The MGH Report

Michael G. Haran, Proprietor

Managing the Public Sector

Posted by on Oct 26, 2014

Healdsburg Tribune

10/23/2014

With this year’s elections fast approaching both candidates for the 4th Supervisorial District, James Gore and Deb Fudge, have represented that they possess the knowledge and skills necessary to manage Sonoma County’s public sector and its problems, one of which is the gorilla in the room – unfunded pension liabilities.

With annual pension costs having increased from $25 million in 2002 to $117 million and are expected to grow to $200 million by 2020 with the county’s unfunded liability at about $300 million (PD 10/11/14) even considering water related issues, this is the most pressing issue facing the county’s elected officials.

Now I have no squawk about how much public employees are paid. Even the issues I have about too many county managers isn’t about pay. It is critical that public employees get paid a middle class wage as all the support we can give the middle class is important to stave off the ravages of the growing aristocracy in this country. Without a strong middle class we could go the way of the Middle East – yikes!

It’s the retirement system that’s broke and needs to be fixed. This problem got rooted when public pension became guaranteed and tied to a wage and benefit plan that was intended to compete with the private sector. Back then everyone had a pension and it was felt that in order for the public sector to attract talented professionals they had to offer benefits that were as good, or better, then what was being paid in the private sector. The problem is the public sector pensions are guaranteed while the private sector pensions were/are not and those that didn’t get eliminated have gotten decimated as many corporations switched their employee pensions to 401ks.

Now the situation has reversed with the public sector jobs paying more than most private sector jobs and with benefits including retirement at age 50 to 55 with up to 90% salary and the immoral practice of perk “spiking” (Jerry Brown and the legislature has tried to put a stop to this but several unions have sued to restore the practice).

So what can be done to bring the system back into balance? The only way that retirement benefits can be “unguaranteed” so that they will fluctuate with the market like everyone else’s 401k, is for legislators to amend the state’s retirement system. This, however, is problematic since most elected state officials are “in the pockets” of the powerful public employee unions. Even if a ballot initiative were to pass it would be ruled unconstitutional by California’s Supreme Court and then it would have to go to the U.S. Supreme Court – which may very well happen. This is why Mike McGuire was against the initiative and saw that in order to get any reform the unions would have to agree to change. Many have but it hasn’t been enough to impact the long-term liabilities and more concessions have to be made.  As stated in a contemporary economic theory:

“This means that the political, legal, religious and educational systems must be understood dynamically in terms of whether they serve to enhance or to hinder human development. Thus, a system that, at one point in time, may have served a progressive role in society may, because of changes in the possibilities created by new modes of production, come to serve a negative function. Accordingly, it might be quite appropriate and functional for a certain perspective or ideology to dominate the thinking at a given historical moment, while at a later time those same ideas may become unproductive expressions of false consciousness and hegemony.”

The situation is not hopeless if all stakeholders work together and in good faith. This is the problem with politicians signing pledges. They work against good faith and erode the ability to compromise. I do not see how any candidate for elected public office who has pledged allegiance to one party or another could possible take an oath of office without perjuring themselves even before they’ve taken their seat at the dais.

 

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Not a Zero Sum Game

Posted by on Jul 1, 2014

Commentary

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Hotel Healdsburg

I had written a response to Sam Naujokas letter “Death of a small town” thinking that Mr. Naujokas was an older man who had grown up in Healdsburg. When I got an email from the Tribune’s editor, Kerrie Lindecker, that Sam is a fifteen year old high school student I was a little stunned. First of all I would like to say that Sam is an excellent writer way beyond his years. If all fifteen-year olds could write like this we wouldn’t be having the debates about how schools are failing our students. That said, since Sam entered this debate about Healdsburg’s future growth writing and thinking like an adult he deserves an adult response.

First of all this isn’t a zero sum game where winner takes all. It’s a matter of degree.  For capitalism to work it requires growth and growth is progressive. Conservatives would like to see things revert to the past or at least stay the same. Whether we like it or not successful business,’ like healthy children, will grow because it’s the nature of things.

Although Healdsburg’s tourism industry has brought changes many locals feel that the positives of those changes far outweigh the negatives. The tourist dollar has upped the town’s tax base which has allowed for improved community services such as infrastructure; and park and rec activities. The vibrant vitality of the shops and services around downtown are the envy of many towns in California and across the nation. And it’s not just the tourists that reap the benefit of the creative merchandise that stocks our stores.

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Healdsburg Plaza

Tourists come and go. They are here to visit the wineries; sip wine at the tasting rooms; visit town shops; eat at local restaurants; and sleep in our hotels, motels and B&Bs. And then they leave. It’s no different than when the town swells for the Tuesday night Plaza concerts and then un-swells. Tourism is a clean industry and if you are into people watching sitting on a sidewalk bench on a weekend is like watching a fashion show go by. With the right outlook it’s a lot of fun.

Although we sometimes wonder our town council is not stupid. They have their finger on the pulse beat of the community and most people pay attention to Healdsburg’s civic activities. They just commissioned a study to see how many more hotel rooms would be required to meet the demand so now they have a benchmark. This study doesn’t mean that the town is going to allow that many new hotel rooms. You see, they too are concerned about the quality of life in Healdsburg.

The reason a lot of people have resented Healdsburg Citizens for Sustainable Solutions is because they have come to town and tried to control the conversation about growth. They have insulted the people in this town who have worked years to shape the quality of our town working hard to include the entire community. To say that a couple of hundred responses to a survey represent a community of 12,000 people is insulting. Nobody disagrees that we need to have controlled growth but with HCSS one just gets feeling that they have a hidden agenda.

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Plaza at Center St. Healdsburg, Ca.

The housing issue is another problem that has no answer but to build more homes which HCSS opposes. The same thing happened to us who grew up in Marin County. We couldn’t afford to buy homes there and had to look north for more affordable housing. This problem is not unique to Healdsburg. Every desirable community on the West Coast of California is experiencing this lack of affordable housing. It has nothing to do with tourism. Healdsburg would be desirable with or without the tourist. Now if HCSS could contribute to finding a solution to the affordable housing problem maybe the community would be more supportive of them.

Sam wrote a wonderful letter. It bodes well for our society having young people as articulate as him. Just as the Common Core Standards requires students to look at math problems in more than one way, so does the planning of a community. And remember the only thing that never changes is the fact that everything changes.

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