Budgeting, at least at the local and state level, where spending plans have to be balanced, is literally a zero-sum game. Yet it is inexplicably rare for a California journalist to note that political influence is driving compensation and regulatory decisions and to then link these decisions to this result: that there is less money available for the broader good or for the needy.

In Saturday’s Los Angeles Times, liberal pundit Steve Lopez offered strong proof that he had been mugged by reality and had figured out this dynamic. The topic: the city’s Department of Water and Power, which is every bit as out of control as the Metropolitan Water District of Southern California with its employee-first priorities.

Lopez notes that Angelenos’ water and power …

“… rates wouldn’t be going up as much if DWP employees joined the rest of the world and contributed, out of pocket, toward their healthcare premiums. The new deal does not require that for current or future employees. They’ll pay more toward their retiree healthcare costs, and 2% of the savings generated from a delay in pay hikes will go toward healthcare.

“But there will be no reduction in an employee’s paycheck.

“With healthcare costs rising, he said, and private sector employees bearing more of the burden, it was all the more reason to bring public employees on board. And what better time to extract such a concession than the year in which IBEW spent a fortune backing Wendy Greuel for mayor, only to see her crushed by Eric Garcetti.

“With other city employees set to negotiate new contracts soon, what incentive is there for them to pay for healthcare now that DWP employees have been spared? None.”

Now, after that display of common sense, Lopez has what amounts to an epiphany: linking compensation decisions driven by political clout to headaches for the general public caused by inadequate government funding.

” … you can look for the mayor and council members to go hat in hand to the public next November with a bond measure to pay for street repairs, if not sidewalk repairs. This despite Garcetti saying during his campaign that he didn’t think we needed a sales tax increase.

“But we need a $3 billion bond, or bigger?   

“The ‘back to basics’ mayor, as Garcetti calls himself, apparently has no other way to pay for streets and sidewalks without that bond measure.

“Will you be inclined to vote yes while your water and power rates are going up in a city that doesn’t require DWP employees to contribute to healthcare premiums? A city in  which 70% of all employees pay nothing for healthcare premiums?”

For good measure, Lopez also refers to another stress factor on DWP rate payers: the city’s “increasingly expensive mandate on securing renewable energy,” environmental trendiness that may thrill Westside enviros but that does nothing for most L.A. residents but reduce the money they have to spend on their families.

The travails of San Jose, Stockton and other troubled cities in California have kept the spotlight off Los Angeles. But it is headed into decades of budget pain because of its generosity to unions. As I noted in a post earlier this year, more than one-third of the city’s budget goes to pay for retirees’ pension and health care — and that percentage is going up, not down.

At least with the election of Garcetti as mayor, L.A. voters have chosen someone who grasps this is a problem. Greuel, the loon Garcetti defeated, wanted to add 2,000 police and 800 firefighters to the payroll — a 20 percent increase even though L.A.s crime and fire problems are near historic lows. Why? To win the support of the police and fire unions.

But Greuel’s defeat will only buy L.A. a little extra time in staving off its decline. It’s not just the city’s permanent budget nightmare. L.A.’s private-sector economy is also in the middle of a broad, long-term decline that only occasionally gets the attention of its large daily newspaper.

By Chris Reed

The unsustainability of the public employee pension system in California has been obvious for at least six or seven years to anyone who understood two simple facts: the demographics of our aging government workforce and the irrationality of CalPERS’ argument in 1999 that retroactive pension giveaways could be paid for with a perpetual boom on Wall Street.

The unsustainability of the public employee pension system in California was no longer a matter of serious debate after August 2009, when then-CalPERS lead actuary Ron Seeling said CalPERS’ benefit structure was “unsustainable.”

So for all those inclined to hail Los Angeles Times columnist Steve Lopez’s decision to finally acknowledge reality in his column posted Tuesday night, hold your horses. Lopez should have been able to figure this out long ago and tried to force honesty from his fellow liberals.

And then there’s the ridiculous fact that Lopez absolves unions from their key role in the creation of this status quo. Here is how Lopez puts it:

“It’s time for public employee unions to wake up and take a look around. Government services are shrinking, cities are crumbling, and they’re enjoying pay and benefit packages that many in the private sector would kill for. They need to give a little back. Yeah, I know, some of them already have. But it’s time for a little more.

“On healthcare contributions. On raises. On pensions. On retirement ages.

“Why?

“Because up and down the state of California, and beyond, public officials foolishly negotiated contracts they can’t pay for without taking a cleaver to basic services, including police and fire protection, park maintenance, street repair. It’s not just the fault of those contracts. There’s also the economic dip and the housing crash, which put a squeeze on revenue. But that perfect storm has led to big trouble in San Jose and Stockton and Fresno and San Diego.

“And of course in Los Angeles.”

C’mon, Steve!

It’s all irresponsible “public officials'” fault, you see, not the puppet masters who chose them, got them elected and controlled their political futures. The union members who control CalPERS? Also not to blame!

Steve Lopez, 37 percent candid!

This is remindful of the 8,000-word New York Times Magazine 2009 analysis of California’s deep problems that didn’t mention unions at all except for passing references.

To quote Keyshawn Johnson: C’mon, man!

Steve, Steve, Steve! More, more, more! You can do it!

L.A. Times columnist Steve Lopez continues his tax obsession with another attack on Proposition 13. His title is, “Speaking the unspeakable in California politics” — except that the “unspeakable” has been spoken continuously ever since voters passed Prop. 13 back in 1978, limiting increases in property taxes.

L.A. Mayor Antonio Villaraigosa, taking time out from letting Dodger Stadium devolve into a gang den, called Steve personally about gutting Prop. 13. Villaraigosa is interested in a “split roll” for property taxes that Lopez has been pushing. Under a “split roll,” homeowners would continue to operate under the Prop. 13 protections, but commercial property would be hit with higher tax rates. Lopez enthuses:

But [Villaraigosa] said he plans to go to Sacramento in August, and he’s thinking he might make a speech to the press club pitching Prop. 13 reform. He said he was surprised that Gov. Jerry Brown hasn’t done it himself, because at the age of 73, Brown doesn’t need to give much consideration to his political future.

“If he needs a guy like me to start it, then I’m going to do it,” said Villaraigosa, a former state Assembly speaker.

But neither the mayor nor Lopez cares about how a split roll would destroy California businesses and jobs.

First, increasing property taxes on businesses would mean they would have less money for jobs creation, increasing a state unemployment rate already second-highest in the nation at 11.7 percent in May. And after six years of Villaraigosa’s misrule, L.A.’s unemployment rate is even higher.

Second, businesses could avoid the tax by leaving the state, which they already are in record numbers.

Third, when other states have enacted split-roll property taxes, the action quickly leads not to just two tax rates (one for residential, the other for commercial properties), but a patch-quilt of rates from exemptions for special interests.

In California, first the environmental companies would say, “You’re killing green jobs and destroying the environment! Give us a tax break or Gaia will be polluted more.”

Then defense companies would say, “The higher property tax rate from the split roll is increasing the cost of producing weapons and equipment for our troops, meaning they have fewer of our products to defend themselves in the War on Terror. That means more of our brave young Americans will come home in body bags. Give us an exemption.”

And so on.

A split roll would be a full employment program for lawyers, lobbyists and politicians.

For the rest of us, it would be another California folly.

July 11, 2011

By WAYNE LUSVARDI

A demogogue is a leader who obtains power by means of impassioned appeals to the emotions and prejudices of the populace. And a demographer is someone who studies the characteristics of human populations, such as size, growth, density, distribution, and vital statistics.

Thus, to coin a phrase, a  “demogogue-grapher” is someone who studies human population with his emotions and a political agenda.

Such must be the case of USC Professor of Demography Dowell Myers, interviewed by columnist and Proposition 13 hater Steve Lopez in the May 31 issue of the Los Angeles Times, “Debunking the Myth of Prop. 13”.

According to Myers, the decline in the number of families and children at the bottom of the population pyramid means that, in the future, there will be a surplus of family housing and the price will drop out of the bottom of single family residential housing.  Thus Myers asserts that Prop. 13 is “toast” because, according to him, it only works in a constantly rising real estate market.

Myers may be a competent demographer, but he is out of his league when he starts claiming that Prop. 13 is “toast” in a falling real estate market. To the contrary, Prop. 13 has “saved” California’s property tax base for public services and schools from ruination and saved politicians from political instability and being thrown out of office.  How so you say?

How Prop. 13 Really Works

Under Prop. 13, the current value of a building goes up and down as the properties are sold, not as the market goes up or down. Without Prop. 13, as the value goes up, the reassessments would drive up the costs of taxes.

For example, without Prop. 13, the state gets used to the new amount of higher taxes and pays 10 new teachers’ salaries with the money. When the market goes down, the building value goes down and the owner gets another reassessment. Tax receipts decrease, and the government no longer has the tax money to pay for 10 teachers. It can only pay for five teachers’ salaries. An artificial “shortage” of five teachers is created.

On the other hand, with Prop. 13 in effect, the current value of a building goes up by 2 percent annually in rising markets as long as the ownership does not change. The state pays for three teachers’ salaries with the money. The amount gradually increases, but is fairly constant.

When the market goes down, the building value goes down and the owner gets another reassessment. The taxes decrease and the government no longer has the tax money to pay for three teachers. It can only pay for two teachers. A “shortage” of one teacher is created. This may be much more easily handled than a five-teacher “shortage.”

The difference is this: In the first case, without Prop. 13, the state government spent the higher amount and expected it. When the market downturn came around, there was a huge deficit.

But in the second case, with Prop. 13 in effect, the government does not experience a severe shortage. This second way is the way to more stable government funding — that is, not getting rid of Prop 13 or raising taxes through the roof by a split commercial-residential property tax roll.

By and large, the California newspaper media and academia are so biased against Prop 13 that they have failed to understand this simple concept.

The Real Problem

The problem in California is not Prop. 13, but capital gains taxes on real estate, which has one of the highest tax rates in the nation. California experienced a boom in capital gains taxes from 2003 to 2007 due to the Real Estate Bubble created by unions and public pension funds trying to puff up the real estate market to plug a huge funding gap in public pensions.

Under Proposition 98, 40 percent of the state budget must go to K-14 public schools. The problem was that, during the Real Estate Bubble, the public schools hired too many temporary teachers and ancillary personnel instead of socking the money away for when the inevitable bust in the Real Estate Bubble occurred. Now the schools are claiming they suffer deep budget cuts they cannot absorb.

The reality is that public schools must adjust back to 2001 budget levels.  If anything, Prop. 98 should be reformed, not Prop. 13.

Prop. 13 “saved” California’s public schools from ruination.  Prop. 13 is not “toast.” Instead, let’s raise a toast to Prop. 13.

The L.A. Times’ tax obsession goes back decades. I remember back when George Deukmejian was governor (1982-1990), the Times was especially fanatical about increasing taxes. So one of the governor’s advisers sent the Times management an unofficial bill for its share of the new taxes the Times wanted — which the Times, hypocritically, never paid.

Now the Times’ staff has gone beserker over the tax increases. Wikipedia writes of the berserkers (that’s a picture of them above):

Berserkers (or berserks) were Norse warriors who are reported in the Old Norse literature to have fought in a nearly uncontrollable, trance-like fury….

Now, he’s what the L.A. Times’ Tax Berserkers have been writing.

Tax berserker Timothy Rutten today:

the governor and the Democrats’ legislative majority need to shake themselves free of the direct democracy delusion, and that process begins with abandoning efforts to put budget-balancing tax extensions before the voters, as then-candidate Brown promised.

Tax berserker Michael Hiltzik today backs not only Brown’s $12 billion tax increase, but

other sources of revenue that other states exploit but California ignores, such as an oil severance tax and a fairer approach to assessing commercial and industrial property.

The phrase “a fairer approach to assessing commercial and industrial property” is a euphemism for attacking Proposition 13 with what’s called a split roll, meaning business and industrial property would be taxed at higher rates. Just what California’s severely anti-business climate needs: even more anti-business taxes.

And tax berserker Steve Lopez yesterday lamented that teachers will have to be fired if taxes aren’t increased:

How about an oil excise tax, with the proceeds going to education? How about some of the other things I’ve talked about, like tinkering with Proposition 13, particularly on the commercial side? How about a relatively fair balance of spending cuts and temporary extension of existing tax increases, so we don’t have to destroy our K-12 schools with an extra $4 billion to $5 billion in cuts?

But as someone named Bully4You noted in the comments section:

How about teachers take a 5% paycut, and pay 5% towards health insurance?

Problem solved.

Commentator benjamin1 wrote:

I found a way to save the teachers.  Say it with me now; end the pensions, give ALL public employees 401k accounts and have them make 75% of the contributions to said accounts just like EVERYBODY else, then see how many teachers you need to actually lay off.  My guess is Mr. Yee will keep his job either way though.  Gov. Brown would never dream about having any of his beloved public employees actually feel any effects of the recession.

Both are sensible suggestions. The private sector sure has taken a hit in recent years, with many salaries slashed and positions eliminated. Given that the private sector supports the public sector, when the taxpayers get hit hard, then the tax-takers should get hit hard, too. If the host shrinks, then so should the parasite.

Well, at least the Times allowed these comments on their Web site. The comments also show that Californians no longer can be conned by Brown and the berserker L.A. Times, Rutten, Hiltzik and Lopez.

Today L.A. Times columnist Steve Lopez makes it seem as if, as his headline puts it, “Saving the state would cost $260” each per year. Never mind that saving $100,000 pensions from cuts isn’t exactly “saving the state.”

He also writes that the cost would be “about $22.00 a month — to maintain a degree of civility and humanity or let it all go to hell.”

Except that if you have the typical family of four, that’s $88 a month. Meanwhile, your food bill has gone up more than $88 a month because the Federal Reserve Board keeps inflating the dollar. And your gas bill has gone up more than $88 a month.

So, you keep falling behind. Maybe you’ve been unemployed for several months in recent years because California’s anti-business and anti-jobs climate has destroyed jobs creation, with unemployment still at 12.4 percent, second highest in the nation.

Maybe your home was foreclosed. Maybe you skipped credit card payments, so you’re paying 30 percent interest on your debts.

So now, Steve Lopez and Gov. Brown and the Democrats and the “business oriented” Chamber of Commerce (really pro-government) want to soak you for another $88 a month. And not just for the next two years to get the state back on its fiscal feet (or at least to pay all those $100,000 pensions a little longer). They want that $88 a month for five years.

Here’s an idea: Instead of a secret ballot on tax increases, let’s have an open vote. Then, those who want tax increases, such as Steve Lopez, can openly say so. And they can show us their canceled checks for their payments.

The rest of us, who openly vote against tax increases, won’t be forced to pay anything.

You want to pay more taxes? Go ahead. Be my guest.

But as Samuel Goldman used to say, “Include me out.”

In his Sunday column, L.A. Times columnist Steve Lopez praises unions — but doesn’t distinguish between private and public unions. He writes:

Neither of my parents went to college, but we always did just fine because my dad had union jobs that paid a living wage. He drove trucks for milk and bread companies, and later worked as a candy and tobacco salesman.

…when I went to San Jose State, my parents paid my tuition and the bulk of my room and board.

For a couple of reasons, I’ve been thinking lately about the union job that paid for my college degree. First, because attacking unions has become a national sport. And second, because I’ve been notified by San Jose State that the school wants to give me an honorary doctorate degree.

But the attacks today area on public employee unions, as in Wisconsin, not private ones. Driving and selling for private companies involved private unions, not public unions. And when Dr. Lopez was growing up and enjoying California’s Golden Age, there was no Dills Act, which Gov. Brown signed in 1978, and which gave collective bargaining to government union employees.

If his father had gone on strike, people could have avoided tobacco or baked their own bread, or have driven to the store to get those things themselves. But with public unions, the government forces a monopoly on us. We don’t have any choice. We’re stuck with them.

Moreover, the public worker unions use their power to “elect our own bosses,” as one union boss put it. They sit on both sides of the bargaining table. They are “labor” and, by electing compliant politicians, they’re also “management.”

Did Dr. Lopez’s father get to elect his own bosses?

That’s why government is broke: Government unions got their bought-and-paid-for politicians to spike pay and pensions.

And the unions help pass wild spending, such as the $5.7 billion in community college bonds that, his own L.A. Times newspaper reported this very day, has turned into a cesspool of “poor planning, frivolous spending and shoddy workmanship.”

Any private company that wasteful and incompetent — such as the private companies his private-union father worked for — would have gone bankrupt long ago.

Now it’s government’s turn to go bankrupt. The day of reckoning, pushed on us by powerful and wasteful government unions, is here.

Dr. Lopez misdiagnosed the state’s fiscal malady.

Feb. 27, 2011