Los Banos grew by 42 percent between 2000 and 2010, to a population of 37,000. Over the same period bankrupt Stockton grew 22.2 percent to reach a population of 298,000.
Throughout the epoch when Great Boom that turned into the Great Bust, creating a major Economic Depression in the nation, worst of all in the northern San Joaquin Valley, city officials, staff, developers, landowners, bankers, realtors, corporate newspaper chains and chambers of commerce argued continually at the top of their collective lungs that “RESIDENTIAL GROWTH PAYS FOR ITSELF.”
Don’t you remember that pitch?
How pathetic it would all be if it weren’t that the same organs of the Consolidated Plutocracy that emerged from the greatest credit-fraud scheme in human history hadn’t devoted their unparalleled propaganda resources to erasing your memory and any thoughts you might have that could be considered the least bit “historical” in character.
Thou shalt not remember the claim, told in tones of utter sincerity with completely cynical intent by the agents of finance, insurance and real estate who appear before local land-use authorities: “RESIDENTIAL GROWTH PAYS FOR ITSELF!”
Thou shalt not remember this as it was dinned into the ears of public then, because it shall be dinned into the public ear again, particularly in rapidly growing, crime infested cities in which GROWTH CLEARLY HAS NOT PAID FOR ITSELF.
But, you forget all that. Because just as soon as private polling has established that you all have forgotten that, it will start all over again, along with the chant promising JOBS JOBS JOBS that will last a few years before you are again pounding the pavement looking for any kind of work again. -- blj
Measure K approval pushed in Los Banos…Corey Pridecpride@losbanosenterprise.com
LOS BANOS— City officials are meeting with community groups to inform them of what’s at stake in November.
Police Chief Gary Brizzee, Fire Chief Chet Guintini and City Manager Steve Carrigan are speaking with civic groups about the importance of a ballot measure that would continue to divert a portion of a half-cent sales tax for the salaries of eight first responders. On Monday, the trio met with the Enterprise to lay out their case for passage of Measure K.
Measure K will allow eight emergency services workers to continue to be paid from facilities funding in a half-cent sales tax. The tax, known as Measure P, was approved in 2004 for public safety equipment, facilities and personnel. As the economy suffered a downturn in 2009, voters approved Measure A. It allows police officers and firefighters to receive salary and benefits through Measure P money previously being saved to build a new police station and firefighter training tower. Measure A, which pays for the salaries of six police officers and two firefighters, expires in 2014. Measure K extends Measure A through 2020.
If Measure K fails to receive two-thirds voter approval, the police and firefighter salaries will have to be paid from the city’s general fund, and Los Banos officials are not confident the city is going to bring in enough tax revenue to fund those salaries.
Brizzee said the Police Department has 36 sworn officers and would be stretched thin if that number goes down to 30.
“There are over 600 documented gang members and associates in Los Banos, and there are over 18 active criminal gangs,” Brizzee said. “Crime is increasing in the neighborhoods. We’ve heard through some of the major federal investigations where people are specifically coming to Los Banos so they can hide out. We know it to be true because we’ve heard it from the gang members’ mouths.”
The Los Banos Fire Department has 14 paid and 27 volunteer firefighters. Guintini said it is important to maintain staffing levels because of the need for an immediate response to medical and fire calls.
“Keeping paid staff is getting that first and second company right now,” Guintini said. “We need to look at the whole picture. If we were to lose that funding, all that personnel would have to go back to the general fund.”
There is opposition to Measure K.
Baldo Salcido said he thinks city officials are engaging in scare tactics.
“It (Measure K) is not necessary,” Salcido said. “They want you to think that if it doesn’t pass, we’ll lose six police officers. The general fund pays those salaries, and there’s a $6 million surplus.”
The city approved a budget in June with anticipated general fund revenue at $9.9 million and expenditures at $10.2 million. The difference is made up by general fund reserve money, which at $6.5 million is nearly double the 2008 amount.
This summer, Carrigan eliminated a 2.5 percent salary contribution employees were asked to make in 2009 to their Cafeteria Plan for health, vision, dental and life insurance. The decline in salary contributions equates to $14,738 from the general fund and $857 from Measure P. A similar deal was also struck with the city’s Fire Department and nonunionized workers, such as public works and the finance departments.
Carrigan defended the decision.
“We need to retain our employees. We don’t need people to leave for other cities,” he said.
Carrigan also said if Measure K doesn’t pass, the general fund will take a hit from absorbing the eight public safety salaries combined with the added contributions to employees’ benefits plans.
“I see Measure K as a building block for our future. Right now we are at core services, if Measure K doesn’t pass we start digging into the bone. If you really want to get a bleak picture of what’s going on, go visit Atwater or the county. While I know we’re not as in bad of shape as those communities, if Measure K does not pass we’re right back,” Carrigan said.
Salcido said the city is getting more money than its projections state because sales tax and property tax are on the uptick. He also said Measure P was a mandate for the funds to be spent on facilities.
“City Hall doesn’t understand the definition of mandate,” Salcido said.
If approved, Guintini said, the city cannot guarantee it won’t ask for an extension on Measure K if it’s needed seven years from now. However, he said it would not be the city’s preference.
“We want to get back to building our facilities,” Guintini said.
Stockton cutting deals with bond insurers…Ed Mendel
Chances of the Stockton bankruptcy producing a landmark ruling to cut pensions dimmed last week, when the city announced a deal with one bond insurer and a tentative deal with another one.
The two big bond insurers, who unsuccessfully opposed Stockton’s eligibility for bankruptcy, argued that a city plan to cut bond debt was unfair because the largest creditor, CalPERS, would be untouched.
U.S. Bankruptcy Judge Christopher Klein said the proper time to rule on the CalPERS question is when the court considers whether all creditors are being treated fairly by the city “plan of adjustment” to cut debt and emerge from bankruptcy.
Now Stockton may be taking big steps toward resolving the fairness issue by negotiating a plan with creditors to exit bankruptcy as urged by the judge. Klein brought in another bankruptcy judge, Elizabeth Perris, to conduct mediation.
A debt-cutting plan proposed by Stockton last week cited a tentative agreement with National Public Finance Guarantee, backer of $89 million in bonds, and a draft agreement awaiting approval by Assured Guarantee, backing $164 million in bonds.
The Stockton city manager, Bob Deis, said the city has agreements with 14 of 19 major creditors. He said a “cram down” approach, which imposes debt cuts opposed by creditors, will not occur until a court order is obtained.
Deis said the proposed plan of adjustment, scheduled for a City Council vote Thursday, is the first step in a complicated process that could, in six months, get Stockton out of the bankruptcy declared June 28 last year.
“While we expect further intense negotiations and court hearings, with perhaps a set back here and there before this is over, this at least is the beginning of the end,” Deis wrote in the plan. “It provides the final piece in our road back to putting our financial house in order.”
One of the remaining hurdles is getting voter approval of a ¾-cent sales tax on Nov. 5. The plan said the alternative to Measure A is $11 million in additional “brutal” spending cuts and the loss of “negotiating room to cut deals with our creditors.”
The Stockton bankruptcy has been widely watched because of speculation that public pensions, protected against cuts by state court decisions based on contract law, might be reduced in federal bankruptcy court like other contract debt.
If the city negotiates agreements that avoid a ruling on whether pensions can be cut, the Stockton bankruptcy still may have produced an important ruling on a growing retirement cost: retiree health care promised state and local government workers.
Retiree health care often has a long-term debt or “unfunded liability” similar to pensions. But most employers do not make annual pension-like contributions to a retiree health fund, which can yield investment earnings to help pay future costs.
The view that retiree health care is a benefit that can be cut may change. This month a superiorcourt overturned a freeze on retiree health care for Los Angeles city attorneys, citing the same contract case law that protects public pensions.
The new Los Angeles ruling, though limited and likely to be appealed, is already having an impact.
“Court ruling on retiree health benefits credit negative for Los Angeles, could impact other California municipalities,” said a headline in a Wall Street credit rating agency newsletter last week, Moody’s Weekly Credit Outlook for Sept. 26.
If it turns out that state law does indeed give promised retiree health care the same protection as pensions, a ruling in the Stockton bankruptcy could be important as desperate cities look at the option of bankruptcy.
Judge Klein, in a deeply researched 40-page ruling last year, refused to temporarily block Stockton’s elimination of retiree health care while the city pursued eligibility for bankruptcy (granted in April) and a debt-reduction plan to exit bankruptcy.
A Stockton retiree group argued that their promised retiree health care is a vested right under federal and state contract law. Under federal law, Klein said, a bankruptcy court cannot “interfere with” the property or revenue of a debtor.
In other words, the bankruptcy court cannot tell the debtor how to spend its money. So Klein said he could not block the cut that “may lead to tragic hardships for individuals in the interval before their claims are redressed” in a plan of adjustment.
The elimination of retiree health care for current workers and retirees is one of the major savings in the proposed Stockton plan of adjustment released last week.
“When I arrived in July, 2010, the unfunded actuarial accrued liability (for retiree health care) was $544 million,” Deis wrote. “By comparison, the actuarial value of unfunded liability for the California Public Employees Retirement System (CalPERS) for June 30, 2011, was $172 million.”
Stockton has said since filing for bankruptcy that it does not want to cut CalPERS debt, arguing that pensions must be protected to keep the crime-ridden city competitive in the job marketplace, particularly for police.
Last June the city announced an agreement with a retiree group for a $5.1 million retiree health care lump sum payment for an estimated 1,100 retiree claims, up from an original proposal that would have given them nothing.
The proposed plan said Stockton has two groups of retirees, divided by a big increase in benefits adopted by many local governments after a CalPERS-sponsored bill, SB 400 in 1999, gave state workers a large, trendsetting retroactive pension increase.
Workers who retired before Stockton gave employees a benefit increase early last decade have an average pension of $24,000 and no retiree health care. Since the increase, the average pension is $51,000 (most get no Social Security) with a medical benefit worth $26,000 a year.
Stockton has negotiated agreements with all of its labor unions. The plan estimated that the loss of retiree health care, pension reforms and pay cuts reduces the total retirement benefit for current workers by 30 percent to 50 percent or more.
Current employees will pay the full employee share of the contribution to the California Public Employees Retirement System, 7 to 9 percent of pay. New employees get a lower pension under a state reform.
If Stockton can cut a deal with the bond insurers, the judge may not have to determine whether the bond insurers are treated unfairly because the cuts for Stockton retirees are not deep enough.
A tough opening position by Stockton has softened in negotiations. The new plan said that under a deal in February, Ambac, backer of $12 million in bonds, gets revenue from property tax growth and will not get a “haircut” if assessed values grow as expected.
National Public gets revenue from property tax growth that should “fully service” a restructured deal on $45 million in arena bonds. New parking revenue is expected to cover a deal on $32 million in bonds for three garages, repossessed by National Public.
The draft deal with Assured for $124 million in unsecured pension bonds and $40 million in bonds for a city hall building, repossessed by Assured, await approval by Assured executives and were not revealed.