The idea that another economic stimulus bill might pass is patently absurd, but there is a new, more targeted bill in committee on the Hill right now, and even if we’re just spinning our collective wheels, it’s worth some consideration.
The Local Jobs for America Act, introduced by the Honorable Rep. George Miller, chairman of the Committee on Education and Labor, aims to keep local and state governments from cutting back on essential services, like fire and police departments, and education. For a $75 billion price tag (split between two fiscal years), the spending bill will put 1 million people back to work while preventing state and local tax increases.
State and local governments, faced with shrinking tax bases, have no option but to trim the fat from their services. From a conservative standpoint, this is great; a chance to starve the beast, without having to actually enact any new policies. And to a certain extent — at least in my home state of California — there might be something to this. Massive, early pensions for city employees are starting to cripple localities that don’t have any way of raising funds on their own. For example, recall the famous Proposition 13 of 1978, when Californians capped property taxes at low rates, but retained the unique ability to get voter referendums on spending on statewide ballots. They can compel Sacramento to take out bonds for big spending projects — like the high speed rail — but they won’t pay taxes to cover it. This is the glaringly obvious reason that California is in fiscal trouble, but apparently no one can do anything about it (I personally find it hilarious that California just may patch up this insurmountable problem by legalizing pot and collecting vice taxes on that; there’s a certain lazy-stoner logic to it).
It is therefore worth noting that the Honorable Representative George Miller represents California’s 7th District, which consists of the Northeast quadrant of the Bay Area. It’s essentially Northern California’s Rust Belt, with Richmond, Vallejo and Pittsburg being the largest cities in the area, all down-and-out, high-crime rate cities, nothing like San Francisco and Marin just across the water. Vallejo, a city of 100,000 which people may recognize as the (maybe) home of the Zodiac Killer, Marine World, and a few popular rappers, but little else, is actually a scary picture of things to come in cash-strapped states and municipalities. It makes perfect sense that their representative would introduce this bill.
Vallejo is the first municipality to file for Chapter 9 bankruptcy in the state during this recession, way back in 2008. According to the Cato Institute — whose conservative slant means we might want to take this with a grain of salt — 74% of Vallejo’s budget went to firefighter and police officer salaries, overtime, and pension obligations, while the average for the state is 60%. While I agree that it’s a good thing to provide a safety net for those who put their lives on the line, and work for the good of the community, earning 90% of your salary for every year of your life past 50, without working a day for the public good doesn’t strike me as fair to taxpayers. And worse yet, the city hasn’t been able to work out a new deal with the unions, even after two years in bankruptcy.
So instead, they’ve cut back on public services. While they can’t change their pension obligations to the police union, they can cut back on hiring. And that’s precisely what they’ve done. According to the San Francisco Chronicle, Vallejo PD might be reduced to just 89 officers, or about one officer for every 1300 citizens. For contrast, New York has one uniformed officer for every 230 civilians. At some times of day, there are less than six cops on active duty in the whole city, a city with a higher crime rate than Compton or Richmond, CA.
While it’s irresponsible for the Vallejo politicians to make promises to police and firefighter unions that it is unable to keep — probably for political gain — it is also irresponsible for those unions to abuse their political clout at the expense of the community they serve. This lack of responsibility is twofold in California, where public service unions seem to want one half of a good welfare state — their pensions — but refuse to pay the taxes commensurate with such a system. This, I think, is why those on the left should not be afraid to criticize these unions, at least in California; I wouldn’t call it a waste of taxpayer money to reward honest public service with good compensation and pensions, but when it cripples the municipality so horribly, something needs to change, be it the tax code, the collective bargaining process, or what, I’m not sure.
So that’s what makes me wary about an otherwise smart spending bill. Not only will cutbacks lower the standard of living in many municipalities, it will hurt our fragile economy even more. The targeted spending is smart, but in Vallejo’s case — and perhaps the same is true for many other cities — it might prevent them from working out a more permanent fix to their fiscal woes (though, to be fair, they have tried going into bankruptcy, and even that hasn’t worked) that will better guarantee long-term prosperity, or at least solvency. Please note, this is different from saying — as Right-wing radio hosts do, I’m told — that the money from Miller’s bill will go straight to pensions. What I’m saying is it will provide much-needed support to local governments, but it will possibly act as a band-aid to cities like Vallejo, allowing them to keep chugging along without fixing fundamental flaws in their policies.
Miller’s bill sits in his committee, and one suspects House Republicans aren’t going to let much new spending pass, nor will House Democrats push for a big spending bill with so many seats up for grabs in the midterms. But, California’s somewhat broken legislature is working on a fix for the pension “spiking” schemes — in short, unpaid vacation is paid out at retirement, and public employees were allowed to count that bonus as “salary”, bumping their pensions even higher — that public employees used to inflate their pensions. So there’s hope for California yet, but odds are the federal government won’t come to the rescue; perhaps I’m overly critical of my home state, but I think that for California, that might need to happen.