California

Someone Forgot to Tell California’s Bankrupt Cities About the Golden State’s Alleged Economic Revival

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Just like Pete Wilson always said, it's better to poke Baja with a stick!

After California voters narrowly approved a hike on their income taxes this November, a species long thought extinct started re-appearing in the national media: the California-is-back story.

"California Finds Economic Gloom Starting to Lift," declared The New York Times, bolstering the case with such beautifully worded info-explainers as "Most Californians are still pessimistic about the direction of their state, but the trend is improving." Politico trumpeted "Jerry Brown's California Revival." The articles were short on economic numbers, long on armchair politics and carnival-barker quotes like disgraced ex-governor Gray Davis telling the Gray Lady that "I can see the sun glistening off the ocean as I look out my office window."

For a reality check against premature it's-back-ulation, I recommend the relentlessly grim website Pension Tsunami, where you can see the daily nitty-gritty of blue-state interest groups (read: governments and public sector unions) fighting like wolverines over the ever-shrinking pie of available government revenue. For instance, here's a recent article from the Riverside Press-Enterprise:

The city of San Bernardino won an important victory in its request for bankruptcy protection Friday, Dec. 21, when a judge denied CalPERS' attempt to force payment of unpaid pension obligations through state court.

CalPERS, the state retirement system, is the city's largest creditor. CalPERS had filed a motion for relief from the automatic protection from creditors under bankruptcy law that came with San Bernardino's Aug. 1 Chapter 9 petition.

In order to make payroll and keep basic operations going, the city has stopped paying many of its debts, including the employer share of biweekly payments to CalPERS.

The city now owes $8.3 million and is accruing a debt of $1.7 million a month even as the agency continues to pay $3.75 million in benefits to city retirees a month, said Michael Gearin, an attorney for CalPERS, during an almost five-hour hearing in U.S. Bankruptcy Court in Riverside on Friday.

The agency depends on timely payments from its members, he said.

"Without that, the system falters, and it will ultimately fail if enough employers don't participate," Gearin said.

Stockton's on the comeback trail!

He said that like it was a bad thing! (I kid.) Comments Chris Reed over at Cal Watchdog:

[This] will be remembered as the first in a very long line of defiant acts from local governments in California as budgets that don't add up force local officials to make tough and often unprecedented decisions. For local officials, telling Sacramento to take a hike is a much easier call than taking on those who benefit from city compensation policies or who benefit from city services. […]

The decision of a judge to side with the city in its maneuvering will absolutely prompt other cities to copy it.

Other cities such as bankrupt Stockton, where national reporters should be forced to walk after nightfall before hitting "send" on their California-revival stories.

I'll be happier than Huell Howser tripping on acid when the Golden State makes its long-delayed comeback, but the structural problems of converting tax dollars into a guaranteed pension machine are vast and ongoing, and it's going to take more than one month of sub-10% unemployment since January 2009 to get me busting out the Phantom Planet catalogue

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25 responses to “Someone Forgot to Tell California’s Bankrupt Cities About the Golden State’s Alleged Economic Revival

  1. “Without that, the system falters, and it will ultimately fail if enough employers don’t participate,” Gearin said.”

    Yep, time to slam the barn door shut!

  2. Oh, and here’s the way everything is going to turn out just fine: That boogie-man of the left, Prop 13, is going to be ‘modified’:
    http://www.sfgate.com/default/…..144515.php
    Notice the special interest group is ‘gaining traction’. Pretty sure that means hardly anyone threw a tomato at the guy.

    1. LATFH!

    2. Under the law, an assessment is triggered only if a single entity owns more than 50 percent of the property – a loophole that many corporations easily circumvent, robbing the state of billions of dollars in tax revenue.

      Nice journalistic neutrality going there.

      While I personally think the concept of journalistic neutrality is BS and papers should go back to the 19th century ethos of being brutally honest about their politics, that kind of thing, supposedly, gets beat out of journalistics during J-school.

      1. a loophole that many corporations easily circumvent

        If you circumvent a loophole, doesn’t that mean you aren’t using it?

        1. They don’t teach English at journalism school these days.

  3. Awesome inside joke on Huell.

    1. I loved the Huell link. I had to break up a near fist-fight between one of my customers and Huell back in 2003. Funny story. Good memories.

    2. That video is hilarious. Huell rules.

      From what I hear, Huell has ended his wonderful ‘California’s Gold’ show. Some people suspect that he might be sick, which is sad news. I hope he gets better, if true.

      I met a gal back in 2000 who worked on the ‘California’s Gold’ program and she loved her job.

  4. carnival-barker quotes like disgraced ex-governor Gray Davis telling the Gray Lady that “I can see the sun glistening off the ocean as I look out my office window.”

    That’s at least a million dollars’ worth of collateral at Fannie Mae.

  5. “The city of San Bernardino won an important victory in its request for bankruptcy protection Friday, Dec. 21, when a judge denied CalPERS’ attempt to force payment of unpaid pension obligations through state court.

    CalPERS, the state retirement system, is the city’s largest creditor.”

    The problem isn’t The California Public Employees’ Retirement System.

    The problem is that the NRA is shooting our children!

    Or what some evangelical idiot in Georgia says next week–don’t worry, somebody ‘ll say something…

    But whatever the problem is, it isn’t the California Public Employees’ Retirement System. You can be sure of that.

  6. fighting like wolverines over the ever-shrinking pie of available government revenue.

    I would just like to point out that california state revenues are at all-time highs.

    1. Hard to believe. How is that possible when all these businesses and taxpayers are fleeing the state?

    2. “Available” is there for a reason. When you’ve locked that stuff to pension payouts, the discretionary portion shrinks, particularly in protracted economic crap-seasons.

      1. Yeah, what Matt said.

        If the pie keeps getting smaller because of the spending, and CalPERS is what it’s being spent on…

        We can’t even keep convicted criminals in prison because the pension system is bankrupting us! They’ve been releasing violent convicts since 2010:

        “SACRAMENTO, Calif. ? Inmates convicted of violent crimes are among those being freed early from California jails to save money, despite lawmakers’ promises that they would exclude most dangerous prisoners and sex offenders.

        An Associated Press review of inmate data shows that some of the freed criminals were convicted of assault with a deadly weapon, battery, domestic violence, and attacks on children and the elderly.

        The early release program specifically forbids authorities from freeing prisoners convicted of about 150 crimes such as rape and murder. But any offense that is not specifically listed qualifies for release, and individual counties can then decide who gets out.”

        http://www.huffingtonpost.com/…..20781.html

        That’s a complete abdication of the most basic responsibility of government. If they can’t even protect the public from convicted criminals, then why are they spending money on anything else?

        CalPERS won’t stop themselves until they’ve turned the whole state into Detroit.

    3. According to this, California’s revenue was down 22% in February — and has fallen 11% compared to last year’s numbers.

      1. Even if it were up, that would just show that the problem isn’t revenue…

        The solution to drunken sailors spending all of our money is not to give them more of our money to spend.

        The solution to overspending is to cut spending.

        Any solution to California’s problems that doesn’t involve massive spending cuts isn’t really a solution.

        1. Even if it were up, that would just show that the problem isn’t revenue..

          Good point.

        2. The solution to overspending is to cut spending.

          ‘Overspending isn’t California’s problem’:

          Here’s one more example: Paying off Schwarzenegger’s “economic recovery bonds.”

          You may remember. He charmed the Legislature and voters in 2004 into borrowing $15 billion to balance that year’s budget. We’re still paying off those bonds ? at double the sticker price, including interest.

          How does that make sense? If we’re not overspending, then why was the ’99 budget $75.3 billion, and ten years later, the 2009 budget was $144.5 billion?

          Yet academics and collegians tell us we have a revenue problem. Huh.

      2. According to this, California’s revenue was down 22% in February — and has fallen 11% compared to last year’s numbers.

        This is great news. last time I had read the numbers 2012 was projected to be one of the highest all time revenues.

        Nothing pleases me more than to see less money get into their hands.

        1. Yeah, that link was only from March ’12. With nine more months, you might still be right.

  7. With all press for a comeback that’s nothing but talk, maybe it’s time for anti-Phantom Planet: http://www.youtube.com/watch?v=YwADe-R2npU.

  8. Has Stockton ever not been a shithole? I remember it being the armpit of California 20 years ago.

    The pensions are going to have be re-done, probably by the courts.

    1. I grew up in Stockton in the 60’s and 70’s. It was pretty decent then.

    2. The pensions are going to have be re-done, probably by the courts reality.

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