Originally published at www.foxandhoundsdaily.com
There are serious problems in California cities, as anyone reading about the recent bankruptcies in Stockton and San Bernardino is well aware. The State of California has made things exceptionally difficult for city officials and staff by eliminating economic development tools while continuing a decades-old practice of seizing, shifting and diverting local revenues to try and fix state problems — and unsuccessfully, I might add.
But not all of cities’ problems begin and end in Sacramento. Much has been written about local pension obligations as drivers of cities’ woes. What isn’t discussed much are the hiring decisions that take place years before the pension bill comes due. It is in some of these hiring practices and subsequent policymaking that I raise an eyebrow and wonder if another Sacramento tradition – special interest influence – isn’t invading city halls across the state.
Take the City of San Jose. The city has seen general revenue increase 19% while the average employee cost has soared 85% — despite a 28% reduction in the workforce. This should come as no surprise, given that 86 government employees are paid over $100,000. Their job titles include “electrician,” “administrative officer,” “program manager II,” and “instrument control supervisor.”
Things are so bad that even a report on whether or not the City should declare a fiscal emergency cost $222,000! Oh, the irony!
Budget shortfalls have resulted in layoffs of police (22% of the force) and firefighters, bringing the total city layoffs to 2,000 over the past 10 years. Meanwhile, environmental advocates have put pressure on the city to dramatically expand the city’s Environmental Services Department. Of the 86 very highly-paid city employees mentioned above, 21 of them have the word “environment” in their job title. Last year the city’s environmental services director left his job to take over the same position in Sunnyvale. In San Jose, his job paid him a whopping $193,196 and he got a low-cost $250,000 home loan from the city. Under his watch, sewer bills went up 73% and garbage rates up 50% in just seven years, with more hikes on the way.
San Jose’s real unemployment is almost 18%, well above the national average. So is the city truly addressing residents’ concerns with these moves, or are they acting to appease the vocal environmental lobby? We know special interests tend to get their way in the State Capitol, but this is a new concept in local government where the elected representatives are non-partisan.
Like other cities, San Jose is on the verge of bankruptcy today, yet the city is commissioning costly environmental impact reports for projects in 2040. The environmental lobby also pushed to make the city the highest paying sponsor of the 2011 U.S Composting Council. They have also advanced bans on plastic water bottles, Styrofoam containers and plastic grocery bags. The efficacy of these bans is questionable, and they are so costly to businesses that public agencies in Sacramento want themselves exempted from them.
We all love to poke Sacramento and Washington for taking their eye off the ball and spending most of their days fundraising and angling for cheap political points. Cities, on the other hand, could long be counted on to be good stewards of taxpayer funds and make sure the really important stuff got done.
Call me crazy, but laying off cops to hire environmental services staff at $180,000 a year doesn’t really fit that bill. Nor does banning food containers for local businesses when the city’s unemployment rate is 20 percent above the national average. This smacks of special-interest-driven decision making, and that is the core reason Californians have so little faith and optimism in the once Golden State.
So I call upon California cities once again to be the example for state and federal government, not just more of the same.
Lawrence Meyers is the President of PDL Capital, a private equity firm devoted to financial services.