Battle over police pensions turns ugly

(Reuters) - A drive by some American cities to cut costly police retirement benefits has led to an extraordinary face-off between local politicians and the law enforcement officers who work for them.

In Costa Mesa, California, lawmaker Jim Righeimer says he was a target of intimidation because he sought to curb police pensions. In a lawsuit in November, Righeimer accused the Costa Mesa police union and a law firm that once represented them, of forcing him to undergo a sobriety test (he passed) after driving home from a bar in August 2012.

That followed a call to 911 by private detective Chris Lanzillo, who worked for the police union and the law firm that represented it, according to the suit. Lanzillo is also named as a defendant, accused of following Righeimer home from the bar.

Disputes such as these have intensified as Detroit and two California cities, Stockton and San Bernardino, have gone bankrupt in the past two years. Police pension costs were a major factor in the financial troubles facing all three. Now large cities, including San Jose and San Diego, say they have no choice but to alter pension agreements lest they end up in bankruptcy too.

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From suburb to basket case: How California city traveled the road to ruin

SAN BERNARDINO, Calif. -- When this sun-drenched exurb east of Los Angeles filed for bankruptcy protection in August, the city attorney suggested fraudulent accounting was the root of the problem.

The mayor blamed a dysfunctional city council and greedy police and fire unions. The unions blamed the mayor. Even now, there is little agreement on how the city got into this crisis or how it can extricate itself.

"It's total political chaos," said John Husing, a former San Bernardino resident and regional economist. "There is no solution. They'll never fix anything."

Yet on close examination, the city's decades-long journey from prosperous, middle-class community to bankrupt, crime-ridden, foreclosure-blighted basket case is straightforward — and alarmingly similar to the path traveled by many municipalities around America's largest state. San Bernardino succumbed to a vicious circle of self-interests among city workers, local politicians and state pension overseers.

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LA Adds Another Meatless Day

So the liberal wienies in LA have now decreed that Monday's shall be meatless. This of course just further demonstrates the complete lack of sensitivity that liberals have. If they had given it even a few moments of thought they would have realized that a solid majority of their citizens are Hispanic, who are overwhelmingly Roman Catholic. Observant Catholics already abstain from meat on Fridays. And of course those of us on the other side of the Bosporus don't eat meat on Wednesdays and Fridays. Minimal reflection might have suggested that Friday would be a good day if they must use the government to try and regulate our diet.

But really the uptake of all of this is that the citizens of Los Angeles pay each of the 15 members of their city council $178,789  per year to tell them they should not eat meat on Mondays.

Our country has gone barking mad.

California: City of Atwater Declares Fiscal Emergency

(Reuters) - The city council of Atwater, California approved a fiscal emergency declaration on Wednesday night, a move that could put the city of 28,000 on the path to becoming the fourth city in the most populous U.S. state to declare bankruptcy this year.

California requires its local governments to try to enter talks with their creditors to avert bankruptcy filings, but municipalities may declare fiscal emergencies to circumvent the law and file for bankruptcy.

Read the rest here.

When I first moved to California seven years ago I lived in Atwater. It was a nice smaller sized city that was, like most of the central valley, about to get buried by the real estate crash. In 2005-2006 which was when I lived there, houses were being sold for near a half million dollars that you can get now for under $200k.

Wall Street Rolling Back Another Key Piece of Financial Reform

Wall Street lobbyists are awesome. I’m beginning to develop a begrudging respect not just for their body of work as a whole, but also for their sense of humor. They always go right to the edge of outrageous, and then wittily take one baby-step beyond it. And they did so again last night, with the passage of a new House bill (HR 2827), which rolls back a portion of Dodd-Frank designed to protect cities and towns from the next Jefferson County disaster.

Jefferson County, Alabama was the most famous case – the city of Birmingham went bankrupt after being bribed and goaded into taking on billions of dollars of toxic swap deals – but in fact it was just one of hundreds of similar examples of localities being duped into suicidal financial deals by rapacious banks and financial companies. The Denver school system, for instance, got clobbered when it opted for an exotic swap deal pushed by J.P. Morgan Chase (the same villain in Jefferson County, incidentally) and then-school superintendent/future U.S. Senator Michael Bennet, that ended up costing the school system tens of millions of dollars. As was the case in Jefferson County, the only way out of the deal involved a massive termination fee that might have been even more destructive than the deal itself.

To deal with this problem, the Dodd-Frank Act among other things included a simple reform. It required the financial advisors of municipalities to do two things: register with the SEC, and accept a fiduciary duty to respect the best interests of the taxpayers they are advising.

Sounds simple, right? But Wall Street couldn’t have that. After all, if companies are required to have a fiduciary responsibility to cities and towns, how in the world can they screw cities and towns? The idea was a veritable axe-blow to the banks’ municipal advisory businesses.

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Years of Unraveling, Then Bankruptcy for a City

 STOCKTON, Calif. — This inland port on the San Joaquin River recently became the largest city in the country to declare bankruptcy, but evidence of its unraveling has been mounting for years.

 It is visible in the rising domestic violence rates, booming private security businesses and a seemingly unstoppable stream of foreclosures. And it can be seen in smaller form too — at a struggling piñata shop, on the once-yellow fire hydrants faded to gray, in a case of stolen koi.

“The police don’t respond to anything unless there’s blood involved,” said Marlene Hinson, 51, who, after living here for 22 years without incident, was burglarized three times in four months, including the fish theft from her pond in a neighborhood of lush lawns and towering shade trees.

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Third California City Files Bankruptcy

SAN BERNARDINO, Calif. (AP) - As recently as last month, no city in California had opted for bankruptcy since 2008, and no U.S. city of more than 200,000 people had ever chosen that route.

The past two weeks have changed that, as the fiscal struggles faced by many American cities became too much for some to bear. San Bernardino became the third California city in that small span to choose Chapter 9 bankruptcy protection with a City Council vote on Tuesday night.

The Southern California city of about 210,000 people will also become the second largest in the nation ever to file for bankruptcy. Stockton, the Northern California city of nearly 300,000, became the biggest when it filed for Chapter 9 on June 28. The much smaller city of Mammoth Lakes voted for bankruptcy July 3.

San Bernardino's City Council directed the city attorney to make the move during a meeting in which administrators explained the dire fiscal circumstances and urged them to choose the bankruptcy option.

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Scranton PA Mayor Slashes All Civil Service Pay To Minimum Wage

Unions representing civil servants in the city of Scranton, Pa., are girding for battle after the mayor announced recently that he would be cutting pay for police, firefighters, garbage collectors and other public workers to minimum wage.

The unions' attorney, Thomas Jennings, told the Scranton Times-Tribune Tuesday that they would be filing a lawsuit against Mayor Chris Doherty in federal court under the Fair Labor Standards Act accusing the city of failing to pay wages on time and failing to pay overtime.

The lawsuit will be among several legal actions the unions may take after Doherty made the announcement last Friday that the city's 398 workers would be paid $7.25 an hour because the city was running out of money.

The Times-Tribune, quoting City Business Manager Ryan McGowan, reported that as of Monday the city had $133,000 in cash, but owed $3.4 million in vendor bills. One of those bills was health insurance, McGowan said.

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Pledges forgotten, local governments repurpose federally funded parks

The government promised that the public would get parks where citizens could exercise and stay strong – shared open spaces that would be theirs forever, places that would inspire and invigorate.

But one park became a Las Vegas hotel. Another was almost turned into a beachfront McDonald’s. Another is being converted into an upscale private resort in Oklahoma.  And in New York City, the National Park Service allowed the New York Yankees, the nation’s richest baseball franchise, to build a parking garage atop public ball fields that needy kids at the local schools didn’t see replaced for six years.

Forty-eight years after Congress and President John F. Kennedy promised parks to the public, the budget-battered National Park Service program that awarded $3.9 billion-plus to state and local governments to buy or improve those parks has routinely allowed the land to be converted to other uses. Frequently, critics contend, these transactions violate federal law and regulations requiring that federally funded recreational acreage be replaced by lands of equal value.

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When a county runs off a cliff

ONE county jail here is so crowded that some inmates sleep on the floor, while the other county jail, a few miles down the road, sits empty.

There is no money for the second one anymore.

The county roads here need paving, and the tax collector needs help.

There is no money for them, either.

There is no money for a lot of things around here, not since Jefferson County, population 658,000, went bankrupt last fall. There is no money for holiday D.U.I. checkpoints, litter patrols or overtime pay at the courthouse. None for crews to pull weeds or pick up road kill — not even when, as happened recently, an unlucky cow was hit near the town of Wylam.

“We don’t do that any more,” E. Wayne Sullivan, director of the roads and transportation department, said of such roadside cleanup.

This is life today in Jefferson County — Bankrupt, U.S.A. For all the talk in Washington about taxes and deficits, here is a place where government finances, and government itself, have simply broken down. The county, which includes the city of Birmingham, is drowning under $4 billion in debt, the legacy of a big sewer project and corrupt financial dealings that sent 17 people to prison.

If you want to take a broad view, the trouble really began with the Constitutional Convention of the State of Alabama in 1901. The document that emerged there — written to empower business interests and disenfranchise African-Americans and poor whites — gives towns and counties little authority over local issues. Local taxing power rests with the state, though state lawmakers are loath to wield it today, in an age of anti-tax populism. Last summer, the Supreme Court of Alabama struck down a tax that was a crucial source of revenue for Jefferson County, finally pushing the county over the brink.

Officials here have only begun to grapple with the implications of life under Chapter 9 of the federal bankruptcy code, a municipal form of debt adjustment, rather than reorganization or liquidation. Until now, the most famous example was Orange County, Calif., which filed for Chapter 9 in 1994, after risky investments went horribly wrong. Many local governments are struggling to pay their bills these days, but hardly any have filed for bankruptcy. Notable exceptions include Harrisburg, the capital of Pennsylvania, Vallejo, Calif., and Central Falls, R.I.

“This is really a journey without a road map,” said John S. Young, the civil engineer who was appointed by an Alabama court to figure out how to fix Jefferson County’s sewer system. Today he is that project’s official receiver in name only: a federal bankruptcy court has suspended his powers, ruling that the federal bankruptcy law trumps state laws that protect bondholders.

Ordinary citizens can’t do much at this point. Jefferson County has even canceled municipal elections scheduled for this August. It seems that there’s no money for voting booths, either.

Read the rest here.