Bankrupt And Bewildered

Sometime this week, the city of Stockton, California will file for bankruptcy.   I’m sure the people of Stockton — all 300,000 of them — are a bit bewildered by their current grim reality.

Not too long ago, Stockton was on the move.   It built a new marina and hotel and promenade to attract tourists.  It built vast tracts of housing in an effort to lure bargain-hunting workers from the Bay Area.  It offered generous pay and benefits to its workers, including allowing them to retire at age 55.

Then the crash came.  The vast tracts of housing sit largely vacant, and Stockton has the second-highest foreclosure rate in the country.  The hoped-for boom in tourism and convention traffic never materialized.  Stockton boasts the second-highest rate of violent crime in California and a 17.5 percent unemployment rate.  The city has been cutting payroll for years, including a 25 percent cut in the police force and a 30 percent cut in the fire department payroll.  Public employee pay and benefits have been reduced.  Yet still the city faces a $26 million budget deficit and $417 million in liability for retirees’ health care.  When mediation talks with public employee unions and creditors failed, bankruptcy became the only option.

If I lived in Stockton I’d have one question:  how did city government fail so colossally?  Stockton looks like one of those cities where bones were thrown to everyone:  big dream city projects for the pro-development crowd, big pay and health care benefits and pensions for the public employee unions, big promises of progress and better days ahead for voters, and pats on the back and big salaries for city leaders.  Now that it has turned to ashes, city residents are left in a crime-ridden, devastated city that has to do untenable things like totally eliminating healthcare benefits for city retirees.

I guess, therefore, I’d have a second question:  where is the accountability for the city leaders who allowed the city to stroll, dream-like, into this predicament?

What Of Walker’s Win In Wisconsin?

Wisconsin Governor Scott Walker became the first American governor to survive a recall election last night.  In a rematch of a 2010 contest, he gathered more than 53 percent of the vote and beat Milwaukee Mayor Tom Barrett — by a margin slightly better than that Walker achieved in 2010.

As is often the case with such events, people want to draw sweeping inferences from this one event.  We’ll see many articles about what this means for the future of the public employee unions that brought about Walker’s recall election after he pushed through reforms of public employee collective bargaining rights, for Republican governors in other states, and for President Obama’s reelection prospects.  It’s a natural human tendency, I think, to want to see a broad pattern in isolated events — but often those perceived patterns don’t really exist.

Public employee unions aren’t going away.  They lost in their bid to unseat Walker in Wisconsin, but they defeated another public employee collective bargaining law in Ohio.  Where’s the pattern in that?  Members of public employee unions, like other members of private-sector unions, believe in collective bargaining rights.  One reason they objected so strongly to Walker’s reforms is that they believe the reforms improperly interfere with fairly gained, bargained-for rights and benefits, won after hard-fought negotiations in which union members may have given in on other issues.  In their eyes, the fact that taxpayers and people in the private sector might view those rights and benefits as overly rich is irrelevant, because they are stalwart believers in the collective bargaining process that achieved those rights.  Public employee unions in other states aren’t going to roll over just because the unions did not prevail in Wisconsin.  If they did, it would undercut the entire idea of public employee labor unions.

I also doubt that Walker’s win is going to charge Republican governors in other states with enthusiasm for taking on public employee unions and pushing sweeping reforms — at least, no more so than is absolutely necessary to achieve balanced budgets and govern responsibly.  Walker prevailed, but his actions precipitated a bruising political battle, sidetracked his term with a recall campaign and election, and ultimately resulted in more than $60 million in campaign spending, much of it by organizations outside of Wisconsin.  It’s therefore no surprise that Walker was playing the pipes of peace after yesterday’s result.  Although politicians love to talk about “fighting” for voters, one way or another, most of them are inveterate compromisers who aren’t looking to pick a knife fight, especially when they know they can’t count on advocacy groups supporting their efforts to the same extent that occurred in Wisconsin.

As for President Obama, he largely stayed out of the Wisconsin recall election fray and will be able to depict it as a one-shot, one-state result that doesn’t have broad national significance.  How do you glean national trends from an election rematch that produced pretty much the same result as the initial 2010 election between Walker and Barrett?  If there is a lesson there, it is that voters stuck with Walker, despite all of the controversy and protests, in a contest that involved extraordinary spending by both sides.  But how many of those Walker voters cast their ballots because they object, in principle, to recall elections under such circumstances?  How many were motivated by special concerns not found in the national electorate?  I’m just not convinced that the Wisconsin results in June are going to predict much with respect to national results in November.

The Wisconsin recall election is an interesting mid-year event that may be the start of a trend — or it may not.

Recalls, Rematches, And Redos

Next Tuesday, June 5, Wisconsin voters will go to the polls to vote in the “recall” election of Republican Governor Scott Walker.  Political junkies, in Wisconsin and nationally, will be watching the results carefully.

The recall election is the result of a petition drive that began after Walker pushed through reforms to address Wisconsin’s fiscal problems — reforms that public employee unions didn’t like, but that appear to be working and allowing the state and local governments to get their budgets under control.

The recall election is a rematch of the 2010 gubernatorial election between Walker and Milwaukee Mayor Tom Barrett.  Huge amounts of money — much of it from out of state — is being spent on the election.  Interestingly, Barrett’s chief objection to Walker doesn’t seem to be the merits of the reforms that produced the recall election.  Instead, he has raised other, minor issues and seems most troubled because he thinks Walker has been “divisive.”  If a politician has been successful in dealing with seemingly intractable problems, however, he’s likely to have upset some people. Why should that disqualify him from finishing his term and standing for reelection at that point?

The Wisconsin election just shows why recall elections are a bad idea and should be reserved for rare circumstances — like criminal activity by the incumbent.  Recalls should not be had just because a segment of the population disagrees with the incumbent’s approach to issues.  Elections should have consequences, and when they do the losing side shouldn’t be able to force costly redos that just distract from the public business.

The polls are indicating that Walker will survive, and national Democrats are downplaying the notion that the Wisconsin election reflects the national mood come November.  I don’t think they need to worry about that.  Wisconsin has been mired in a bitter brew of its own making over the past few years, and I’m sure that many voters just want to bring an end to the constant fighting and let Walker finish his term.  I’d be cautious about drawing too many national inferences from the Wisconsin results.

Day Of Reckoning

Tomorrow is Election Day in Ohio, and the hoo-hah about Issue 2 finally will end. Unless there has been catastrophic polling failure — or Ohioans have been misleading pollsters for chuckles and giggles — Issue 2 will be defeated and the old collective bargaining rules applicable to public employees will be reinstituted.

Both sides have poured huge sums into the Issue 2 campaign, and anyone who regularly watches the news has seen more Issue 2-related ads than they care to remember.  The ads haven’t exactly been objective treatments of the relevant issues, either.  We had some friends in from out of town over the weekend, and after seeing countless Issue 2 commercials they were totally mystified about what Issue 2 was.  The only thing they knew for sure was that a yes vote or a no vote would effectively mean the end of civilization as we know it.

Whichever way tomorrow’s election goes, I suspect we haven’t seen the last of public employee-related initiatives on the Ohio ballot.  Those who want to cut government spending naturally are going to want to focus on public employee salaries, benefits, and jobs — and this election has shown that public-sector unions won’t be shy about mounting petition drives and spending significant sums to protect those salaries, benefits, and jobs.

The Rhode Island Lesson

Supreme Court Justice Louis Brandeis once described the states as “laboratories of democacy” — that is, in our federalist system, individual states were free to experiment with different policies and diverse approaches to common problems.  The idea was that, from the results of those experiments and the testing in state “laboratories,” sound policies could be distinguished from unsound.

Brandeis’ concept is playing out in Rhode Island, and in this case, the experiment has produced results that should give every other state pause.  As this New York Times article explains, Rhode Island and its cities are in desperate financial straits because the pension obligations owed to public employees have become crippling and are consuming ever-larger shares of governmental budgets.  A combination of rank politicking, ridiculously over-optimistic investment return projections, shrinking tax revenues, and longer-lived retirees have forced Rhode Island and its municipalities to choose between meeting its pension obligations and providing essential government services.  One city, Central Falls, has already declared bankruptcy, and the state itself has had to take special measures to try to protect its bond rating.

I mention this unfortunate story because it seems pertinent to Ohio’s impending vote on Issue 2, which relates to how compensation, health care benefits, and pension benefits should be decided for public employees.  As we consider Issue 2, it is important to keep in mind that government does not exist simply to provide benefits for public employees.  I don’t want to see Ohio become another Rhode Island, where pension and health care benefit costs are bringing down local governments or are imposing such all-consuming obligations that roads and bridges may go unrepaired.

I’ve Made Up My Mind On Issue 2

Early voting has has been underway for more than a week now on Issue 2, the issue dealing with public employee issues.  Today I got an email from Ohio’s Democratic Senator, Sherrod Brown, urging me to vote early against the issue.  I’ve going to wait until the election to vote, but the email got me to thinking about Issue 2.

After some reflection, I’ve decided I’m going to vote in favor of Issue 2.  I recognize that there are arguments the other way, but I’ve made up my mind.  Here’s why:  I don’t think the collective bargaining model works with public employees.  In the classic case, workers collectively bargain with bosses who own the business.  The bosses have skin in the game and an incentive to vigorously bargain with the employee’s union.  Our political leaders don’t have the same kind of skin in the game, however.  To the contrary, they may have been elected with the active support and contributions of public employee unions.  I also think that it is not unreasonable to ask public employees to contribute more toward their health insurance and pensions.  Many in the private sector pay 100% of the cost of both of those benefits, without any employer contribution.  Add to that the fact that there is a lot more job security in the public employee world, and I think that public employees have a pretty good deal.

I don’t believe that Issue 2 would solve our governmental budget problems by itself, and I defer to no one in my admiration for police officers and firefighters, but I also think we simply cannot afford to continue to expand the size, scope, and cost of our state and local governments.  Every police officer and every firefighter may be essential — but not every teacher is, and not every clerical worker at the BMV is, either.

If Issue 2 gives our leaders more flexibility to deal with bloated public employee payrolls and to avoid the kind of crippling, long-term pension obligations that are such a problem in states like California — or, for that matter, in countries like Greece — I think that is a good idea.  I’m going to vote for Issue 2 because I think it is the prudent thing to do.

The Issue 2 Onslaught And The Firefighters’ Brigade

In Ohio, you can’t watch a football game without seeing commercials, pro and con, on Issue 2.  The ad onslaught, funded by well-heeled groups on both sides of the issue, has begun in earnest, and the election is still six weeks away.

State Issue 2 is a public referendum on various public employee issues.  A “yes” vote would uphold SB 5, legislation passed by the Ohio General Assembly earlier this year that limits certain collective bargaining rights of public employees, requires public employees to contribute at least 15 percent of their health insurance premiums and 10 percent of pension contributions, and make a number of additional changes.  A “no” vote on Issue 2 would overturn that law.

The big question right now is whether the flood of commercials will advance meaningful public knowledge about Issue 2 and its impact.  Would an affirmation of SB 5 cripple public employee rights and put public safety at risk, as opponents claim?  Or, would the approval of SB 5 give cash-strapped state and local governments the flexibility to save money while maintaining public services, as its proponents contend?

So far, the ads I’ve seen suggest that Issue 2 is all about firefighters and the staff members who work for Ohio’s 33 state senators.  Of course, that is not the case.  Firefighters are attractive subjects of TV commercials, but they represent a small fraction of the public employees who would be affected by SB 5.  According to an article earlier this year in the Cleveland Plain Dealer, there are nearly 650,000 state and local government employees in Ohio; in Cuyahoga County alone there are more than 76,000 local government employees.  In contrast, Cleveland, the largest local government in Cuyahoga County, employs 900 firefighters.

I’d like to see commercials that get beyond firefighters and Ohio Senate staffers and get to the heart of the issues on Issue 2.  Under our current scheme, how do public employees really fare versus those working in the private sector?  How much money could state and local governments reasonably expect to save if SB 5 is affirmed?  What abuses, if any, should cause us to change the current approach toward public employees?  If voters are to be informed about the merits of Issue 2, those are the kinds of questions that need to be answered.

A Union Leader’s Thoughts On Labor Day

Today Teamsters President Jimmy Hoffa, Jr. revved up a crowd for President Obama as a Labor Day rally in Detroit, Michigan.  He said the “tea party” had declared a “war on workers” and added:  “President Obama, this is your army. We are ready to march. Let’s take these son of bitches out and give America back to an America where we belong.”

I don’t mind the vulgarity and martial imagery — anybody warming up a crowd at a union event on Labor Day can get carried away, I suppose — but I’m not sure what “war on workers” Hoffa is referring to.  Presumably he is talking about the efforts to limit collective bargaining rights for public employees in states like Wisconsin and Ohio.  For the most part, however, the agenda of the “tea party” — if such an entity can even be said to exist — seems to be a pro-worker agenda.  The “tea party” element wants to restrain the growth of government, keep taxes low, avoid unnecessary regulations that restrict economic growth, and let private enterprise develop and create jobs.  What is so “anti-worker” about that?

Many union leaders, like Hoffa, apparently equate a “pro-worker” agenda with a “pro-union” agenda.  Anybody who pushes a “pro-union” agenda necessarily supports government spending, government growth, and government regulation, because public employees have been one of the few growth areas for unions in recent decades.  If you follow a pro-worker agenda, on the other hand, you want to see jobs created, whatever those jobs may be.  How many more people — Teamsters included — would be employed on this Labor Day, for example, if our government hadn’t imposed a moratorium on certain oil drilling and imposed restrictions on our ability to exploit our reserves of oil and natural gas?

The Wisconsin Recall Election, And What It Means For Ohio

Wisconsin’s big recall election showdown is over.  Democrats won two of the six elections to recall Republicans, leaving the Democrats one short of the number necessary to get a majority in the Wisconsin Senate.

Each side is spinning the results.  Republicans boast that they survived, despite an onslaught of union money, ads, and get-out-the-vote work.  Democrats tout what they say is an historic result in recalling two Senators.  In short, both sides think the election sent an unmistakable message to Wisconsin Governor Scott Walker and the rest of the Wisconsin political establishment — they just disagree on what that message was.

Ohio is the next battleground.  In November, Ohioans will vote on Issue 2, which would overturn a law limiting public employee collective bargaining.  What do the Wisconsin results mean for that Ohio referendum?  I’m not sure they mean much of anything.  Wisconsin’s recall election necessarily raised questions about the individual candidates — one of the defeated Republicans, for example, had an affair that apparently hurt his chances — whereas Ohio’s Issue 2 will present a straight, up-or-down vote on the concept of limiting public employee collective bargaining.

Ohio polls seem to indicate that a majority favors repeal of the law.  Wisconsin’s relevance in Ohio, if any, may turn on the actual results of the Wisconsin collective bargaining law that gave rise to the recall elections in the first place.  If the results produce meaningful savings for local governments and school districts, as some argue is the case, that fact may resonate with Ohio voters who are worried about government spending and cause them to look more favorably on the idea of keeping the Ohio law on the books.

Recall Wisconsin?

Remember Wisconsin?  It’s been knocked off the front pages by more pressing stories, but earlier this year Wisconsin dominated the national news when Governor Scott Walker sought to reform public employee collective bargaining laws, Democratic Senators fled the state, and protesters occupied the Wisconsin Statehouse for days.

Today Wisconsin is back in the news, writing another chapter in the saga of the public employee collective bargaining law.  Six Republican Senators face unusual mid-summer recall votes today.  If Democrats can win three of those seats, the Wisconsin Senate will flip to Democratic control.  Proponents and opponents of the collective bargaining law have poured millions of dollars — at least $28 million, according to estimates — into advertising and get-out-the-vote efforts.  Polling data indicates that all six of the races are close, with turnout likely to tell the tale.  And who can predict how many voters will show up at the polls on a hot summer day?

In Ohio, there is special interest in Wisconsin because the Buckeye State followed Wisconsin’s lead in enacting a public employee collective bargaining law.  In Ohio, the fight will resume in November, when the electorate will vote on a public referendum on that law.  Wisconsin’s votes today could be an indicator of how the political tides are flowing.  I also wonder whether the recent national news about government spending, debt, and credit ratings will have any effect on voters.  Wisconsin Republicans have defended the collective bargaining law, in part, on the ground that it has meant savings for cash-strapped state and local government entities.  If recent events have made voters more concerned about government spending, that may work to the Republicans’ advantage.

Does Limiting Public Employee Collective Bargaining Save Money For State And Local Governments?

In Wisconsin and Ohio, new Republican majorities in state legislatures, and new Republican governors, have modified public employee collective bargaining rights and argued that it is part of an overall effort to bring state and local government budgets back into balance.  Democrats have responded that the budget control argument is a bogus fig leaf and that the real motivation for the Republicans’ actions is union-busting, pure and simple.

It therefore is interesting that in Massachusetts — Massachusetts! — the House of Representatives voted overwhelmingly in favor of a bill to restrict the ability of municipal public employees to collectively bargain about health care benefits.  Moreover, the House effort was led by Democrats, who argued that the changes will help struggling cities and towns.  Indeed, the Democratic Speaker of the House contended that the changes would save cash-strapped municipalities $100 million and allow them to maintain more jobs and provide more services.

The Massachusetts initiative still has to pass the Senate and be signed by the Governor, so it may well not become law.  Still, the fact that Democrats in the Massachusetts House supported such a measure on budget grounds seems like a powerful argument for the proposition that modifying public employee collective bargaining rights is a legitimate way to achieve significant savings in government spending.  If Democrats have accepted that argument in Massachusetts, how can Democrats in Ohio and Wisconsin contend that similar efforts in their states are motivated wholly by partisan politics and mindless anti-union sentiment?

From A Village To A City (Cont.)

If you’ve noticed residents of New Albany strutting around recently with a special pride, it is because our community has officially moved from being a village to being a city.  The long-awaited 2010 census results have been released, and they show that the population of New Albany has smashed through the 5,000-resident threshold that separates “villages” from “cities” under Ohio law.   Officially, 7,724 hardy souls now call our teeming metropolis home.

Our fine Mayor received a plaque commemorating our passage to city status, but with the plaque, and city status, comes change and increased responsibility.  Under Ohio law, public employees in cities have collective bargaining rights where village workers don’t — at least, whatever collective bargaining rights exist after the statewide ballot issue petition drive is over — and New Albany also will assume responsibility for asphalt maintenance, sign maintenance, and pavement striping on the portions of the state routes that run through New Albany.  In addition, the city will become responsible for snow and ice removal on Route 161.

For us residents, it means we’ve got closer-to-home people to blame if a pothole isn’t filled or roads seem too icy or snowbound.  The ability to kvetch will be one of the things that makes city status great.

Weirdness In Wisconsin

Wisconsin — home to the Green Bay Packers and their cheesehead fans, different varieties of beer, and countless solid Midwestern burghers of Germanic lineage — has a long and storied tradition of political ferment and dissent.  With the bizarre happenings in Madison over the past month or so, Wisconsin is living up to its rich political and cultural reputation.

Three weeks ago, Wisconsin Senate Democrats fled the state, hoping that last-ditch tactic would prevent a quorum and therefore a vote on a bill to change collective bargaining rules for government employees.  They believed their procedural “Hail Mary” — coupled with constant protests by teacher and public employee unions and union supporters in the Wisconsin state capitol — would exert pressure on Governor Scott Walker and Republicans who supported the bill.  The Republicans held firm, however, and the parties were at an impasse.

Now the Republicans have made the Democrats pay for their high-risk tactic.  Yesterday, while the Democrat Senators remained out-of-state, Republicans stripped the collective bargaining bill of the budgeting provisions that presented the quorum problems and then passed it through the Wisconsin Senate.  Because they chose to absent themselves from the state, no Democrats were present for the final vote or to raise objections to the procedure.  The bill now goes to the state assembly.  In the meantime, protesters flooded, once again, into the Wisconsin state capitol.

In the linked article, the leader of Wisconsin Senate Democrats accuses Republicans of showing “disrespect for the people of Wisconsin” and conspiring to “take government away from the people.”  We’ll have to see whether that spin has any resonance with Wisconsin voters — but it is hard to see how Republicans who stayed on the job in the face of public protest, waited for weeks for petulant Democrats to return to the governmental process, and then enacted legislation in a public forum in the Democrats’ absence, showed more “disrespect for the people of Wisconsin” than the Democrats who tried to take their ball and go home.

Senate Bill 5 Moves On

By a one-vote margin, the Ohio Senate today passed Senate Bill 5, the controversial legislation to modify the collective bargaining rights of public employees.  The vote came as pro-union demonstrators again flooded the Ohio Statehouse and its grounds to try to stir up opposition to the measure.  The union protesters manage to get six Republicans to break ranks with leadership and vote against the bill — but they needed seven defections to kill the bill.  The measure now moves to the Ohio House, where it is expected to pass.  Governor John Kasich supports the bill and would sign it if it makes it to his desk.

I respect the public employees who came to Columbus to exercise their free speech rights and oppose Senate Bill 5, but I believe it is a necessary measure.  Ohio is facing a huge budget deficit, and many Ohio municipalities also are facing budget shortfalls.  A significant part of the state and local governmental budgets are devoted to public employees compensation and benefits.  Senate Bill 5 seems like a reasonable step to deal with those costs.  Public employees could still bargain about wages, hours, and working conditions, but not health care, pension benefits, or sick time.  Public employees also would not be able to strike.  The move should allow Ohio state and local governmental entities to bring public employee health care and pension benefit contributions in line with the prevailing approaches in the private sector, and the savings produced as a result will help to make up the budget shortfalls.

We shouldn’t kid ourselves, however.  Senate Bill 5 is not going to fix Ohio’s budget gap by itself.  Our legislators need to roll up their sleeve and continue to look carefully, and skeptically, at state programs, state departments, and state agencies and decide whether they truly are needed, and if so at what funding level.  What services are critical, and which provide non-essential services that we simply cannot afford any longer?  Public employees in Ohio should not be the only group that bears the brunt of necessary budget cuts.

 

At The Ohio Statehouse Union Rally

A view from the Statehouse steps onto the northwest lawn

Today, after lunch, Richard and I walked over to the Ohio Statehouse to check out the big union rally against Senate Bill 5, the bill that would affect the ability of public employees to engage in collective bargaining rights.  I had been hearing the hubbub outside my office window and was eager to see the turnout.

We got to the Statehouse about 12:45 and entered at the Third Street entrance.  There were some union folks out on Third Street and milling around the entrance.  We saw people wearing public employee union t-shirts, jackets and buttons in the map room and in the Atrium above.  Rows of chairs had been set up in the Atrium, facing each other across a center aisle, and as we walked through a large, leather-lunged woman was leading the crowd in “We want respect” chants.  I would estimate that several hundred people were in the Atrium, and they were in good spirits.

Signs at today's Statehouse rally

We crossed through the Statehouse Rotunda and exited out the Broad Street entrance, which was where the real action was.  A temporary stage had been erected and two singers with guitars were singing union songs.  The crowd covered about two-thirds of the west lawn and sidewalk, with people sitting on the benches and standing on parts of the McKinley memorial.  There were lots of union t-shirts, hats, and some very creative signs criticizing Governor Kasich.  Some of the signs seemed to be generated by outside forces.  For example, we saw several signs referring to Governor Kasich and Wisconsin Governor Walker as “Koch-heads” or “Koch addicts,” and I’m not sure most union workers would focus on the Koch brothers as sign material without some kind of prompting.

The people at the rally were pleasant and friendly, and the whole gathering had an upbeat open-air feel.  The Ohio Highway Patrol had officers at points in the Statehouse, and they were professional and friendly as always.  We later heard an estimate that 8,500 people were at the rally.  I’m not sure it was that large when we were there, but there definitely were thousands of people in attendance.  We did not see any counter-protest.

Regardless of your politics, if you are downtown restauranteur you have to like these protests.  We saw lots of protestors crowding into the Tip Top, Dunkin Donuts, and other restaurants in the core downtown Columbus area.