Neil Barofsky Promises Handcuffs; Police Pay Dispute In Miami; Workers Protest In NM; California Muni Bond Outlook, Other Potpourri

Inquiring minds note that Neil Barofsky, special inspector for the Troubled Asset Relief Program (TARP), claims Bailouts created more risk in system.

Neil Barofsky Says Handcuffs Are Coming

Police, City Square Off In Miami Over Pay

Police City Square Off Over Pay Dispute

WEST PALM BEACH ? The police union used slides of a bloodied badge and beat-up officers to make its point to city commissioners Monday: officers aren't like other city employees and they deserve step-raises this year.

"No other city employee has the threat of death or serious bodily injury as a residual part of daily work routine," said Ernie George, executive director of the Palm Beach County Police Benevolent Association. George was addressing a special commission hearing, set up after city administration and the union couldn't agree on a contract for the 2009-10 fiscal year. It was the first such meeting in a quarter century.

"From their safe city hall offices, the mayor and the finance director can say, 'so what?,'" George added, as he pointed to a slide of a police officer with blood dripping down his head. "Does that look like a regular day at the job?"

After the heated three and a half hour meeting at City Hall, packed with dozens of West Palm Beach officers, commissioners decided to mull the decision another week and vote Feb. 8.

Commissioners failed to go into detail about the biggest issue, whether police can keep their yearly step increase, which gives officers a five percent bump every year for their first 10 years on the force. Eliminating the step increases would save the city $230,000.

Assistant city attorney Zoe Panarites argued the city's side, saying that police officers are doing better financially than most city employees. The average income for officers is $82,455. Sergeants average $106,010, and lieutenants average $122,037.

By eliminating step increases, raises to employees in their 10th and 20th year, holiday pay on three of the 11 city holidays, and reducing some costs in insurance benefits, equipment and overtime, Panarites said the city could save just over $1 million.

The city is facing a revenue shortfall of $20 million this year and $10 million next year. "All city employees, including management, had to make income adjustments they did not foresee," Panarites said. Both sides indicated some room for flexibility.

No Room For Flexibility

The budget hole is $20 million, the proposal saves $1 million. The city needs to politely tell the union to go to hell.

Six Figure Salaries In Phoenix

Phoenix management's 6-figure salaries worry councilman, union head

About 1,375 [city] employees earn more than $88,005, or the base salary of Mayor Phil Gordon.

In 2008, the average Arizona worker made just $34,335 a year, according to the U.S. Commerce Department.

Councilman Sal DiCiccio, who has criticized the size of Phoenix's spending on employees, said his calculations show the average total cost per worker is more than $100,000, something he sees as untenable as city leaders struggle to close a $245 million budget shortfall through the 2010-11 fiscal year.

But City Manager David Cavazos, Phoenix's highest paid official, said management has been cut at the same rate as front-line employees. And he pledged that in March the 20-person City Manager's Office will be cut by a greater percentage than any other city department.

Phoenix Salaries

That is absolutely outrageous across the board but especially an executive assistant making $170,000. Is there no one qualified who would do the job for $50,000?

Note too, the deep "pain" David Cavazos will feel if his salary is cut 3% (or whatever) just like everyone else.

New Mexico Workers Protest 2% Cuts

State workers protest proposed cuts

Angry and passionate protestors took to the roundhouse Saturday, calling for lawmakers to protect the salaries of educators and state workers.

The protest was organized by AFSCME, the union which represents many state employees.

It started on the steps leading into the roundhouse and continued as hundreds marched around the capitol building. After the protest, union members walked through the capitol and signed their names on sheets outside their representatives' doors to let them know they were there on Saturday.

The two percent cut is only a portion of the budget proposal in question. $200 million in tax increases or further spending cuts would be required.

The only solution to union arrogance is to privatize everything. Afterwords the unions can ponder how good they had it compared to everyone else.

Budget Crisis In Los Angeles - Audio

LA's budget crisis

The Los Angeles City Council is considering as many as a thousand layoffs ? and extending mandatory furlough days for city employees ? to address a projected $200 million deficit. City Council President Eric Garcetti says he hopes it won?t come to that, but the situation is extremely serious and drastic measures must be taken. Mayor Villaraigosa says there are concessions other than layoffs that could help, such as pay cuts and letting private contractors take over some city services. What proposals are on the table? And can the cash-strapped city avoid bankruptcy?

California muni investors trim holdings

California muni investors trim holdings

Financial advisers with clients in California are increasingly recommending a cutback in exposure to the Golden State's tax-exempt bonds.

Considering California's high income taxes, that is a tough recommendation to make, but many advisers say that the state's perilous fiscal condition ? worse than that of other troubled states, including Illinois and New York ? will continue to pressure California bond prices.

?My clients are nervous, and I am very nervous,? said Marilyn Cohen, president and chief executive of Envision Capital Management Inc., a Los Angeles-based firm that oversees $250 million in bonds for individuals.

?Nothing has materialized to give us any confidence that this is going to be handled,? she said, referring to California's budget crisis.

Marin County California Cutbacks

Big changes in store for Marin governments

IT'S TIME to take stock of where California government, both local and state, is headed.

The first thing to understand is that there will be no future tax increases. The only exceptions are the occasional parcel tax or bond to fund specific community or school needs in prosperous communities.

The two-thirds super majority at the ballot box and in the Legislature guarantees that current revenues will not expand.

It's a pipedream to think that voter approval of constitutional reform will eliminate the existing super majority requirement for tax increases.

Accept it. The two-thirds rule, meaning veto power by the Legislature's Republican minority and anti-tax folks at the ballot box, is here to stay. Golden State voters have reached their limit. Right or wrong, that's political reality.

Excepting social services, and higher education, state cut backs will be felt more by government employees than by service recipients. Relatively few citizens are impacted by prison closures and smaller regional agencies. Infrastructure spending will decrease, but it will take some years to see the impact on highways, bridges and transit.

This isn't a threat. It's a statement of what will inevitably happen as a direct result of dysfunctional state government. The trick is adapting and replacing the old paradigm with a new way of doing business.

As in San Rafael, where police and fire personnel refused to agree to a modest 5 percent salary cut to preserve jobs, North Bay governments will be left with smaller cadres of well-paid public employees providing ever declining levels of services.

A scheme where a San Rafael police officer after five years of service earns an annual total compensation package of $175,000 isn't sustainable. A big part of the dilemma is the city paying for retirements that guarantees police and firefighters 90 percent of their salary for life at age 50.

This isn't the end of the world. Marin council members and supervisors need to design innovative methods of serving the public with less staff. Answers include privatization, moving entire tasks outside the public sector, or simply doing without.

Actually it will be the end of the world (bankruptcy), unless the cities get rid of police officers making $175,000 after 5 years with retirement at age 50 at 90% pension.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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