KeNo's Housing and Economic Portal: Tuesday February 23 Housing and Economic stories

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California Sheriff Takes Home $640,000 a Year; Automatic Muni Raises in SF; Oregon Pension Board Buries Head In Sand - (Mish at globaleconomicanalysis.blogspot.com) Double Dipping Sheriffs: Thoroughly disgusted minds are reading about sheriff officials double and triple dipping. Though highly unusual, the methods San Luis Obispo County’s two top sheriff officials have adopted to double and even triple their incomes are entirely legal. In an interesting twist, San Luis Obispo County Under Sheriff Steve Bolts is taking home between $640,000 and $772,000 this year in retirement benefits and an hourly salary, while his boss, Sheriff Pat Hedges, takes home $340,000, according to calculations based on dates provided by Bolts. “I can see people saying this is double or triple dipping,” Bolts said. “But this is the pension plan and I am not hiding anything. All of that money is mine anyhow.” The principal reason for Bolts’ hefty income is the Deferred Retirement Option Program (DROP). Adopted by the board of supervisors in October 2006, DROP allows county employees to simultaneously collect both their full wages and benefits along with their full retirement for a period of no more than five years. Currently, sheriff’s department personnel retire under a pension formula that allows members to retire at age 50 with 90 percent of their salaries. Question of Relativity: This kind of behavior will not change until public outcry forces it. Pray tell, exactly what does it take for the taxpaying public to revolt against this kind of union greed and arrogance? I have had several email exchanges with teachers who just do not get it, and thankfully many more who are interested in an actual discussion of the issues. The issue at hand is the defined benefit pension system is flat broke. The issue is NOT that police unions are worse (they are), firefighter unions are worse (they are), transportation unions are worse (they are), but rather what is actually mathematically supportable. All public unions are a problem. Inevitably I hear about "living wages". Well one of the reasons living wages are so high in the first place is unions (all of them) demand a free lunch (to varying degrees) that the private sector does not get.

Phoenix gives OK to 2% tax on food - (www.azcentral.com) Desperate to save police, fire and other city jobs, a divided Phoenix City Council on Tuesday approved a sales tax on grocery items that will generate tens of millions of dollars a year. The 2 percent food tax will take effect April 1 and expire after five years, though Mayor Phil Gordon said the council has the option of reversing its decision after it hears from the public during 15 budget hearings planned for this month. The tax on milk, meat, vegetables and other food purchased by shoppers will generate an estimated $12.5 million for the fiscal year that ends June 30. It will raise another $50 million for fiscal 2011. Food purchased with food stamps will not be taxed. The extra tax revenue means Phoenix will have more money in its coffers to help close a $241 million general-fund budget deficit through June 2011. Last week, budget officials proposed cutting $140 million in services. Other special funds for things like transit also could get money. City Manager David Cavazos proposed eliminating 1,379 citywide positions, including nearly 500 police officers and firefighters. Among the dozens of targeted cuts, libraries and senior centers would be closed, an after-school program would be dismantled, and bus and light-rail service would be significantly reduced. It's unclear exactly where the extra money would be allocated. On Feb. 9, Cavazos and other staff will offer options of how they can reverse proposed cuts using food-tax revenue. Phoenix shoppers who buy paper towels, toothpaste and other non-food items at a grocery store already pay an 8.3 percent sales tax, 2 percent of which goes to the city. But Phoenix has not taxed food items since the early 1980s.

Phoenix food tax increase a sign of failure - (www.goldwaterinstitute.org) On Sept. 11, 2007, Phoenix voters were asked to approve an 11 percent increase on the general sales tax that, it was promised, would result in 500 more police and firefighters. On Tuesday, the Phoenix City Council voted to impose a five-year, 2-cent sales tax on food purchased from grocery stores – to save the jobs of 500 police and firefighters. Media reports say Phoenix officials intend to use the food tax revenues to stop staffing cuts announced in January for the police and fire departments. Taxes are a poor substitute for doing the heavy lifting of re-thinking, reorganizing, and re-prioritizing government. Phoenix City Councilman Sal DiCiccio has pointed out that the average cost for a Phoenix city employee is $100,000. In just the past six years, the City of Phoenix budget grew by 59.6 percent, more than double the sum of inflation and population growth. The current economic downturn started early in 2007, but the fiscal 2010 budget was the first time that Phoenix actually reduced overall spending. Operating expenditures were cut by just 0.6 percent. The General Fund budget, currently only 44 percent of the total budget, saw its first reduction in fiscal 2009. Clearly, there is a failure by the City of Phoenix to address fundamental reform in the face of shrinking tax revenues. Public safety should be the city’s first priority for funding, not an afterthought that depends on the promise of additional taxes. Many of the funds in the city’s total budget are dedicated for various purposes such as public art. Phoenix Mayor Phil Gordon said it’s possible the council could cancel the food tax after hearing from the public during budget hearings in the next few months. Perhaps now is the time to ask the voters for their priorities.

Automatic Raises For Muni Drivers - (www.sfgate.com) So much for the idea of saving $8 million by having Muni drivers give up their raises next year. Even if Muni drivers were game, they can't forgo their raise because they are required in the city charter, which guarantees that they are the second-highest paid transit operators in the nation. The extra financial hit to the agency has not been factored into the minimum $52.7 million Municipal Transportation Agency deficit projected for the upcoming budget cycle. The new bit of information, which trickled out Tuesday, throws a crimp in the heated negotiations between the administration and Transport Workers Union Local 250-A to come up with cost-saving alternatives. With the raise issue off the table, the union is being pushed to consider other concessions, such as allowing Muni to use part-time drivers and ending or reducing premium pay benefits for such things as working at night or training other drivers. Or, Muni operators could start contributing to their retirement account. Supervisor Sean Elsbernd has another option: pass a proposed ballot measure he's pursuing for the June ballot that would remove the formula-based pay provision and make the pay scale for Muni operators subject to collective bargaining. Elsbernd's proposal, vehemently opposed by the transit union and generally given a cool reception from several of his colleagues and the mayor, will be considered by the Rules Committee on Thursday for placement on the ballot.

Oregon Public pension board to vote on employer rate increases - (www.oregonlive.com) Under current rate-setting rules, public agencies and the taxpayers that support them face a 170 percent spike in biennial pension contributions starting in 2011 -- a collective $1.5 billion budget hit -- to start digging out of the pension fund's actuarial hole. The market plunge lopped $17 billion off the value of the Oregon Public Employee Retirement Fund. Despite a strong recovery last year, the $51 billion fund still has a shortfall of approximately $14 billion, with 75 cents in assets for every $1 in liabilities. The board has been lobbied by public employers and unions to temper any rate increases because of the impact on the already strained budgets of municipalities, school districts and public agencies across the state. The dilemma is whether it can do so without further compromising the funded status of the system or pushing the obligation off on future generations. PERS-covered employers currently pay an average rate of 12.4 percent of payroll to cover retirement benefits. The system has a contribution rate collar that normally limits rate changes to 3 percent of payroll per biennium. But when individual employer's funded status is less than 80 percent the collar doubles, and their rates jump by 6 percent of payroll costs. A 6 percentage point increase would leave average employer rates above 18 percent in 2011. The depressing reality in Mercer's models is how little the increased contributions under either the current or revised policy actually budge the system's funded status. Even if the pension fund's investments earn 8 percent annually for the next decade, the system's funded status only reaches the 80 percent level in 2019. If that's the case, employers will face further rate increases in 2013 and 2015.