How did Vallejo, California go bankrupt?

George Will in the Washington Post – Pension Time Bomb:

Joseph Tanner, who became city manager after this municipality of 120,000 souls was mismanaged to the brink of bankruptcy, stands at a whiteboard to explain the simple arithmetic that has pushed Vallejo over the brink. Its crisis — a cash flow insufficient to cover contractual obligations — came about because (to use fiscal 2007 figures) each of the 100 firefighters paid $230 a month in union dues and each of the 140 police officers paid $254 a month, giving their unions enormous sums to purchase a compliant city council.

So a police captain receives $306,000 a year in pay and benefits, a lieutenant receives $247,644, and the average for firefighters — 21 of them earn more than $200,000, including overtime — is $171,000. Police and firefighters can store up unused vacation and leave time over their careers and walk away, as one of the more than 20 who recently retired did, with a $370,000 check. Last year, 292 city employees made more than $100,000. And after just five years, all police and firefighters are guaranteed lifetime health benefits.

Credit Suisse estimates that state and local governments have a cumulative $1.5 trillion shortfall in commitments for retiree health care. But it is the pension crisis that most dramatically illustrates Lowenstein’s thesis about the slow accretion of power by the unions. Pensions “are a perfect vehicle for procrastination; in the financial world, they are the most long-enduring promises that exist.” Human nature — the propensity to delay the unpleasant — rears its ugly head: When pension benefits come due, the people who promised them, thereby buying labor peace and winning elections, are long gone.

The insanity here is that public service unions are allowed to donate to candidates. The system allows taxpayer money skimmed from public employee salaries to fund political campaigns to elect more politicians to give more money to government employees … and the system just reinforces itself.

Previously:

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