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.
