In state government, no good idea goes unpunished
If you were a government leader, you would do as California’s Legislature recently has done. You would try to quash the idea in its infancy, forbid its implementation elsewhere and turn the manager into a pariah. Private companies serve customers to stay in business, whereas elected officials serve only the interest groups that keep them in power.
California cities face daunting fiscal problems (even before COVID-19), driven by the outsized pay and pension deals for their employees. This is leading to what policy wonks call “service crowd out.” As these costs outpace inflation and revenues, cities must cut services to balance their budgets and pay an escalating tab to the California Public Employees’ Retirement System (CalPERS).
The main problem involves the costs for public-safety programs, mainly police and especially firefighting. Those departments often consume 60 percent or more of local budgets, with the bulk of the costs involving compensation. In many California cities, for instance, the average firefighter earns total annual compensation of well over $200,000.
The list of firefighters earning $400,000 or more will boggle your mind. Firefighters generally receive a “3 percent at 50” pension formula, which allows them to retire at age 50 with 90 percent or more of their final years’ salary. Most cities essentially pay for two firefighting forces – one that’s working and the other that’s lounging at the beach (or doubling up by taking another firefighter job in a locality in a different retirement system).
In 2018, I wrote about the Riverside County city of Calimesa. Tired of seeing its budget consumed this way, it exited its contract with Cal Fire and created its own department. That allowed it to offer less generous – but still enviable – compensation, featuring a 401/k-type retirement similar to what private-sector workers receive. Because of the savings, the city could afford a new fire truck and station, and improve its level of service.
I argued that its approach should be a statewide model and was “surprised that it hasn’t gotten more attention – or more push back from the state’s firefighter and police unions.” I spoke too soon. After the Orange County city of Placentia decided to follow this sensible reform, it endured unprecedented pushback from the state’s firefighter unions, who soon realized that if the model spreads it would threaten their crazy pay deals.
The plan also met fierce resistance from the California Fire Chiefs Association, which raised bogus “safety” fears. It took the outlandish step of asking its members and statewide fire unions to boycott the new department as it hired firefighters. The Orange County Fire Authority imposed unreasonable impediments designed to keep Placentia from joining a mutual-aid agreement – in what seems like a clear case of putting their financial interests above the safety of local residents.
Despite the bullying, Placentia’s city manager and council majority fought it out to the end. How many officials have such courage these days? In July, the city cut the ribbon on its new Fire and Life Safety Department, which will save the city $28 million in the next decade, thanks largely to the new retirement plan and the outsourcing of ambulance services.
That’s a lot of extra cash for a small city, leaving it well positioned to properly maintain local streets, parks and other services. The new department promises improved response times, so city residents won’t get shortchanged with their firefighting, either. By the way, the department had no problem finding plenty of highly qualified firefighters – despite the fire establishment’s best efforts to throw a wrench in the works.
Of course, this rare good-news story couldn’t last. In response, the Legislature passed Assembly Bill 2967, which forbids agencies from exempting employees from CalPERS contracts. Essentially, the new law prohibits “cities, special districts and counties contracted with CalPERS from exploring novel and innovative operational structures in the future,” as opponents noted in the Assembly analysis.
No other localities can now take Calimesa’s and Placentia’s approach, which is an outrageous breach of local governmental authority. It also keeps California on a fiscally ruinous course. The state Supreme Court has now twice refused to revisit the so-called California Rule, which generally forbids local governments from rolling back future pension formulas for current employees.
That leaves locals with no tools other than cutbacks and tax hikes. Democratic legislative caucuses overwhelmingly supported the bill, but only a handful of Republicans opposed it. It’s yet another example of how government operates on behalf of powerful interests, but not the public. In government, unlike in business, no good deed goes unpunished.
Image credit: Susanne Pommer