Original post made by Arnold on Jul 11, 2012
"This is probably the hardest decision this council woman will ever have to make in this chair,' said Councilwoman Wendy McCammack.
"Philosophically, I'm against bankruptcy, but if this is the only way to save the city from long-term debt from which it might never recover ... it's the best choice."
Penman also said at the meeting that for 13 of the last 16 years, the council had been given falsified budget documents. Those documents said the city was in the black when, in fact, it had been deficit spending, he said."
- This is an interesting statement. It's hard to imagine 13 - 16 years of audited financial statements not detecting a problem as large as the difference between being in the black, or the red. While I suspect there is much more to the story, it is probably also true that most cities ARE deficit spending, and that includes Pleasanton and the PUSD, and every school district in the state for that matter.
"In an earlier report to the council, Travis-Miller said the city has faced declining revenues and escalating retirement costs, with employee compensation accounting for about 75 percent of the city's general fund spending."
- Now we are getting somewhere. Employee costs are 75% of the budget but the budget doesn't recognize all of the employee costs. The true cost is higher. Retiree medical benefits are "pay as you Go" which only treats the current cost as expense while ignoring the true cost which is 3-4 times the dollar amount expensed. The true pension costs are also significantly higher then what's reported by ALL cities. CalPERS allows cities to only partial fund actual costs by extending payment terms, for past service, by as much as 30 years. Many employees will have worked, retired, and died before the cost of their pension has been paid for. New GASB rules regarding pensions attempt to address this issue but they don't go far enough. Actually, the GASB exposure draft rules addressed the issue but special interest groups, like CalPERS, lobbied hard to mitigate their impact.
Another article puts San Bernardino's cash balance at 155K - or ZILCH! Many more cities on the verge…
Read more: Web Link
Pleasanton doesn't suffer from many of the issues that drove SB to bankruptcy, but there are many issues the two cities have in common.
on Jul 11, 2012 at 9:49 pm
Goodness, declaring bankruptcy on a mere 48.5 million dollars. That strikes most of the people I hang with as ludricous. Why my golfing cronies lose that much on bets while on the golf course. Chump change. It's a shame Obama is in over his head. Glub, glub. I just want you to know that CAlifornia's Prop 13 strikes me as just fine, and I'd never consider raising taxes against the wealthy in Cal who are so oppressed by it. A tsunami is coming unless the little people begin paying their fair share.
on Jul 11, 2012 at 10:37 pm
Mr. Mittens, you make some excellent points. Your commentary on San Bernardino's 48.5 million dollar deficit is not one of them. The real debt is probably 10 times that number only accounting for underfunded pension liabilities and unfunded retiree medical costs. If you also add the cost of deferred road maintenance, usually the first sign of structural deficit and poor management issues, the burden grows larger.
Your comments regarding Obama "in over his head" are interesting. I don't view it that way. Both he and Biden are who they are and that is supporters of the public employee unions that put them in the White House. The unions have been well compensated for those efforts and the stimulus funding - directed toward public employee unions in the form of grants, is evidence of that. As is Obama's comment that the private sector is just fine and public sector union's are struggling. Baloney!
The grant funding promoted by Obama/Biden to prop up police & fire staffing is only preventing a natural correction in compensation. The rest of the stimulus funding is going toward private sector union funding and signage that promotes all the shovel ready projects. At the same time the administration counts grant funding to support staffing levels, at ridiculous levels of compensation, as jobs that have been created. That couldn't be further from the truth. The only thing happening is that the federal government is subsidizing government employees while preventing a natural correction in government employee compensation.
The poor aren't the only ones being subsidized. We are also subsidizing government employees that receive both six figure salaries and six figure pensions.
Your whining about prop 13 gives you away as the union rep you are. The loudest and most consistent attacks always come from public employee unions. They can't stand that homeowner equity is just an unlucky number beyond their reach (13 - as in prop 13).
If not for prop 13 the unions would be taxing homeowners as much as it took to satisfy they're installable desire for more tax dollars.
on Jul 12, 2012 at 5:07 am
Poor babies. When will you ever learn?