In 2012, the City of Stockton went bankrupt.
The man who had the sad duty of filing Stockton’s bankruptcy, City Manager Bob Deis, was certain about the roots of the disaster: the decision by city officials in 1996 to provide full healthcare benefits to its retired firefighters.
According to Reuters: “At the time, the move seemed cheaper than the pay raises sought by the union. When other Stockton employees demanded the same deal, the city agreed.”
The result, according to Deis, was a “Ponzi scheme” that eventually swallowed the city’s budget, leaving a deficit of $417 million.
Unfortunately, Stockton’s story is not uncommon in California: skyrocketing benefits for government employees, driven by relentless public-sector unions and politicians eager to overpromise and underfund, have driven up the cost of government and crowded out money needed for necessary public services.
Former San Jose Mayor Chuck Reed is well acquainted with this problem. At a recent gathering of community leaders in Bakersfield, jointly sponsored by Kern Citizens for Sustainable Government and the California Policy Center, Reed recounted how San Jose leaders had been forced to cut services, including law enforcement, to the bone year after year to pay for their union-driven benefit obligations.
Reed and other city leaders were so concerned about the wellbeing of their city and the burdens that had been created for future generations that they acted boldly and urgently to make large scale changes to the way their government did business, including pension reform.
Reed is no longer mayor, but his experience in San Jose has imbued him with a sense of mission, and now he travels the state warning local officials about the crisis and offering solutions and resources for those willing to tackle the problem.
Kern County is fortunate to have such officials. Through budget reductions and fostering a new culture of continuous improvement, and in part, through a process called Lean Six Sigma, officials have reduced the County of Kern’s General Fund deficit to $12.6 million from $44 million just two years ago.
However, much work remains to be done to put our fiscal house truly in order — a $10 million structural deficit in the county’s Fire Fund is up $1.5 million from last year. This must be addressed if the county wishes to reach a path to prosperity.
And at the recent Kern Citizens for Sustainable Government and California Policy Center gathering, there was also a presentation on a development that could open vast opportunities for local budget reforms: Any day now, the U. S. Supreme Court will issue its decision in the Janus v. AFSCME case.
Currently, government employees can be forced to pay union fees. If this arrangement is stricken down as unconstitutional in Janus, as many court observers expect, organized labor will face a stampede of deserting workers.
The result will be that public unions are less able to bully local officials into giving them unsustainable compensation and pension packages. That would be good for anyone who wants transparent, sustainable government.
California faces a lot of challenges, but thanks to Mayor Reed, perhaps the Supreme Court, and bold local leadership, we can hope that those challenges can be met and overcome.
Romeo Agbalog of Bakersfield is the executive director of Kern Citizens for Sustainable Government; Matt Patterson is an award-winning journalist whose work has appeared in The Wall Street Journal, Forbes, The Washington Times and FoxNews.com. He is state field director for the California Policy Center. The opinions expressed are their own.