Give Local Government Budget Control

A recent political cartoon showed an obese pig (representing unions) gorging itself on food. He is speaking to a skeleton (representing taxpayers) and saying “All you need to do is tighten your belt.” That pretty much sums up the way things are in California. Public employee unions are riding roughshod over taxpayers who from the perspective of the unions are nothing more than birds to be plucked.

In California many political outcomes are determined in advance because the game is rigged. Because unions effectively negotiate their fat contracts with themselves (government) the process of collective bargaining has been turned on its head. As in Las Vegas the house always ends up the winner.

Bargaining with yourself works out well right up until the point when the private sector can no longer afford these extravagant demands. Then your government benefactors become your enemies. Data gathered from the Franchise Tax Board and Board of Equalization shows that it takes 25 taxpayers making the average private sector salary of $55000 to fund the average state employee who makes $90000 including benefits. With 12.6% unemployment rate and $20 billion budget deficit the unsustainability of this situation is self evident.

A new front has been opened in the battle over excessive union influence and it is being fought locally. In 2008 the City of Vallejo filed for bankruptcy seeking to get out from under massive debt and pension obligations it could no longer afford. Rather than work with local governments to help municipalities maintain solvency unions are attempting a brazen power play that strips away municipality budgeting control and is the clearest example yet of unions utter failure to recognize the plight of taxpayers in our struggling economy.

Union backed Assembly Bill 155 (Assemblyman Tony Mendoza) AB 155 says that a state agency the California Debt and Investment Advisory Commission (CDIAC) would have to first approve any municipal bankruptcy filing despite having no expertise in bankruptcy law. The Commission could also mandate that labor contracts be kept whole as a condition of approving a filing. The result will be yet another unelected state government agency dictating fiscal policy to local government.

AB 155 is a very big deal to the unions and they have pulled out all the stops to jam it through the Legislature. The bill was originally held and stopped in the Senate Local Government committee last year because the swing Democrat vote Lois Wolk refused to ignore the broader public interest. For this she was removed from the committee by the union controlled Senate leader Darrell Steinberg and replaced by Mark DeSaulnier who authored the same bill last year. This switch guaranteed the passage of AB 155 and its likely transition to the Governor’s desk.

Of course part of the blame for all this must also fall on local governments who willingly acquiesced in giving these inflated compensation packages despite repeated warnings from taxpayer groups for more than two decades.

To be clear municipal bankruptcies should be avoided because the long term fallout to communities can be severe. But local governments must be able to control their finances and access to all the tools necessary to restore their fiscal health. By eliminating an effective management tool AB 155 will severely curtail the ability of cities counties and special districts to provide basic services to their residents. If the choice is between that and voiding a fiscally bankrupting union contract we’ll take the latter every time.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.