Government Spending

One Important Reason Why We Are Out of Money

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The Washington Post editorial page this weekend compared two Beltway-area counties–Montgomery, in Maryland, and Fairfax, in Virginia. They are, the Post says, "demographic cousins with populations around 1 million, school systems among the nation's biggest and best, and public spending equal to that of small countries." Yet Montgomery is a fiscal basket case, Fairfax is not. What's the difference?

Take a snapshot of one year, 2006, when times were flush. In Fairfax, the county executive, an unelected technocrat, proposed a budget with a relatively robust spending increase of about 6 percent. In Montgomery, County Executive Douglas M. Duncan, a career p

The river is nice, though

olitician then running in the Democratic primary for governor, pitched a gold-plated, pork-laden grab bag of political largess that drove county spending up by 11 percent.

Mr. Duncan's budget that year capped a three-year spree in which county spending rose by almost 30 percent. It reflected major multiyear increases in pay and benefits that he had negotiated for police, firefighters and other county workers. At the same time, Jerry D. Weast, Montgomery's schools superintendent, negotiated a contract that promised pay increases for most teachers of 26 to 29 percent over three years—about twice the raise Fairfax teachers got—plus health benefits virtually unmatched in the region. Montgomery County Council members, most of whom were hoping for union endorsements in the fall elections, rubber-stamped Mr. Duncan's contracts. The Board of Education, equally beholden to the teachers union, did the same for Mr. Weast. […]

The results have been striking—and strikingly unaffordable—in a county where more than half of all spending goes to public schools. The average teacher salary in Montgomery today is $76,483, the highest in the region. Average pay for teachers is now almost 20 percent higher in Montgomery than in Fairfax and has increased much faster than in most local suburban school systems. Since 2000, salaries for Montgomery teachers, as for many other county employees, have nearly doubled, rising at almost triple the rate of inflation. […]

Today, Montgomery schools spend about 20 percent more per pupil than Fairfax schools; they consume a greater share of the public spending than in any other locality in the region. The spending gap is not about classroom quality and student achievement; in those terms the two school systems are comparable. Rather, the difference is compensation, which accounts for 90 percent of Montgomery's education spending.

This problem isn't going away

Virginia law denies public employees collective bargaining rights; that's helped Fairfax resist budget-busting wage and benefit demands. As revenue dipped two years ago, Fairfax officials froze all salaries for county government and school employees with little ado. By contrast, Montgomery leaders were badly equipped to cope with recession. County Executive Isiah Leggett took office proposing fat budgets and negotiating openhanded union deals after he succeeded Mr. Duncan. Then, as economic storm clouds gathered, he shifted gears and cut spending—while still trying to appease the unions.

Notoriously, one such deal guaranteed almost $300 million in pension benefits over 40 years to thousands of employees based on salary increases they never received. The giveaway became known as "Phantom COLAs," for the cost-of-living raises that were never paid. And even when Montgomery's teachers agreed to give up cost-of-living raises last year, about two-thirds of them continued to receive step increases of up to 4 percent.

Whole thing, well worth a read, here; link via Instapundit. I referenced Montgomery's "phantom" pension increases in my recent column, "We Are Out of Money," and also in this blog post. Steven Greenhut's classic cover story on the "Class War" here.

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58 responses to “One Important Reason Why We Are Out of Money

  1. a contract that promised pay increases for most teachers of 26 to 29 percent over three years — about twice the raise Fairfax teachers got — plus health benefits virtually unmatched in the region.

    But it’s not about the money.

    1. They do it because THEY LOVE IT!!!!

    2. I just sold a condo in Fairfax County to a private school teacher who teaches in Fairfax County. He had to buy a foreclosure far from a metro (subway) because he makes a low 5 figure salary to teach kids, though he is taxed to pay for the public school teachers high 5 figure salaries and the public school administrators 6 figure salaries.

      The Virginia counties apparently do have something of a hiring freeze for public schools right now, so he could not find a job in the public schools.

  2. Suck it, Maryland! Our AG might be an asshat, but Virginia still rules.

  3. MNG always says unions can’t be blamed for the deals politicians make with them, as if the unions aren’t responsible for electing the people who are going to bring home their desired flavor of bacon.

    1. A union’s job is to negotiate the fattest, most lush contract they can.

      The issue is not unions per se. The issue is public employee unions, who wield both political and labor power. That’s not an easy nut to crack without either getting rid of public unions or removing voter influence from those who negotiate with unions.

      1. A union’s job is to negotiate the fattest, most lush contract they can.

        That’s not precisely true in general. Most parasites unions have to be careful not to damage their host’s employer’s chances of survival.

        Of course, in the public sector case, the employer is never going to go bankrupt without dragging the entire economy down with it, so that’s not as much a concern. Which is why Virginia’s anti-public-union law is sensible.

        1. How does Virginia have an anti-public-union law and Texas doesn’t?

          1. I believe that only Virginia and North Carolina have anti-public-union laws.*

            *Technically, they’re “anti public employees collective bargaining” laws. The employees are free to join a union, but they can’t collectively bargain.

    2. Actually WaPo editorial doesn’t blame the unions either, it says their just doing their job. The editorial blames the polticians.

      1. I know, I read it. I’m placing much blame on them, though, and commenting on MNG’s position and how he’s retarded for having it.

  4. Virginia law denies public employees collective bargaining rights

    I dont favor many possible constitutional amendments, but I could get behind making that one.

    1. To wit:

      http://www.economist.com/world…..payBarrier

      DON NOVEY used to be the most important man in Californian politics that no one had ever heard of. As president of California’s prison-guards’ association from 1982 to 2002, Mr Novey turned that union into the most powerful in the state. On his watch, California built 21 new prisons. Mr Novey’s organisation also sponsored or supported tough laws that helped to fill those prisons to almost twice their capacity at times. It helped elect two Republican governors and one Democratic one, besides countless state legislators. “We sent candidates 13 questions,” he happily recalls, ranging from their stance on the death penalty to labour issues.

      He is especially proud that he won his members by far the most generous wages and benefits that prison officers get anywhere in the country. Under the last deal he negotiated, which expired in 2006, the average member of the California Correctional Peace Officers Association (CCPOA) earned around $70,000 a year and more than $100,000 with overtime. (Since then, wages have gone up again.) Mr Novey negotiated pensions of up to 90% of salary starting at as early as 50?more than teachers, nurses or firefighters get, and matched only by the state’s highway patrol.

      This is the legacy that many people now blame for a good part of California’s fiscal crisis. Visiting the state earlier this month, Anthony Kennedy, a justice on the US Supreme Court, said it was “sick” that the CCPOA had sponsored the “three-strikes” law of 1994, a notorious sentencing measure that contributes to prison overcrowding. The state’s prison agency is permanently at war with the union and accuses it of obstructing reform. California’s governor, Arnold Schwarzenegger, had to climb down from open confrontation with the CCPOA in 2005, but is now proposing to privatise much of the state’s prison system precisely to evade its grip.

    2. Does it really need to be elevated to the level of an Amendment?

      1. If you pass a federal law like that, the unions are going to go apeshit and empty their coffers electing Congressmen who will repeal it.

        An amendment is very hard for even powerful interests to repeal.

        1. And in my version of the amendment, it would very clearly apply to the states too.

        2. If you pass a federal law like that, the unions are going to go apeshit and empty their coffers electing Congressmen who will repeal it.

          Yeah, well, they tried to repeal Taft-Hartley for 50 years, and failed. Once Republicans got that passed they made sure that it wouldn’t be repealed.

          Of course, NC unions hate that NC Democrats refuse to repeal the similar NC law about public employees collectively bargaining.

  5. And the Post has no trouble reconciling these 2 statements, mere paragraphs apart:

    “The primary culprits here, as this account should make clear, are not the unions, which are supposed to represent their workers energetically, but county leaders.”

    “Virginia law denies public employees collective bargaining rights; that’s helped Fairfax resist budget-busting wage and benefit demands.”

    No, no congnative dissonence here at all.

    1. Nice little “Post” you got here …

    2. The union cannot be blamed for doing its job. Allowing unions to exist in the public sphere is still the responsibility of the body politic.

      1. “We demand increases in salary and benefits increases that can only be sustained through either massive budget “cuts” in other services or significant tax increases.”

        You’re right, they’re fucking angels.

      2. True, but there can definitely be a law or constitutional amendment that simply forbids legislators from bargaining with public employee unions.

        In a less-libertarian society, it might be worthwhile to ban unions of police officers as well, as unlike most other unions, there’s more opportunity for criminal mischief there. Yes, it’s a violation of the right to associate, but there is no corresponding right to be a police officer, and presumably the worst punishment would be firing unless there was some evidence of other criminal behavior.

      3. I wonder how the unions would react to an attempt to bar them from the public sphere.

        If they’re the blameless angels you make them out to be, they should just sit back and let the people decide this democratically.

  6. Virginia law denies public employees collective bargaining rights

    Funny how Reason suddenly is fond of government intervention in the economy when it prevents workers from protecting themselves from exploitation.

    1. Starve the troll, please.

      1. So, SF, I shouldn’t mention how it would seem the taxpayers of Virgina have expressed their desire through their elected representatives to not be exploited by unions? You’re no fun.

        1. Yes, exactly. Nor should you mention that the government not doing something that is an intervention in the economy is not the same thing as the government intervening in the economy. Sort of how beating an internet troll with a length of 1″ diameter PVC pipe filled with buckshot is not the same as not beating beating said troll with a length of 1″ diameter PVC pipe filled with buckshot.

      2. No, EAT the Troll! Misery makes meat taste better and they’re just FULL of it! Just remember to stay away from the brain and spinal cord, as that will infect you with the mad-cow!

    2. By restricting public unions, the government is regulating it’s own hiring methodology. How is that “government intervention in the economy”?

      When the government regulates private unions (as they do), that’s intervention.

    3. I agree. Virginia should privatize as many public services as possible, so that the employees would be free to collectively bargain.

      Starting with the schools. Are you with me Dan?

      1. I don’t live in Virginia so they can do whatever they like up there.

  7. Mr Novey turned that union into the most powerful in the state. On his watch, California built 21 new prisons. Mr Novey’s organisation also sponsored or supported tough laws that helped to fill those prisons to almost twice their capacity at times.

    This reminds me of a Mark Twain quote I saw a long time ago: “If you want to see the dregs of humanity, go and visit one of our prisons. The inmates will be there, too.”

  8. Get your head out of your ass, Dan.

  9. Fascinating indeed. thats quite a breakdown. Very informative article.

    Lou
    http://www.anon-posting.at.tc

  10. Virginia law denies public employees collective bargaining rights; that’s helped Fairfax resist budget-busting wage and benefit demands.

    I’ve lost track of the number of times I’ve recommended that the government not bargain with unions. No exceptions.

    Yay for Virginia.

    1. Corporations, on the other hand, I’m sure you’re cool with…

      1. I’ve never seen a corporation go on strike when they didn’t get their way, since another corporation would be right behind them to pick up where things were left off.

      2. Yes, we’re cool with corporations bargaining with unions, if they so choose.

  11. the other big thing in this equation is that montgomery county is a single party dem stronghold where there is little electoral competition outside of primaries. Fairfax, though dem leaning, does have some republicans on its board and they regualry have compeditive elections. Voters in Fairfax will actually punish their elected officials for raising taxes too much, unlike in montgomery county.

    1. and the Maryland Republican Party is no better than the Dems. Basically, the only way to save Maryland would be to shoot everyone involved in state and local politics and start over.

      1. well i guess this isnt so much a repub/ dem thing as much as politicians in fairfax actually have to worry a bit about losing an election. Officials in Montgomery County dont.

      2. Eh, Ehrlich was better in some ways than O’Malley-

        1) Actually used the pardon power and was interested in justice
        2) Was strongly against photo ticketing (red light and speed cameras), unlike O’Malley who has pushed them

  12. This is today’s “Dog Bites Man” story, right?

  13. Public sector unions really have stolen liberals souls. Liberals are basically arguing that poor people in Montgomery County (and there are some) should pay higher taxes and receive fewer government services so that public employees can make well above market rate for their jobs. These contracts are really on the backs of the poor and working poor. Localities like Montgomery county collect taxes primarily through sales and property taxes, which are regressive as hell. The millionaire lobbyists and contractors who live Bethesda and Chevy Chase don’t care about the taxes. They can pay or move somewhere else. But the poor and middle class living in Silver Spring and Gathersburg sure as hell do.

    1. My local income tax collector would beg to differ. MoCo gets its taxes from local income tax, property tax, energy taxes, tickets, fees and fines, (and whatever share of state revenues they can manage to keep).

      But we’ve got a nice new arts center, a new County administrative office and some other shiny new bells and whistles we can’t afford.

      1. Depends on where you live. I live in MoCo and don’t pay a local county tax. And we also have lousy streets to go with those admin offices.

        1. Check your return then: Either you don’t earn enough to pay state taxes, or you don’t realize you are paying it. http://individuals.marylandtax…..caltax.asp

          The prevailing politics and incompetence here is truly mind-boggling.

        2. I know I paid a 60% tax rate of the state tax to the county the last time I filed taxes.

          However you’re getting out of it, I’m all ears.

          1. I have a small tip for people moving to the DC area. If you are a renter and find it easy to move every year, once a year, around June 1st, between states (e.g. DC to Montgomery County) then on your state taxes you may save money as you will drop to a lower tax bracket, since in each state you are liable on only half your income. I discovered this by accident in the 80s.

  14. And if Montgomery County were anywhere but next door to Washington which guarantees high incomes regardless of the insane tax policies of the place, it would be east St. Louis.

    1. Hey! Let’s not sully East St. Louis!

  15. “…it would be east St. Louis.”

    or Gary, Indiana. Or Newark, New Jersey. Or Cleveland, Ohio. Or Detroit, Michigan. Or Any other Shitburg, U.S.A.

    Full disclosure, I live in Fairfax and the roads here look like a pock-marked teenager’s face. Also, just because Fairfax does not waste as much money on public-sector unions as MOCO, it does not mean that they don’t waste money. I still have yet to figure out where all the property tax money goes. I suspect it can be traced to local prostitutes and strippers (Let’s face it people, they’re practically the same thing…I have yet to meet a stripper that hasn’t propositioned over-valued ugly bumping while grinding on a pole).

    1. I forgot Philadelphia AND Pittsburgh. I knew the euphemism Shitburg should have reminded me of its more offensive progenitor.

  16. Having just driven through both north Arlington (VA) and Chevy Chase/Martin’s Addition (MD) this weekend, Chevy Chase, land of Anita Dunn, Charles Krauthammer, and other members of the tax predator ruling classes and talking head professions, just is more lovely. All that government money makes for lots of manicured lawns, wraparound porches, and Queen Anne architecture.

    I suspect the elite of Chevy Chase will make sure BCC and Walt Whitman high schools get the funding they need, or will send their kids to private school. The tax serfs or low level bureaucrats in Montgomery Village or Takoma Park will have to eat cake.

  17. I’ve been employed by MoCo govt since 2005: it’s a closed shop so I must pay the same dollars, be they union dues or agency fees to MCGEO, the union local of UFCW that reps MoCo employees. I live in MoCo, too. Public schools are top heavy and their curriculum before high school is a mess. The exec branch of county gummint is top heavy too, nowhere near as flat as most private sector organizations – it’s so fat they have scores of employees in human resources, an eminently disposable line of work. I’d love to take an encore in the private sector before too long as the risk/reward calculus here is FUBAR. I really don’t wish to stick around so long that I retire from MoCo – I’m afraid I’ll become one of the pod people I work with.

  18. Fiscal irresponsibility knows no party line – it knows only the greedy to gain and retain office and their lust for endorsements of the well known and respected unions. Stop all of the finger pointing and VOTE for the candidates who you know to be leaders, not dealmakers! If you do not KNOW your elected officials, then take SHAME on your disinterest in your own community! The only sucking up Maryland will do is of its own mess and of the long road it will take to bring a leadership who is not afraid to lead with an eye on the target – the future of Maryland. Adios Mr. O’Malley and to several of MoCo’s Council. – Happy that THIS is an election year!

  19. This article forgets to mention that Fairfax county residents wanted to start a new tax to add extra funding to the schools. Long before this financial meltdown . VA law does not allow counties to create a new taxes without permission from the state. The state blocked the tax and pissed off a lot of residents. Fairfax residents wanted t opay more for teachers they just were not allowed to. If you look at the number of kids in Fairfax who go to private school to the number in Montgomery you will see Fairfax has a higher number per pop/sq ft. Plus MD is always ranked at least 3 or 4 levels higher then VA for not just test scores, HS diploma academic standards but college readiness then VA. Therefore the article’s main premis is based on a falsehood. Montgomery county has a better school system then Fairfax. Just ask a Fairfax parent. If they would just build a couple more bridges Montgomery county would be packed to the gills.

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