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What's your opinion about why it hasn't worked out well for city governments? Maybe a tragedy of the commons? "Well, it's not my money being spent, why not gi

What's your opinion about why it hasn't worked out well for city governments? Maybe a tragedy of the commons? "Well, it's not my money being spent, why not give the unions a bigger pension"? Whereas in a private company there is always someone who wants the company to continue to be profitable.

manfredo 8y ago
California has over a trillion dollars in pension obligations. Politicians make deals with unions that the government cannot afford because unions often become very politically powerful.
ChuckMcM 8y ago
There are lots of opinions on this, and there are several cities in California who have gone through or started the Chapter 9 process[1]. When I read the material on these I see a fundamental tension between committing to planned future payments vs the ability to scale revenue to make those payments. As a result, any "baked in" payments, whether they are wage increases in union contracts or interest payments on general obligation bonds, can consume more than the available revenue. Bottom line is that things like pension obligations contribute to the problem but it takes a couple of things going south at the same time to drag a city under. That said, responsible city management which is unable to arbitrarily change the tax rate by law (the fabled CA requirement of 2/3 majority vote) would not enter into contracts that would put the city's solvency at risk, and yet they still do. [1] The factors contributing to a local government's decision to file for relief under Chapter 9 typically are varied and complex. From the information that has been made available to date, it appears that Stockton and San Bernardino's bankruptcy filings were driven by some similar factors including: long–term imbalances in revenues and spending, reduced tax revenues associated with the downturn in the economy, some constraints to reducing expenditures in the short term, and increasing costs to provide retiree benefits. Additionally, substantial borrowing appears to be a factor in Stockton's filing, and prior budgeting practices, such as borrowing from internal funds, appears to be a contributing factor in San Bernardino's case. By contrast, the bankruptcy filing by Mammoth Lakes appears to be driven by a single significant event—a recent legal judgment that required it to pay an amount more than twice its annual General Fund budget. -- https://lao.ca.gov/reports/2012/localgov/local-government-bankruptcy-080712.aspx https://lao.ca.gov/reports/2012/localgov/local-government-ba...
physguy1123 8y ago
In New York at least, constructions unions extract large amounts of money from the government. Some examples that come to mind: * Lots of construction employees are mandated by unions to stay around (crane greasers I believe are an example) even though these employees do no work, and then managers have to be hired to manage more employees, etc. * Sometimes employees are hired to do no work at all * Highly experienced employees will be given menial jobs like coffee-fetcher sort of deal, but get paid very highly for it due to their experience. * The MTA has no negotiating power, the unions and the construction contractors agree on a price and then give it to the MTA Why is it like this? I don't know, one could imagine all sorts of corruption, political plays to get the construction vote, political games to avoid seeming anti-union, who knows.

manfredo 8y ago

California has over a trillion dollars in pension obligations. Politicians make deals with unions that the government cannot afford because unions often become very politically powerful.

ChuckMcM 8y ago

There are lots of opinions on this, and there are several cities in California who have gone through or started the Chapter 9 process[1]. When I read the material on these I see a fundamental tension between committing to planned future payments vs the ability to scale revenue to make those payments. As a result, any "baked in" payments, whether they are wage increases in union contracts or interest payments on general obligation bonds, can consume more than the available revenue. Bottom line is that things like pension obligations contribute to the problem but it takes a couple of things going south at the same time to drag a city under. That said, responsible city management which is unable to arbitrarily change the tax rate by law (the fabled CA requirement of 2/3 majority vote) would not enter into contracts that would put the city's solvency at risk, and yet they still do. [1] The factors contributing to a local government's decision to file for relief under Chapter 9 typically are varied and complex. From the information that has been made available to date, it appears that Stockton and San Bernardino's bankruptcy filings were driven by some similar factors including: long–term imbalances in revenues and spending, reduced tax revenues associated with the downturn in the economy, some constraints to reducing expenditures in the short term, and increasing costs to provide retiree benefits. Additionally, substantial borrowing appears to be a factor in Stockton's filing, and prior budgeting practices, such as borrowing from internal funds, appears to be a contributing factor in San Bernardino's case. By contrast, the bankruptcy filing by Mammoth Lakes appears to be driven by a single significant event—a recent legal judgment that required it to pay an amount more than twice its annual General Fund budget. -- https://lao.ca.gov/reports/2012/localgov/local-government-bankruptcy-080712.aspx https://lao.ca.gov/reports/2012/localgov/local-government-ba...

physguy1123 8y ago

In New York at least, constructions unions extract large amounts of money from the government. Some examples that come to mind: * Lots of construction employees are mandated by unions to stay around (crane greasers I believe are an example) even though these employees do no work, and then managers have to be hired to manage more employees, etc. * Sometimes employees are hired to do no work at all * Highly experienced employees will be given menial jobs like coffee-fetcher sort of deal, but get paid very highly for it due to their experience. * The MTA has no negotiating power, the unions and the construction contractors agree on a price and then give it to the MTA Why is it like this? I don't know, one could imagine all sorts of corruption, political plays to get the construction vote, political games to avoid seeming anti-union, who knows.