A couple years ago, the City of Vallejo went bankrupt, blaming unsustainable costs of wage and benefit packages negotiated with employee unions. Two months ago, Pleasant Hill, despairing of a negotiated settlement with the unions, imposed a salary freeze on its workers and dramatically reduced pension benefits for future hires.
Then, on Nov. 8, San Francisco voters approved an initiative requiring city workers to contribute 7.5 percent or more of the money needed to fund pension promises made to legions of past employees. This was the progressive solution to a nationwide dilemma. In Wisconsin the result was reactionary: Employee unions lost their right to collectively bargain on nearly all meaningful issues.
What’s happening? All across the nation, the costs of salary and benefit packages far exceed available revenues.
What of Berkeley, where our mayor brags about the city’s high credit ratings? Unhappily, His Honor is whistling in the dark. The numbers in fact reveal structural problems that began long before the current recession. If it continues on its present course, Berkeley will be bankrupt in a few years, and its workforce will be on the streets.
Over the last twenty years, wages and benefits have gone up by nearly twice the rate of inflation.
Clearly, wage and benefit costs have eaten up money that used to go to maintaining critical infrastructure. There is an obvious reason why there are holes in our streets, clogged storm drains in low-lying areas and failing sewer lines nearly everywhere. There is also a reason why the city’s expenditures on social safety net programs for youth, seniors and the disadvantaged have declined by more than one third over the past few years.
Phil Kamlarz is Berkeley’s long-time city manager and nobody’s fool. He is now retiring with an annual pension some estimate at close to $300,000. After years of reassuring us that all was well with the city budget, Kamlarz recently reported that “years of limited funding and deferred maintenance have resulted in an aging city infrastructure that needs repair and improvement. We have been taking away from capital improvements in a way which is not sustainable.”
When compared to the regional average elsewhere, Berkeley has more employees, pays higher salaries and gives more benefits to its employees.
On Nov. 16, 2010, the city auditor reported that most of the city’s pension obligations were unfunded and that drastic salary/benefit reductions are in the works.
“In FY 2010 a City Employee earned an average $.54 in benefits per every $1 in salary,” said City Auditor Anne Marie Hogan in her Nov. 16 report. “To offset [these] costs the City will need to make significant compensation reductions to future and/or current employees. With such high pension rates, in fiscal 2016, salary reductions would have to range from 9% for police and 11.5% for fire to 7% for all other employees just to absorb the CALPERS increases.”
We are on a collision course. Unlike other jurisdictions, Berkeley continues to yield to its unions, for example by funding 100 percent of the cost of some plush pension and health care packages. For this, we cannot blame the unions: Their job, after all, is to get whatever they can for their current members. We can only blame the politicians. Their job is to bargain seriously to get the best deal for the voters. Their job is also to tell us the truth, even when it is hard to digest.
To date, they have failed miserably.