Imagine a major, public company where the executive officers posted phony financial projections, systematically misled shareholders with over-optimistic forecasts, organized compensation committees with no independent members, intimidated suppliers with threats of reprisals, stacked supervisory boards with management cronies and failed to disclose campaign contributions. The SEC would hurl the book. A criminal jury would convict. And Bernie Madoff would quickly have a new circle of cellmates. Yet, somehow or other, this behavior is tolerated in city government, and nowhere is it more evident than in San Francisco, where the political leaders -- in a panic to protect their sinecures and political careers -- recently locked arms to ensure that a modest ballot measure to ensure sound financial management was defeated.
Given the massive spending and "Death panel" style campaign mounted by former Mayor Gavin Newsom and his political benefactors, it's a miracle that San Francisco's quixotic, cobbled-together financial reform campaign almost squeaked to victory last November. Since the election two things have happened. San Francisco's affairs have deteriorated further and Gavin Newsom has artfully dodged the consequences of piggy-bank management by becoming California's lieutenant governor following a campaign whose twenty largest contributors -- organized labor groups -- had enjoyed his mayoral largess.
San Francisco, like most U.S. cities, has two monstrous financial holes. First it cannot afford to pay retirement benefits because irresponsible political promises have outpaced the investment returns of the pension system. This requires the city to fork out $430 million this year and $700 million by 2014 to close the gap. Without this crushing obligation San Francisco's operating budget would actually be in the black and civic services could be maintained. Second the unfunded obligation for health benefits is now almost $4.5 billion. (In plain English this means that politicians have arbitrarily slapped an extra $30,000 mortgage on every San Francisco household). To top it all off the city's retirement system recently granted an additional $170 million of one-time bonus payments to retirees because of "excess" earnings on investments. This is somewhat akin to going on a round-the-world trip binge cruise when you cannot make your credit-card payments.
But what's done is done and now we have to figure out a way to change the tone of civic leadership in San Francisco. Some politicians are having furtive meetings which will allow them to claim they are in favor of the idea -- not the reality -- of reform. There is also the chance that Ed Lee, the interim mayor, who has expressed no desire to seek election and is unbeholden to anyone, can bring about real change. However, the only sure path to a safe future for San Franciscans is for them -- via a series of new ballot initiatives now being prepared -- to alter the moral compass of city government.
Here's what needs to happen. First, San Franciscans need to understand that their political leaders have pushed their city over the abyss. Once this occurs it will be clear to them that it's time to hit the reset button and city employees who retire prior to the age of 65 should not be entitled to full retirement benefits; pensions should probably be replaced by 401K plans; "spiking" -- the devious way in which salaries are jacked prior to retirement in order to increase pension payouts -- should be banned; overtime pay should not form part of the pension calculation; benefit increases need to be tied to cost of living rather than wage increases; employees need to pay half the costs of their benefit plans; retirees should not be allowed back on the civic payroll while collecting pension benefits; labor negotiations should be conducted by independent third parties and union contracts -- which suck up most of the tax payments made by ordinary citizens -- should require voter approval.
The electorate of San Francisco may have been bamboozled once. But the political establishment will have a tougher time staging an encore performance. History shows that there is no more potent engine for reform than the passion of voters who feel betrayed by the politicians they hoped would do the right thing.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/02/07/BAD91HJ22F.DTL
The rest is a farrago of obfuscation, mixed with half-baked solutions (I can accept that OT might not be worth time-and-a-half for credit but hours worked should equal hours worked). Having the electorate, often led by the nose when "experts" like Moritz howl in indignation at, "irresponsibility" vote to approve labor contracts is foolish twice. It makes it likely good contracts can be demagogued to death, and the costs, and delays, of putting such a measure to the electorate will make it almost impossible to manage.
In addition the money required to have such an election has to come from somewhere.
It's a lot of prescriptions for making business happy, but it doesn't really address the needs of the public.
What a surprise.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/02/07/BAD91HJ22F.DTL
Can't say I have had many dealings with San Francisco employees, but when I call repeatedly to get information from the California tax office on which forms to fill out to pay the company taxes and get a different answer each time, it becomes clear why the state may have trouble collecting taxes. When I try repeatedly to get a simple change of address taken care of and get a difference number to call or different form to fill out, my confidence erodes.
I suggest the Governor make a few anonymous calls to a few state offices and see what kind of service he gets. Then fire a few people and hire a few of the unemployed who have been laid off long enough to appreciate the work.
We must come to the support of our public servants. they have helped us throughout the years. it is the least we can do now that they are being decimated by the corporate power structure.
California needs to generate revenue. The best way to do it is to tax the rich and the corporations. We need to work together to make that happen.
"labor negotiations should be conducted by independent third parties and union contracts -- which suck up most of the tax payments made by ordinary citizens -- should require voter approval."
Leaving the approval of specific contracts to the whim of the voter would only accomplish two things - both of them bad for effective governance
1) It would make approval of any and all such contracts ponderous, and will subject to the same campaign monies from corporate influcences to which (unfortunately) our political elections currently are subject. Big money will 'buy' the result they want - just like politicans.
2) It will give our Politicans cover they need for avoiding having to make the hard decisions 'we' have allegedly elected them to make in our stead.
"We" already have a say in what our politicans approve - it is called elections. If our politicans cannot stand on the merits (or lack of them) of their choices then they deserve to go home and work for a living instead.
Come on, Wall Street in collusion with ratings agencies sold junk to Pension Plans as triple-A rated paper. That is why America's pension funds are collapsing. Spare me the revisionist history.
You are absolutely correct about the investments on the part of pension fund managers, they bit real hard on the Wall Street Mutual Fund managers offerings and got hurt. Yet somehow, this is, let's see, the average government worker's fault? And now the homeowners in SF are going to pay? Will BofA pay back their share of this fraud? Or Wells Fargo? What about J. P. Morgan Chase who swallowed Bear Stearns+Washington Mutual after they swallowed Chase Manhatten and then formed Bank One? Maybe a big bank known as the Average Working People of America should swallow these crooks?
Then there is Goldman Sachs, maybe they should hawk up a goober two. Well, nah, cause when you own the government you don't cough up nothin' for no one.
And check out how high a proportion retire on disability. Those paper cuts can become seriously debilitating injuries.
Just so all the public sector folks reading this understand, in the private sector, employees must use their time off as it is granted each year, or it stops accruing. If you get 30 days each year, you have 30 days to use each year, and, if it isn't used, you don't get more. You don't lose what you have earned, but you can't accumulate more.
Can we publicize San Francisco's woes and its painful learning experience? How about a reality show?
Um - Mr. Moritz, we don't have to "imagine" such a company. We have a host of real examples before us, including the banking and financial "titans" whose malfeasance recently wrecked the economy that San Francisco relies on to fund its pension and health care obligations.
I recognize that the venture capital and banking communities are not synonymous, but reading a member of the financial community heaping scorn, outrage, and accusations of bad faith on the government of San Fransisco for struggling with its financial obligations is a bit like watching a pickpocket accuse his victim of vagrancy.
To the unions who made such sweet deals: How long before the electorate decides that unions are no longer worth what they're extracting from the populace & said electorate takes stringent measures to either gut you, or greatly diminish your power?
To the politicos who've brought SFO to this point: You didn't prepare for the eventual & inevitable economic downturn that surely follows periods of boom. Bet you feel foolish right about now.
To San Franciscans: Send a message in the way you vote. Your fair city is being hung out to dry because of the malfeasance of your "leadership".