and against the taxpayer, so that it's easy to become 'disabled' on the public dime.


As our own Steven Greenhut noted yesterday, the big story in California politics this week has been the anticipation of Governor Jerry Brown's roll-out of a pension reform plan aimed at curbing the runaway benefits of public-sector workers in the Golden State.  That plan began to take shape at a press conference in Sacramento earlier today, where Brown delineated 12 proposed changes to the current system.

Surprisingly enough for a Democrat elected on the strength of union money, nearly all of Brown's proposals have merit. He would increase the retirement age for public employees, move new hires to a hybrid defined contribution/defined benefit system, seek to tamp down on "double dipping" and "pension spiking", and require longer terms of service before public employees had access to state-funded health care in retirement. The only problem is that these gestures won't come close to solving the problem. The total estimated savings of Brown's proposed reforms are about $900 million a year. The State's total unfunded pension liability? Estimates run as high as $500 billion.
You read the headline right. California's powerful teacher union actually found a tax it could say "no" to. Not that the CTA has any principled objection to a surtax on Californians earning $1 million or more. Part of the problem is the proposed tax doesn't go far enough.

In 12 days, Ohio voters can solidify the meaningful public sector employment reforms put into law earlier this year under the leadership of Governor John Kasich. Just like their neighbors to the west in Wisconsin, taxpayers in the Buckeye State can reap the benefits of a more efficient public sector workforce while keeping taxes down and maintaining vital services such as education and healthcare. However, if Ohio voters reject the reforms by repealing Senate Bill 5, the Buckeye State will be faced with rising taxes, public sector layoffs and fewer services for an overtaxed population. This short video lays out the great success taking hold in Wisconsin and offers a clear picture of what Ohio taxpayers can experience if they simply stand-up to Public Sector Inc.

MacIver News Service 

[Madison, Wisc...] The Walker Administration has unveiled a new Compensation Plan for state employees that replaces the old state contracts. The new plan cracks down on overtime abuses and curbs many work rules and add-on provisions that had previously been negotiated with the former employee unions.

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Having already saved an estimated $600 million over the next two years through employee contributions to health and retirement plans, department heads will now be given the freedom to assign overtime in an efficient manner without regard to seniority, a move that will save more than $5 million in one state agency alone.


"Overtime is one of the major areas that will be affected as agencies will now have discretion in determining how overtime is assigned," Department of Administration Secretary Mike Huebsch wrote in a letter sent to all state employees Tuesday.


Read the entire article here.


You know things aren't going well for SB5 in Ohio when New York Times journalist Mitt-Romney-John-Kasich-Mansfield-Ohio-June-25-20102_large.jpgMichael Shear, in what is supposed to a neutral report on Mitt Romney's tepid support for the measure, describes it as "tough anti-union legislation." That this is the shorthand suggests that supporters of Governor Kasich's signature legislation have effectively lost the battle to frame the issue.

Conservatives have taken Romney to task for his apparent waffling, which may even open the door for a Rick Perry comeback as the conservative alternative.
Thumbnail image for yes.pngQuinnipiac released a poll today that shows New Yorkers like the way Gov. Andrew Cuomo is "handling" unions. From Quinnipiac's release:

Cuomo is "about right" in his handling of public employee union, 46 percent of voters say, while 21 percent say he is "too tough" and 20 percent say he is "not tough enough."

You read that right, 20 percent of respondents think he could be tougher. And that's not all...

By a margin of 53-36 percent, voters think that New York State public employees are not pulling their weight when it comes to helping out with the state's fiscal issues. In other words, a majority of voters think public employees should be doing more to help the state out of its fiscal predicament.

Cuomo reached a deal earlier this year with the Civil Service Employees Association (CSEA), the state's largest state government union. The second largest, the Public Employees Federation (PEF), also negotiated a deal with Cuomo, the fate of which rests with a full membership vote (the alternative is 3,500 layoffs).

Both deals include some combination of a multi-year pay freeze, "deficit reduction leave" days, furlough days and increased benefit contributions. But eligible union members will still get their step increases worth a percentage point or two (to the tune of $146 million this year) and some one-time bonuses.
Gov. Jerry Brown last night sent out a letter promising a joint conference committee that on Thursday "you will receive my updated pension reform proposals for review at your next hearing. Given the paramount importance of pensions to both taxpayers and public employees, it is absolutely critical that we carefully examine our current assumptions and practices. We have to do our best to make sure that we have a system that is fair and truly sustainable over the long time horizon that our pension and health systems require." But as Flashreport publisher Jon Fleischman explains, Brown will only propose some previously proposed changes around the margin -- limiting some of the worst abuses and calling for some minor pension reductions for new hires. Brown will do nothing serious about pension reform, especially after he signed many laws advancing public-sector union interests.
San Francisco's competing pension reform measures -- the "city family" Proposition C half-measure and the tougher Proposition D -- might both be in trouble, according to this San Francisco Chronicle column (scroll down a bit). According to Matier and Ross, "A new poll of 500 San Francisco voters shows Proposition C, the 'consensus' measure being backed by unions and City Hall, barely squeaking by, with 52 percent support. Proposition D, the rival measure put on the ballot by Public Defender Jeff Adachi, comes up short at 42 percent. ...With Adachi's measure appearing headed for defeat, the unions must now decide whether to spend big money to pass their measure - or hold back, let both measures fail and thus keep the status quo." What are the chances the unions will choose anything other than the status quo?
The Ocean State is is literally about to fall into the sea. You know things have gone awryrhode-island.jpg when about half of state workers make more in retirement than they did working (and this does not include Social Security payments). While PSI has long been documenting the state's fiscal problems, they've recently received some national news coverage that is worth reading. Walter Russell Mead has an insightful take on how RI got into its' current bind.

Losing the message war

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A new Quinnipiac University poll suggests that Ohio Governor John Kasich is losing theOhioSB5.jpg message war in his battle with public sector unions.  Opposition to the governor's reform of his state's public sector labor relations has almost doubled in the last month, from a 13-point margin in favor of repealing the law in late September to a 25-point margin today.

The unions' umbrella group has invested millions in the campaign and put out sophisticated ads in favor of repeal.  According to the Cleveland Plain Dealer, opponents have outspent supporters 5 to 2 on campaign commercials.
As the nation's laws and regulations expand, we're seeing expanded fights between various members of the public sector. I spent the weekend in Yreka. Residents up there fly the "Jefferson" flag, which refers to a small secessionist movement that unites rural counties on both sides of the California/Oregon border. This is where federal endangered species laws have shut down the lumber industry, where federal water restrictions have killed the fishing industry and where residents are fighting the latest environmental cause in California -- busting dams to re-wild the landscape.

Over the weekend, Senator McConnell said preventing firefighter and police layoffs wasn't the federal government's job. Watch the CNN "State of the Union" segment:

For the last twenty years, local government has been robustly expanding far faster than the population. Public sector layoffs we're seeing now shouldn't be bringing us back to a level of poor service, says Steve Malanga. Read Steve's PSI post on this and then watch Steve and FOX Business's Dagan McDowell talk about the costs of public employment.

We can't afford the local government that we have right now. Welcome to the new fiscal reality where states and cities have to adjust their budgets for the long term.

The rhetoric has been heating up in Washington over additional stimulus for state and local government ever since the President's latest jobs bill failed. The President suggested last week that parents were going to have to explain to their children why their favorite teachers have been fired thanks to Republican opposition to additional stimulus to save local jobs. The Vice President went even further, suggesting we could see a rise in violent crime including rape and murder thanks to layoffs of police.

But what this hyperbolic rhetoric ignores is that local government has been on a decades long hiring boom and that we currently have historically high ratios of public safety workers like cops and firefighters to the population at large, as the chart below suggests. Something similar has been going on with teacher hiring, as the chart on the next page shows.

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Earlier this week, I noted that the decision by instructors in the Los Angeles Unified School District to back the "Occupy" protests was just one more example of how California teachers unions consistently act against the interests of the Golden State's students (in this case by opposing education reform up to and including charter schools in some of the state's most blighted neighborhoods). According to a story published today by California Watch, that trend doesn't abate when it comes to higher education:

As a small cadre of University of California faculty prepares to deliver the first online classes in a systemwide experiment, the effort is stirring both excitement and controversy among instructors and administrators...
110222_rahm_emanuel_mayor_ap_328.jpgIt was politically feasible for Republican President Richard Nixon to engage China because he had impeccable anti-communist credentials. Similarly, Chicago's Democratic Mayor Rahm Emanuel can take on his city's unions without creating a firestorm because of his party's alliance with organized labor.

Major change appears to be afoot in the windy city. As PSI has been documenting, Mayor Emanuel has more than any other politician in the nation directly raised the issue of how unionization in the public sector can compromise government productivity. He has taken on the teachers' unions and sanitation workers over inefficient work rules. (By a long shot, Chicago has the most expensive trash disposal system among large city in the country). Other unions are nervous that they might soon find themselves in the sights of a mayor bent on achieving efficiencies in government. However, Emanuel has not tried to change collective bargaining rules or weaken the unions' political clout in other ways. 

Yesterday, the Bureau of Labor Statistics released 2010 rates of injury and illness in the American workforce, and once again state and local government workers on average missed far more days from illness and injury per worker than workers in the private sector. Below are the topline rates of illness and injury. More detailed stats available from the BLS show that even in comparable jobs, public workers miss substantially more time than private workers.


injuries.jpg

Everyone in Sacramento knows the state government is dysfunctional and that California is basically a train wreck. But the dominant viewpoint among Democrats and the media is that the real source of the problem is tax-limiting Prop. 13. Never mind that California has the highest taxes in most categories and has a hostile business climate. To the big thinkers here, the source of the enduring crisis is an initiative that makes it too tough to raise taxes. The latest foray into this thinking comes from Bloomberg Business Week. Reporter Christopher Palmeri argues in a news story that is more of a hard-edged opinion piece:

The Wall Street Journal on Wednesday lambastes California Governor Jerry Brown for signing Senate Bill 202, a nasty little law that restricts ballot initiatives to November general election contests while moving a vote on a measure to impose a new state spending cap and establish a "rainy day" fund to 2014. The bill is a gift to the state's powerful public employee unions.

"This month marks the centennial of California's voter initiative process," the editors observe, "and Governor Jerry Brown has commemorated the occasion by signing a law that makes it easier for unions to defeat ballot measures they don't like. Consider it more evidence of Mr. Brown's disappointing return to Sacramento."

Indeed! Although Jerry Brown can be surprising now and again, he remains essentially a conventional politician. As it happens, I wrote about the very same law in my weekly "Head to Head" column for the Sacramento Bee today
...Washington, D.C. is now the wealthiest metro area in the United States, according to the U.S. Census Bureau. Bloomberg reports (with a "gasp!"): 

Proponents of public employee compensation reform have repeatedly pointed to the difference between how the public and private sectors award fringe benefits to their employees. New revelations uncovered by researchers and reporters at the John K. MacIver Institute for Public Policy underscore those differences.

A MacIver News investigation that revealed recent state employee retirees cashed in an average of 43 weeks of unused sick leave is prompting legislative calls for reform:

On the face of it, this Denver Post article by Yesenia Robles looks like pretty standard reporting of political campaign contributions for the currently hot Denver Public Schools board election. (Then again, maybe we shouldn't take for granted the wonderful kind of transparency and fast access to campaign records that make this kind of reporting possible.) Those of us following the race here in the shadow of the Rocky Mountains are not terribly surprised as some might be to see the local teachers union office bestow nearly $90,000 in contributions to its two favored candidates. Rather, what I found most interesting was the seemingly bland final paragraph:
The folks with money to invest in California are worried about the state's fiscal shape, and specifically about mounting unfunded pension liabilities for state and local workers. A new poll by UBS of its clients in California found about half were worried that the state's steep pension debt would have a long-term impact on their own personal wealth, while more than half felt the state's budget woes in general would crimp their financial future. "We are a very high-tax state, and we are getting less and less for it all," a UBS officer said in interpreting the results.


UBSSoCalOutlook.jpg

Despite Governor Quinn's massive tax increase earlier this year, lawmakers in Springfield, IL have been mulling the prospects for a federal bailout of the state's unsustainable public pension system. Yesterday, in rather clear language, Illinois' Republican Congressional delegation told Springfield that it would not support a federal bailout for the state. You can read all about the Illinois bail out debate here, where our friends at the Illinois Policy Institute have been closely following the story. The letter from Illinois' Congressional Republicans underscores the findings from a recent Manhattan Institute poll, which found that 66 percent of likely voters in Illinois don't want a federal bailout of the state.

Southern California has been doing its ready best of late to keep up with New York in the "Occupy" protests against corporate greed/capitalism/western civilization, etc. Occupy Los Angeles, the largest protest outside of the original in New York's Zuccotti Park, is still going strong in the City of Angels, despite the fact that its biggest contributions to the public debate have been a nostalgic invocation of the French Revolution and a wave of antisemitism (note to the protesters: Los Angeles is not the ideal market for that last one).

Last week, Occupy L.A. got a shot in the arm when it received the backing of the California Teachers Association, the Golden State's enormous union for educators. And now teachers from the Los Angeles Unified School District are joining in the mayhem, according to the Torrance Daily Breeze:
Brandman University's head of its masters of public administration program, Fred Smoller, resigned his administration position at the university last week after saying that he was essentially replaced with a new staff member known mainly as an advocate of high-speed rail and the local government status quo. He will still teach, though. This is significant because it suggests the amount of pressure academics can receive for challenging the public sector. Here's my CalWatchdog article on it. Smoller (who in full disclosure is on our unpaid advisory board), is an avowed liberal with whom I have battled over the years, but he is serious about ideas and wants to reform government so that it does a better job providing the services he so strongly cares about. So he favors pension reform and exposing the outrageous salary packages earned by city managers. He is a pariah for that reason, although his students were learning to think critically and not just be functionaries in city bureaucracies. I disagree with his municipal consolidation ideas, but so what? We need more debates over ideas at the local government level and fewer battles between self-interested groups.
Blaming California's Proposition 13 for the state's enduring budget woes is a venerable and enduring exercise among Democrats, bureaucrats, and do-good journalists. Christopher Palmeri's long feature at Bloomberg Businessweek attempts to trace U.S. decline to Californians' fateful decision in 1978 to cap the unchecked growth of property taxes. Despite the article's length and depth--with quotes from such lumninaries as historian Kevin Starr and economist John Husing--the argument is the same as it ever was, and no more persuasive. 
The subject of comparative worth between public and private sector workers is a tortured one. It is very difficult to make apples to apples comparisons, as many public sector jobs have few counterparts in the private sector.  (A New York City police officer is not comparable to a mall security guard). Another complicating factor is that so much public sector compensation is back-loaded into benefits (pensions and healthcare), whereas private sector employees tend to get the bulk of their compensation in current salary or wages. Finance professor Josh Rauh offers some thoughtful reflections on this theme based on recent research. Some of that research come form an excellent conference on government unions held at Northwestern University last week.
Pending a full membership vote, New York's second largest state government union, the Public Employees Federation (PEF), has tentatively agreed to a new contract that is apparently similar in key respects to the money-saving deal its members rejected last month. Governor Andrew Cuomo says he will cancel 3,500 scheduled layoffs if the union ratifies. 

Unfortunately, the closest thing to official details are available only from PEF itself and from media reports; the governor has confined himself to putting out a brief statement expressing his hope that it passes.  All of which highlights a New York tradition common to states with extensive public-sector collective bargaining: negotiations are secret, and government officials do not feel compelled to share contract language or financial analyses when tentative settlements are reached.   This ought to change, as the Empire Center has recommended.
California state workers are fearful that a dubious practice known as airtime -- they buy extra retirement benefits on the cheap -- will soon be eliminated. So they are rushing to take advantage of this benefit, according to the Sacramento Bee. Per the newspaper: "California government employees, fearing that lawmakers may soon shut down a controversial program that boosts their retirement payouts, have flooded the state's largest pension system with inquiries and requests to purchase the benefit ... The spike in interest comes perhaps as a consequence of the raging debate over public pensions. Many observers expect Gov. Jerry Brown to renew a proposal to end airtime as one way to scale back costs."
Most of the coverage of abuse or waste within the public pension system focuses on rank-and-file state workers enjoying lavish retirement pay or benefits, often claimable at a relatively early age (and thus more expensive). As a story out of San Francisco reminds us, however, elected officials can be just as culpable. From the Bay Citizen:

While San Francisco's District Attorney George Gascón publicly supports pension reform, he is quietly receiving a sizable pension from the Los Angeles Police Department, The Bay Citizen has learned.

Gascón, who is running for a full term as District Attorney, earns a salary of $216,776. He also receives a $125,000 annual pension from Los Angeles Police Department pension.

Source: The Bay Citizen (http://s.tt/13vBB)

While San Francisco's District Attorney George Gascón publicly supports pension reform, he is quietly receiving a sizable pension from the Los Angeles Police Department, The Bay Citizen has learned.

Gascón, who is running for a full term as District Attorney, earns a salary of $216,776. He also receives a $125,000 annual pension from Los Angeles Police Department pension.

While San Francisco's District Attorney George Gascón publicly supports pension reform, he is quietly receiving a sizable pension from the Los Angeles Police Department, The Bay Citizen has learned.

Gascón, who is running for a full term as District Attorney, earns a salary of $216,776. He also receives a $125,000 annual pension from Los Angeles Police Department pension.

Source: The Bay Citizen (http://s.tt/13vBB)

While San Francisco's District Attorney George Gascón publicly supports pension reform, he is quietly receiving a sizable pension from the Los Angeles Police Department, The Bay Citizen has learned.

Gascón, who is running for a full term as District Attorney, earns a salary of $216,776. He also receives a $125,000 annual pension from Los Angeles Police Department pension.

Source: The Bay Citizen (http://s.tt/13vBB)

While San Francisco's District Attorney George Gascón publicly supports pension reform, he is quietly receiving a sizable pension from the Los Angeles Police Department, The Bay Citizen has learned.

Gascón, who is running for a full term as District Attorney, earns a salary of $216,776. He also receives a $125,000 annual pension from Los Angeles Police Department pension.

Source: The Bay Citizen (http://s.tt/13vBB)

While San Francisco's District Attorney George Gascón publicly supports pension reform, he is quietly receiving a sizable pension from the Los Angeles Police Department, The Bay Citizen has learned.

Gascón, who is running for a full term as District Attorney, earns a salary of $216,776. He also receives a $125,000 annual pension from Los Angeles Police Department pension.

Source: The Bay Citizen (http://s.t

Manhattan Institute Senior Fellow Steve Malanga sits down with FOX Business Network's Shibani Joshi to discuss Harrisburg, PA filing for bankruptcy. Watch the video then read the prescient article, "The Man that Bankrupted Harrisburg," that Steve wrote last year.

Talk about taxing the rich. The publisher of two magazines circulating to some 3.2 million members has been hit with a $1.1 million tax judgment after it tried to improperly write off certain costs. The publisher is the National Education Association, the nation's teachers' union.The NEA tried to expense its circulation costs to offset advertising revenues for its two magazines. The only problem is that the NEA already charges members for the magazines through their dues, and provides the publications as a right of membership. In fact, NEA membership forms even specify what percentage of dues are for a subscriptions to the publications. A federal judge, citing the union's own bylaws, disagreed with the NEA contention that it was under no obligation to provide the magazines and that therefore it should be allowed to deduct its circulation costs.

Last week, I posted about one of California Governor Jerry Brown's intermittent moments of sanity: vetoing a bill that would have allowed babysitters to unionize in the Golden State.  For Brown, who has cannily developed an overblown reputation for political independence, it was a golden opportunity: take one of big labor's craziest proposals, make a show out of the veto, and then use it as a smokescreen for other union giveaways.

As the Los Angeles Times reports:

When the dust settled on Gov. Jerry Brown's first legislative session in nearly three decades, no group had won more than organized labor, which heralded its largest string of victories in nearly a decade.
I had at one point expressed wishful thinking that Gov. Jerry Brown might do a few unpredictable things. Indeed he vetoed a couple of really bad union laws and offered a handful of encouraging veto messages, such as when he vetoed a card-check bill and suggested that requiring helmets for skiers was too Nannyish. But as he finished up the year with many signings and vetoes it became clear that Brown was the best investment the public-sector unions ever made. Even the Los Angeles Times acknowledged the obvious with this story, "Gov. Brown is giving unions most of what they seek": "When the dust settled on Gov. Jerry Brown's first legislative session in nearly three decades, no group had won more than organized labor, which heralded its largest string of victories in nearly a decade."

What this overly regulated, overly taxed, economically struggling, pension-debt-laden state needs more than anything else is someone to take on the muscular public sector unions. Instead, they have a lackey in office, albeit one who occasionally throws everyone else a bone. Things are going to have to get much worse before they get better here.

Impasse in Albany

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In New York, Governor Andrew Cuomo insists he'll go ahead with a planned 3,500 layoffs next week if the state government''s second largest union, the Public Employees Federation (PEF), doesn't agree to a new contract that saves as much as the one rejected by PEF members in a Sept. 27 ratification.

cuomo_250x.jpgIn an important budgetary win for Cuomo, members of the larger Civil Service Employees Association (CSEA) voted two months ago to ratify a similar five-year deal, including a three-year base pay freeze and an increase in health insurance contributions. The negative PEF vote (by a 19,629-16,906 margin, in an impressive 65 percent turnout) seems to have taken aback the governor and the union leadership, although it could not have been a complete surprise.  PEF represents the state's better-paid lawyers, research scientists, engineers and the like, who faced bigger increases in their health insurance premiums than the lower paid, less educated CSEA members.  And in contrast to CSEA, there was an organized opposition movement in PEF.
The city council in Harrisburg is trying to file for bankruptcy in defiance of the state, which wants to install a fiscal monitor instead. I described the mess that Pennsylvania's capital city got itself into in this City Journal piece, The Man That Bankrupted Harrisburg. In a follow-up posting on PSI, I described the tug-of-war in the city council that was making it tough to find a solution to the city's fiscal problems.

Over at the New York Times blog Economix, Floyd Norris has a post on the downturn in state and local government jobs, which he notes is now deeper than the decline in these jobs during the recession of the early 1980s. This is remarkable and unexpected only if you have not been paying attention to the rise in government jobs in the previous 20 years, or to predictions from  experts in a range of organizations who have been noting that when it comes to state and local government budgets and especially spending on personnel costs, this time it really is different.

My Sunday column looks more closely at an issue I touched on in a PSI blog -- the nation's two largest pension funds have a habit of lecturing the private sector on proper board governance and management techniques, yet they themselves are awash in unfunded liabilities and scandal. In my column, I write:

The nation's two largest pension funds, the California Public Employees' Retirement System and the California State Teachers' Retirement System, have been plagued by myriad fiscal problems and even a corruption scandal in the case of CalPERS, and yet these systems continue to lecture the private sector on ethical corporate governance. The latest nonsense, released recently, is a project funded by the two systems to promote "diversity" in board rooms.

The two funds launched something called the Diverse Director DataSource (3D), which is designed to help companies find "untapped talent to serve on corporate boards," according to a statement from the pension funds. It's meant to be voluntary, but make no mistake about the political and investment muscle these two funds wield. As the Wall Street Journal reported, many Wall Street sources believe this really is a mechanism by which the investment funds can select board members and exert more political control over corporations.

This is amazing hypocrisy. Check out CalPERS' weak response to another article I wrote about the topic. But the key point is the one raised by the Wall Street Journal -- how these funds are trying to exert more influence in the boardrooms. Be sure to check out this Manhattan Institute report on this topic.
I reported on PSI last week that the Cal State University Employees Union, which represents non-faculty workers at Cal State campuses, is encouraging its members to engage in "flash mobs" and other intimidating behavior to dissuade people from signing petitions for a Paycheck Protection Initiative. The union activism mentality is spreading across CSU campuses. Now the California Faculty Association is calling for a strike on Nov. 17 to promote higher wages for its members. These professors and lecturers are angry at budget cuts, but the CSU's chancellor points out that faculty have already received significant raises in recent years. Students are being given those yellow union T-shirts to show solidarity with their professors, even though earmarking more scarce resources to boost already generous teacher salaries will obviously lead to more increases in tuition. It's also unseemly on a college campus. Full disclosure: I have a daughter at a CSU campus (Humboldt, on the redwood coast) and can attest to the quickly escalating tuition costs. But I don't expect the kids to understand basic economics any better than their leftist profs, who are about as well-schooled in economics as the anti-capitalist crazies who have been occupying Cesar Chavez park a couple blocks from my office. These university folks are using our kids as pawns for their greed. That might have the makings of a good protest sign, but I've got other things to do than protest (especially in the rain!).
Contra Costa Times columnist Daniel Borenstein has a piece out this weekend with some great reporting on the Northern California city of Oakley, where the city manager and the city council seem to be thick as thieves. From the piece:

Under the council's agreement with Bryan Montgomery, manager of the community of 35,000 people, the city forgave a home loan it had issued him and received in exchange a far-less-valuable partial ownership of his property.

It was the third time Montgomery received mortgage assistance from the city. When he took the job in 2005, the city issued the loan at an exceptionally favorable interest rate. Then, for the past 21/2 years, the City Council had allowed Montgomery to defer monthly payments without accruing additional interest.

The City Council agreed to the latest deal without consulting an outside adviser and after negotiating directly with Montgomery in closed session. That private gathering violated the state open-meeting law because a council majority cannot legally negotiate compensation in private with an employee.

Using what appear to be surplus dollars to pay salaries isn't a wise use of public funds. Not that that's ever stopped public officials before. But with a new California law barring school districts from laying off teachers even in the face of mid-year budget shortfalls, it's altogether foolish to contemplate rehiring hundreds of teachers. Yet the law may compel precisely that result. 

L.A.'s teacher union this week demanded the Los Angeles Unified School District use a $55 million budget surplus to rehire 1,200 teachers laid off in the last year, according to Intersections South LA, a publication of USC's Annenberg School.
Nicole Gelinas has a fine piece in today's New York Post, which is a reminder of how heavily dependent New York City is on tax revenue from Wall Street. If Wall Street takes another plunge without more federal stimulus to cushion the fall, average New Yorkers will suffer with reduced services as more dollars are dedicated to covering the pension and healthcare obligations of municipal employees whose unions who have join the protestors in Zuccotti Park. The same logic applies to New York State government. People are right to be upset with Wall Street gamesters for helping bring on the recession.  Unfortunately for New Yorkers, they must also hope the financial sector retains its footing or average citizens will be the ones who get crushed between the rock of declining Wall Street tax revenues and the hard place of rising benefit costs for public employees.
Last week I noted that the failure of the Illinois state legislature to enact meaningful pension reform carried a steep cost for its citizens: the big boost in income taxes enacted by the state earlier this year is going largely to pay for rising pension costs even as the state's budget deficit grows. The Chicago Tribune notes that the income tax increase, fondly referred to in the state as the 'Quinncome' tax after Gov. Quinn, is costing the average worker an additional 2 percent of his pay. That's essentially one week of additional earnings going to the state. As the paper notes, "Virtually everyone who has a job in Illinois is working this week just to pay state government's pension obligations."
New York City's "Occupy Wall Street" weeks-long demonstration is getting most of the nation's attention, and I suppose that's fair. What a spectacle it turned out to be. Read Katherine Ernst's lively report from Zuccotti Park at City Journal today--she nicely captures the sights, the sounds and the smells of a hardly working band of protesters.

But, don't forget, the Occupation is a national phenomenon. And here in California, the movement is just as incoherent as it is back east.
(Updated version)
Gov. Jerry Brown just signed an executive order "to help deprive criminals and gang leaders in California's prisons of one of their favorite means of organizing criminal activity: the contraband cellular phone." According to the governor, "these measures would help 'break up an expanding criminal network' that uses cellular phones to plan crimes both inside and outside of prison walls." On the extended text, you can read the governor's press release and the exact wording of the order. Note how artfully it avoids the obvious -- the role of the prison guards in smuggling phones to prisoners. How exactly do these phones reach the gang leaders? Per reports, highly paid prison guards take bribes and bring the phones in with them. The union won't allow comprehensive searching of its employees. This is from the LA Times:

"Lawmakers struggling to keep cellphones away from California's most dangerous inmates say a main obstacle is the politically powerful prison guards union, whose members would have to be paid millions of dollars extra to be searched on their way into work. Prison employees, roughly half of whom are unionized guards, are the main source of smuggled phones that inmates use to run drugs and other crimes, according to legislative analysts who examined the problem last year. Unlike visitors, staff can enter the facilities without passing through metal detectors."
So the governor wants to tackle the problem by issuing a toothless executive order that barely touches on the real source of the problem, the guards' union. Granted, the legislation he signed increases penalties, but it too avoids dealing forthrightly with the fundamental problem. I want to note, in fairness, that the bill's sponsor Alex Padilla has been willing to take on CCPOA and the governor's signature is a good thing. But it's so hard to take on these powerful unions. This is what passes for reform in California.
Today, the student newspaper at Brown University has a staff editorial on pension reform. The editorial calls, among other things, for cuts to future benefits earned by workers on state and local payrolls today:

Legislators must avoid the temptation to enact reforms that do not immediately set about closing the unfunded liability. Josh Barro of the Manhattan Institute notes, for example, that many states rely on cuts to future workers' benefits to alleviate pension troubles, delaying savings for "years or decades." A better approach, commonly taken in the private sector, is to apply changes to the future benefits of all workers.
Salvation comes in small doses sometimes. But in California we'll take what we can get.

Jerry Brown is far from being a crusader against the power of public-sector unions. As a matter of fact, he was elected with their money, as our own Steven Greenhut has chronicled. But he did do something sensible today, when he vetoed one of the approximately 600 bills sent to his desk by the legislature. As I've previously reported, the legislation would have essentially allowed for the unionization of babysitters (that may sound extreme, but in California we can count it as a win that the legislature didn't try to unionize babies).

Brown wrote in his veto message, "Today California, like the nation itself, is facing huge budget challenges. Given that reality, I am reluctant to embark on a program of this magnitude and potential cost." A humble suggestion for the governor: copy and paste that text for nearly every bill that comes across your desk.

The anti-Wall Street protests continue and are now spreading to other cities.  There is clearly some passion sustaining the SS_Bailout_shoveit_4.jpgdemonstrators. And now they are receiving some support from organized labor.  My own union, the Professional Staff Congress, which represents 20,000 CUNY employees is going to join the protesters tomorrow.  Some are even calling the protests the harbinger of a Tea Party on the Left. What the passion of these protestors is directed at remains hazy.  Left-wing protests are often long on problems but short on solutions. Nonetheless, a few things seem clear...
Today's Wall Street Journal has a story about labor unions in New York getting behind the protests in Lower Manhattan against Wall Street. The Journal reports that the Transit Workers Union, representing subway, rail and bus operators in New York, has tried to block the New York Police Department from requisitioning buses to transport protestors who have been arrested, while the Service Employees International Union, representing workers in the heavily subsidized Empire State health care industry, have been offering logistical support to the protestors.

Gov. Jerry Brown just gave the construction unions a big bonus by signing a bill that halts efforts by localities to ban Project Labor Agreements -- those union-monopoly laws that artificially inflate the cost of labor in public works projects by reducing the pool of bidding contractors to union firms. Non-union firms can bid on jobs but only if they become de facto union firms and hire their workers in the union hall. His signing message was Orwellian:
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