California Still Refuses to Face Fiscal Reality

What the Golden State can learn from the Badger State

During recent travels to Madison and Milwaukee for some research about reform-minded Gov. Scott Walker’s survival of a union-backed recall, I found little residual anger among the friendly folks there, despite seemingly endless pitched political battles that divided families and led to angry water-cooler discussions.

Perhaps the central issue—Walker’s Act 10 plan that rolled back collective-bargaining excesses—has been resolved, or perhaps Wisconsinites simply got tired of two historic recall elections, legislators who bolted the state to avoid voting on legislation, endless national media attention, and union protesters swarming the Capitol and screaming into their bullhorns.

Midwestern culture values community and “nice,” and the ongoing events in Wisconsin strained the social fabric. Californian residents, typically oblivious to events east of the Sierra Nevada Mountains, owe a debt of gratitude to the folks in Packer country. Had Wisconsin voters replaced their governor and other Republican officials, the message would have been heard nationwide: Pension reform, and efforts to rein in the public-sector union power at the root of the problem, would be dead for years.

Instead, Walker is becoming a national GOP figure. Another budget reformer from Wisconsin, U.S. Rep. Paul Ryan, is on the GOP presidential ticket. And Republican National Committee Chairman Reince Priebus, from Kenosha, will no doubt tout the Wisconsin reforms as Republicans gather in Tampa for their national convention.

Wisconsin’s Progressive political tradition rivals California’s, which only highlights the disparity between the two states as California’s leaders refuse to even acknowledge fiscal reality, let alone confront it in a serious way. Walker and his reforms were sparked by a $3.6 billion budget deficit, which is a rounding error in California budget terms. But his understanding of the core issue—the abuses perpetrated by the privileges and greed of public sector unions—may have stemmed as his stint as county executive in Democratic Milwaukee County, where he had to clean up an ugly pension scandal where government workers were granting themselves outrageous bonuses.

Wrote Bruce Murphy in the Madison alternative weekly called the Isthmus, “In the bitter aftermath of the failed recall, there will be many blaming a vast right-wing conspiracy, out-of-state billionaires like the Koch brothers, and Gov. Scott Walker's polarizing, take-no-prisoners style. But Democrats and unions might want to take a look in the mirror. For it was their willingness to abuse government benefits—with sweetheart deals benefiting only a minority of workers—that led directly to defeat.”

In California, sweetheart deals are a daily occurrence. In San Francisco, police and fire officials are granting themselves half-million-dollar payouts as they leave government “service.” The ranks of the $100,000 pension club are escalating rapidly, even as Moody’s warns of a coming tsunami of municipal bankruptcies across the state. The California Public Employees’ Retirement System, which has itself been through a disgusting “pay for play” scandal, believes that bankrupt Stockton ought to stiff its bondholders—the same ones that gave the city $125 million in pension bonds to help it make good on pension promises it couldn’t afford to pay—rather than trim the lucrative pensions received by city retirees.

Meanwhile, cities slash public services and the state’s leadership demands higher taxes even as they embrace costly new programs (i.e., high speed rail) that will mainly benefit government employees and special interests.

The ongoing state parks scandal is a poster child for the problems here. As the San Jose Mercury News reported, “With state leaders scrambling to find out how state parks officials kept tens of millions of dollars hidden for more than a decade, California's top finance officials Tuesday acknowledged what could be a far bigger problem: They have no system in place to account for $37 billion in ‘special funds' scattered throughout state government. Instead, finance officials revealed, they rely on an honor system to track money that could be stashed away in untold accounts similar to the funds that turned up last week, sparking a scandal in the state parks department.”

Parks officials were allowing many parks to potentially be closed while they had money “stashed away” in hidden accounts. Thanks to this “honor” system, dishonorable state employees were granting themselves huge vacation buyouts all done secretly, accounting for it through Post-It notes to “avoid a paper trail,” as the Sacramento Bee reported.

This is the same basic storyline repeated across the state: Government is not serving the people, but the people within government are serving themselves. This touches on the nature of government, although overly large and unaccountable ones are more plagued by such corruption than others. As the free-market writer Frederic Bastiat wrote, “The state is that great fiction by which everyone tries to live at the expense of everyone else.” We should at least recognize the truth and not deceive ourselves about talk of “public service.”

These attitudes—the raiding of public treasuries for personal gain, the refusal to rein in unsustainable pension benefits that dwarf those earned by people in the private sector—reflects a “corruption” of public service, in the words of San Jose Mayor Chuck Reed, a progressive reformer. That’s what these debates are about, and what people in Wisconsin—despite the discomfort of it all—decided to hash out in a series of elections and budget reforms.

Unfortunately, Californians are steadfastly avoiding that needed debate. Perhaps voters here are still burned out from the 2003 recall election, in which voters booted a terrible governor and replaced him with someone not much better. Or perhaps it’s a reflection of California “exceptionalism”—the idea that the normal rules don’t apply here, and that we can have everything without making any tough choices. Either way, we need to learn some lessons from the Badger State and have our defining debate over unions, or watch helplessly as cities go under and services deteriorate.

Editor's Note: This article originally misidentified the date of the 2003 California recall election.

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  • Sevo||

    OT, but related:
    Taxpayers take a bath on Solyndra fire-sale:
    "Solyndra's factory in Fremont, [...] may sell for just a fraction of what taxpayers invested in it."
    http://www.sfgate.com/business.....811513.php

  • Almanian's Evil Twin||

    Surprise, surprise, surprise!

    Not surprising.

  • LTC(ret) John||

    "Surprise, surprise, surprise!"

    There must be something wrong with me, I heard that in Gomer Pyle's voice.

  • Mustakrakish||

    You are not alone.

  • Hyperion||

    Why should they face reality? We have a president that they KNOW will take taxpayers money and bail them out, no matter how foolish it is to do so.

  • Drake||

    Or, if we get a President and Congress who don't do bailouts, CA will be an example to rest of the states.

  • Alex the wolf||

    Can he do that without congress approval? He shouldn´t

  • Ken Shultz||

    California residents, typically oblivious to events east of the Sierra Nevada Mountains...

    This gets it exactly backwards.

    Californians are so obsessed with what's going on east of the Sierras, that they don't pay any attention to what's going on in Sacramento.

    Some Christian fundamentalist from the South says something stupid? That's a great reason to vote for liberal Democrats.

    Some Tea Party candidate from Minnesota says something stupid? That's a great reason to vote for liberal Democrats.

    People in Arizona and Alabama pass laws against illegal immigrants? Some nut-job from a church in Kansas goes around holding signs that read "God Hates Fags"?

    That's a great reason to vote for liberal Democrats.

    If California residents have a problem, it isn't that they're oblivious to events east of the Sierras. It's that they're so obsessed with what's going on east of the Sierras, that they're oblivious to what's going on in Sacramento.

    That's the problem.

    Learn it. Know it. Live it.

  • MrBillalso||

    Amen! Fuzzy thinking in most the state. They prefer to look at the world through foggy rose colored glasses. That is why they voted Jerry back in.

  • Ken Shultz||

    Tip O'Neill didn't know what he was talking about.

    In California, all politics is national.

    Hell, you bring the environment into the equation, and those parts of California's politics are international.

    Have you seen that bumper-sticker that reads "Think Globally, Act Locally"?

    They aren't kidding about that.

  • Ice Nine||

    Don't believe Ken? I have five words for you: Berkeley City Council Foreign Policy.

  • ||

    Wait, what?

  • Ice Nine||

    "What?", what?

  • Mokers||

    You should preface all of your posts with ***THIS IS WHAT CALIFORNIANS ACTUALLY BELIEVE***

    Californians have a huge problem thinking that they are A) better than everybody else and B) thinking that everybody is dying of envy trying to be like them. They really think that everything wrong in the wold would be fixed if only they can ban or subsidize the correct things. Everything would be so easy if those gun loving, jesus worshippers in the Central Valley and Orange County would just do the right thing and elect some nice Democrats so the Republicans will cease to hold up all of the nice progressive things the smart people in Sacramento want to do.

  • MrBillalso||

    Yep! Unreal expectations. So sad for such a great place. The dung heap of waste will be insurmountable soon.

  • Mumu Bobby||

    If I could put the weather in a bottle I'd leave.

  • The Late P Brooks||

    Government is not serving the people, but the people within government are serving themselves.

    But- but- I have been told many times, by many people, that working for the government is inherently ennobling. This is what attracts the best and brightest like self-sacrificing moths to the beautiful flame which burns upon the altar of Public Service.

  • Phil_EngAmer||

    It’s clear California politicians are afraid to stand up to unions. They’ve had chances to fix these compensation problems (http://bit.ly/PSZq4W), but continue to be blinded by the deep pockets unions offer them.

  • SoquelCreek||

    Now why would you say that?

    Heck, even career California Democrats acknowledge the problem. In amazing honesty now that he's not running for office, here's what Willie Brown, career Democrat, former California Assembly Speaker, and former Mayor of San Francisco wrote about Governor Jerry Brown (no relation, same political party)

    "Jerry Brown won't challenge teachers union"
    http://www.sfgate.com/bayarea/.....528743.php

    A snippet:

    "No one knows the power of such unions in California better than Gov. Jerry Brown.

    "You'll notice that even as he's proposed draconian cuts to health and welfare programs and the state's universities, and asked taxpayers to pony up extra for several more years, Brown has been careful not to touch teachers.

    "He knows good and well what the California Teachers Association can do for him - or against him - in an election. And this year, he needs the union's help to pass his tax extensions (Proposition 30)."

  • vicky||

    America is becoming California under our community organizer BARACK HUSSEIN OBAMA. Just saying.

    Looks to me like most RED STATES are doing so much better financially... hummmmm.

    Romney/Ryan JOBS.

  • vicky||

    As Phil_EngAmer said... its the fault of the Unions. They made promises that WE cannot keep. WE didn't make the promises, the unions did, and now we are bankrupt.

  • Americanaiko||

    I don't have to read a word of this article to know it only bolsters my wife and my commitment to leave the Tarnished State. Anyone who lives here that isn't a Leftist should think about doing the same. Nothing in the future of this state has a good outlook. It is a place for Very wealthy Liberals, state workers and welfare cases.
    Here's all you need to know about what the priorities are here: A 17 year parole officer (state worker, granted she and her Union share some blame) is going to lose her job. She calls a local radio station to tell the listeners about her last week. Her 17 year career ends at the home of 2 Felons with 5 kids. The 4 BR apt is paid for, all the medical care is covered and they get 1200-1500 a month stipend, as well as 900 month in food stamps. Neither one has EVER HAD A JOB, the woman is the same "victim" the father was sent to prison for abusing. They won't get on a bus to look for work...get this...because the bus pass costs 40 bucks and isn't coered by the state any longer.
    You Lefties have a very very long history of short sighted policies. It's all for the power. You have sold this country down the river.

    Time to put a stop to that in November....but not for this sorry place. Adios....hellooooo Texas!

  • Thomas O.||

    As long as you support marriage equality and pot legalization, we'd love to have you. :)

  • tiredoftheinsanity||

    Great article and great comments. Unfortunately the problem the solution is not the politicians it is us. The "Watchmen" are supposed to be the press and the voters and the bad news is that in Wisconsin and the midwest you have smarter and more involved communities. They blew it, but they can recognize that and reform by voting in a Scott Walker and republican Legislature. No such reflection exists in the state of CA, cue the music and rearrange the deck chairs_CA has hit an iceberg.

  • Alex the wolf||

    Can the great leader bail out California without Congress?

  • Mumu Bobby||

    I believe they're called 'partying gifts'. If the Rs run the table in November there will be a giveaway to the blue states before Romney takes over.

    Romney's revenge will be doing away with the mortgage interest deduction, which will hit the more expensive blue state dwellings. Then if he really wants to stick the blue states he does away with the muni tax break. The states that borrow every year (I'm looking at you California) will see their future borrowing costs increase substantially.

  • Cromulent||

    The people of California know what they want and they are going to get it good and hard.

  • Sevo||

    I don't think so. The denial is amazingly strong.
    The state legislature is now (given the 'simple majority' measure passed by the voters) effectively a one-party operation.
    Regardless, the 'blue' news-sheets (and -stations) still claim the fiscal problems are caused by intransigent 'reds'.
    The reality is not something the major news-outlets are willing to mention, and I presume they're reading the audience in that denial. Or, they're ignoramuses.

  • Cromulent||

    Denial doesn't have anything to do with it. The point is the voters deserve this. This is what they voted for. In a democracy over time you get what you want.

  • jacob the barbarian||

    Is there anyway to get everything west of the san andreas fault to slide into the pacific. That will fix a lot of the problem with that state. The rest of the state might vote the bums out. You even get to keep the weather.

  • Cromulent||

    No, that would definitely change weather patterns.

  • Laoshi||

    Unfortunately, San Francisco and Berkeley are east of the fault, so maybe the High Sierra fault system would be a better choice. That would leave me with beachfront property but with a 4,700 foot cliff down to the beach.

  • SoquelCreek||

    You forget that here in California, we elected a "proven" "experienced" Governor in Jerry Brown who would fix all that is wrong with California.

    His considerable experience and political skills led him to the one (and only) solution in the Democrat playbook: Raise taxes!

    Governor Brown and his party affiliates in the California Legislature passed a sham balanced budget that ASSUMED that voters would pass the Governor's $40-50 BILLION tax hike. If voters do not, then the budget automatically cuts about $6 BILLION from education.

    Never mind that the Legislature has money for pay raises for staff. Never mind that the Legislature has money to pay for a not-so-high-speed rail project that even train advocates think is a bad idea. Never mind that the Legislature can't find money for education but found $100 MILLION a year for their Hollywood cronies and donors.

    Not surprisingly, Proposition 30 is funded by the very same taxpayer-funded public employees that feed Governor Brown's political party.

    No, my friends, Proposition 30 is a good old-fashioned shake down.

    Californians, VOTE NO on PROPOSITION 30 this November. Here are but a few reasons why Proposition 30 is the wrong solution for what ails California.
    http://soquelbythecreek.blogsp.....ernor.html

  • dinkster||

    I've opted to move. Six more months of CA max.

  • Classical Lib||

    Well stated. Their problems are significant and their condition will only deteriorate. The key for the nation is to ensure that a Federal bailout does not occur.

    The most likely form of a bailout is via "stimulus" legislation like the ARRA that provided significant support to the States. Veiled bailouts of this type must not be allowed again.

  • J Cuttance||

    aaaaahhh! one of the side bar ads on the screen for this article was from the nz police site and said 'click to become a cop'. Obviously regionally targeted stuff but fucking scarey all the same. Uniform alert!

  • Ardelle||

    “In the bitter aftermath of the failed recall, there will be many blaming a vast right-wing conspiracy, out-of-state billionaires like the Koch brothers, and Gov. Scott Walker's polarizing, take-no-prisoners style. But Democrats and unions might want to take a look in the mirror. For it was their willingness to abuse government benefits—with sweetheart deals benefiting only a minority of workers—that led directly to defeat.”

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