City revenues continue to fall

Sept. 16, 2012

By Brian Calle

More and more cities are starting to face the reality of shrinking budgets as a result of over generous pay and benefits offered to public workers. And it is not just California.

A recent survey by the National League of Cities found that 2012 will mark the 6th annual year of falling revenue for American cities. In 2012, the average city’s revenue will decrease 3.9 percent. What’s the culprit? High pay and benefits.

As noted by the Wall Street Journal “The skyrocketing costs of pensions and health care are also taking a toll on cities. Among the 324 cities surveyed, 77% said pension costs increased in 2012 from the previous year, and 81% said the same of health-care costs.

The Journal gave the example of Bluffton, Indiana which “has shed workers by not replacing people when they retire, while cutting back on local services like paving roads.” This is a reality for many California cities too. And elected city council members may have to choose between paying off past promises (retiree pay and benefits) or servicing current residents.

Few cities have recognized the dire situation.  One exception is the city of Costa Mesa which has moved aggressively to privatize some services and make tough budgetary decisions in an effort to right the wrongs of past city councils and the lucrative contracts they approved. But other councils seem to think that their woes will be cured by a miraculous economic turn around. Good luck.

Since the economy is not showing signs of a rapid recovery more cities will have to begin making tough decisions that will cause powerful public employees unions to react. But there are few other choices for balancing municipal finances, and more importantly serving the priorities of taxpayers.

13 comments

Write a comment
  1. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 September, 2012, 22:45

    Few cities have recognized the dire situation. One exception is the city of Costa Mesa which has moved aggressively to privatize some services and make tough budgetary decisions in an effort to right the wrongs of past city councils and the lucrative contracts they approved. But other councils seem to think that their woes will be cured by a miraculous economic turn around. Good luck.

    I have a friend who is a FF in Costa Mesa, and I rememeber back in 2008 when he said the city councel gave them 3%@50, when it was WELL KNOWN that these pension scams were not going to be sustainable. I said RU KIDDING ME??? The cat was well out of the bag at that time-2008- on the pension scam, yet the clowncil still gave the giveaway to them. Now CM may outsource their entire FD. What irony.

    Reply this comment
  2. SeeSaw
    SeeSaw 16 September, 2012, 23:49

    Costa Mesa just negotiated a new contract with its fire fighters, that runs until 2017. Doesn’t look like they will be outsourcing any time soon.

    Reply this comment
  3. Douglas
    Douglas 17 September, 2012, 08:48

    It’s not rocket surgery. Study after study shows that public employees are NOT paid more than their private sector equivalents, even when including the costs of pensions and health care.

    But if, as usual, employee costs are about 80% of the budget (it IS a labor intensive enterprise), and the revenues fall for 6 years in a row, the budgets will not balance.

    “skyrocketing costs of pensions and health care”?

    Health care costs are increasing for everyone. Probably by less for many government employees because of their group purchasing power advantage.

    Pension costs are only “skyrocketing” if compared to 1999-2000 when many governments took pension holidays. Generally speaking, pension costs are about 3% of the total budget, as they have been for dozens of years. Changes in recent contracts in California are saving the state over $400 million a year, with similar savings for many local governments.

    Reply this comment
  4. Queeg
    Queeg 17 September, 2012, 09:58

    Will someone inform the loons we don’t want blatant misinformation!!!!

    Reply this comment
  5. Rex the Wonder Dog!
    Rex the Wonder Dog! 17 September, 2012, 10:44

    Costa Mesa just negotiated a new contract with its fire fighters, that runs until 2017. Doesn’t look like they will be outsourcing any time soon.

    seesaw, did you even read the new CCFD CONTRACT?? CM FF took MASSIVE cuts in both pay and pensions. No need to out source, they saw the writing on the wall and caved. EOM!

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 17 September, 2012, 10:46

    It’s not rocket surgery. Study after study shows that public employees are NOT paid more than their private sector equivalents, even when including the costs of pensions and health care.

    Oh brother…another torugh feeder who actually thinks someone will bite on this BS!!! Love it.

    Go home troughie, this is the big boys playground.

    Reply this comment
  7. Douglas
    Douglas 17 September, 2012, 11:02

    That’s what I get for believing the US Bureau of Labor Statistics?

    Reply this comment
  8. Queeg
    Queeg 17 September, 2012, 12:56

    Thank goodness no one has you posters on their payrolls!

    Reply this comment
  9. Rex the Wonder Dog!
    Rex the Wonder Dog! 17 September, 2012, 14:55

    That’s what I get for believing the US Bureau of Labor Statistics?

    No, that s what you get for trying to tell a WHOPPER lie here on CWD!

    “Average Federal Employee Makes Twice as Much as Private Sector Employee & As Much as Microsoft Employee”
    Posted by Jim Hoft on Monday, January 30, 2012, 6:51 AM
    http://www.thegatewaypundit.com/2012/01/average-federal-employee-makes-twice-as-much-as-private-sector-employee-as-much-as-microsoft-employee/

    Reply this comment
  10. Douglas
    Douglas 17 September, 2012, 16:55

    Rush Limbaugh said roughly the same thing, that federal employees make twice as much as “the taxpayers who pay their salaries”

    I say he’s either delusional or dishonest. Of course I would never say that about anyone on this board. That would be rude.

    You should look beyond the headlines, though. I could help you out, but you’ll learn more if you find it yourself.

    Reply this comment
  11. Queeg
    Queeg 17 September, 2012, 17:36

    Do any of you work? Who would hire you?

    Reply this comment
  12. Hondo
    Hondo 17 September, 2012, 20:10

    Do I work?
    I ripped out a wall and found a water leak that has been elluding me for a week. My boss gave me an ataboy for I saved him some time and money.
    San Jose was looking at going from 7600 employees a couple years ago to 1600 in a couple years. Reed was saying the city may have to go to an all volunteer police and fire dept. The public unions there are trying to override the voters but they can’t override the math. It doesn’t add up.
    Hondo…….

    Reply this comment
  13. Queeg
    Queeg 17 September, 2012, 23:50

    Good Hondo…..good……we down size before Christmas! You earned a heads up.

    Reply this comment

Write a Comment

Leave a Reply


Related Articles

Kamala Harris’ Totalitarianism

Steven Greenhut: California Attorney General Kamala Harris and her union allies no doubt have amused themselves at the way they

Will NSA snooping kill CA prosperity?

Since California invented the Internet more than four decades ago, we’ve ruled the digital roost. Others have contributed, such as

Sacto would financially benefit from downtown arena

May 1, 2013 By Katy Grimes This unnatural and inexplicable push by Sacramento city officials for a downtown arena is