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Government Unions v. Everyone Else

Unraveling California’s New “Fiscal Paradox”

California taxpayers are getting taken to the cleaners, but most of them are completely in the dark about how and why.

I will pose a quick question:  Does it seem strange that California has recorded record revenue increases, yet we also see a record number of tax increases and bond issuances on the ballot?

In other words, the state’s tax system is collecting massive amounts of revenues, record amounts, yet politicians are still asking for a record number of new tax increases.  For taxpayer advocates, it just doesn’t seem fair and seems very strange at first glance as to how this can even occur.

The truth of the matter is that California’s system of public finance is a complete train wreck and is set up such that no amount of tax revenues collected will ever be enough to satisfy “spending needs.”   The so-called baseline expenditure increases are on autopilot and deficit projections are generated despite record revenue increases, a trend projected in the Governor’s May Revise. 

In May, Governor Brown’s office said that state tax revenues were surging but projected significant future deficits in the near future, particularly in the event that the Prop. 30 tax extensions are not approved by voters.

A closer look at the state’s independent audit reports note that total state tax revenues have increased from $185.2 billion in 2012 to $250 billion in 2015—a $64.8 billion or 35% increase!  Total state, expenditures have increased from $195.6 billion in 2012 to $248.4 billion in 2015—a $52.8 billion or 27% increase. (Note:  Revenue growth is coming in equally as strong for 2016 if not even stronger, such as in the case of property tax revenues)

Prop. 98 education spending alone has jumped from $47 billion in 2011-12 to $72 billion in 2016-17—a 52% increase in education spending in only five years despite very nominal public school enrollment growth.

 

Prop. 98 spending has increased by 52% since 2011, and yet more tax revenue is needed?

 

Despite this huge windfall of roughly $65 billion in annual state revenue increases for 2015, over 2012—state Democrat politicians and the public employee unions are still telling us that we need a massive tax increase, namely Prop. 55, to avoid education budget cuts.

To put it simply, the state budget has received a $65 billion annual windfall since 2012, so why do the tax and spend interests so badly need to extend an $8 billion a year tax increase?

Don’t be fooled.  Prop. 55 and the “need” for additional taxes is a complete sham set up by California’s unaccountable and automated system of budgeting that ramps up state spending regardless of need and past budget windfalls. (Note: Similar trends are seen at the local level)

The primary culprit is Prop. 98 which requires that 55% of new revenues to be allocated to Prop. 98 education programs regardless of need or other priorities.  And then this spending is locked in, meaning that if revenues drop the following year, you effectively run up a deficit to Prop. 98 programs even though they just received a massive windfall in the preceding year or years.

The result is a ratchet effect on state spending, where it can only go up, never down, and any declines must be paid back in full regardless of any accountability mechanisms or other needs.  The only solutions to mitigate the problem would be to either provide Prop. 98 with nothing more than the minimum guarantee each year, or just suspend it every year into perpetuity, assuming an outright repeal cannot be achieved.

The state’s pension problem, particularly at the local level, is another major factor which has dramatically increased the cost of government, led to the crowding out of government services, and helped bolster the false narrative that somehow government needs more money because service levels are declining dramatically.

Much of the tax windfalls were also committed to other ongoing programs such as a doubling in Medi-Cal enrollment, increases in the cost of government from contract negotiations, and unmitigated pubic employee benefit cost increases, particularly retirement and health care.

Perhaps the most unfortunate thing is that over this same period of extraordinary revenue growth the state has failed to both invest infrastructure and curb the state’s addiction to skyrocketing debt which has recently increased to over $400 billion in 2016 for the State of California alone, according to the San Francisco Chronicle.

To sum up, despite these record revenue increases the state has failed to reduce deficit spending, invest in infrastructure and still supposedly needs billions of dollars in additional taxes from taxpayers, to add to the state’s record tax take in recent years.

To borrow a phrase from the state’s most prominent left-wing economist Robert Reich, this is “baloney” and every taxpayer needs to know it.

The only solution to this out of control spending is to shut off the faucet.  If the Democrat Legislature is irresponsible and cannot control its spending, we must limit the amount of tax dollars sent to Sacramento to a bare minimum.

With the cost of government at all time highs, and the value provided by government at all time lows, it is simply not cost effective to further build and sustain California’s big government.  Furthermore, the services that government does provide are provided at such high cost and low value, that it is simply not worth it to taxpayers to pay for these services.

The California Governor and Democrat Legislature have led the State of California down a dangerous fiscal path, very similar to what happened under Gov. Gray Davis in the early 2000s, but even worse.  All the revenue windfalls have been spent, debt stands at an all-time high and is increasing, and these are supposedly the good times, based on economic growth.

When the economic correction comes, this Democrat house of cards will collapse, leaving California taxpayers holding the bag.  And then the same Democrat and public employee union interests, the ones who are currently “crying wolf” for more tax revenues, will say we need to raise taxes even higher.

Don’t fall for this new “fiscal paradox”–it’s a complete sham.  Vote no on all new tax increases this fall to send Sacramento and Democrat politicians a message a message that you’re tired of being lied to and want irresponsible politicians to clean up their act.

About the Author: David Kersten is an expert in public policy research and analysis, particularly budget, tax, labor, and fiscal issues. He currently serves as the president of the Kersten Institute for Governance and Public Policy – a moderate non-partisan policy think tank and public policy consulting organization. The institute specializes in providing knowledge, evidence, and training to public agencies, elected officials, policy advocates, organization, and citizens who desire to enact public policy change.

CalPERS Sinks Further into Fiscal Insolvency

Orange County Register reporter Teri Sforza quietly released a story  that blows the whistle on another fiscal bombshell of bad news at the California Public Employees’ Retirement System (CalPERS).

The story states that according to unofficial preliminary numbers from CalPERS the fund lost about 2% of its market value in the 2015-16 fiscal year that just ended–which represents an estimated $28.5 billion increase in the fund’s unfunded liabilities, according to my rough calculations.

The fund assumes a 7.5% per year annual return despite the fact that no investment officer in the country believes that is achievable in the current environment.

Stanford Professor Joe Nation estimates CalPER’s total unfunded liabilities have increased to an estimated $150 billion, compared to $93 billion just two years ago, according to the Orange County Register report.

 

CalPERS investments returned 2.4% for fiscal year 2015, far below its 7.5% target.

 

And if one assumes a more realistic 4% rate of return (a “Treasury” or “risk-free” rate) the funded liability for Calpers alone is now $412 billion, or the equivalent of three state general fund budgets, Nation said.

For anybody who knows the numbers, and I do, CalPERS is speeding down the track toward financial catastrophe but none of the state’s leading Democrats will even acknowledge that there is a major problem here.

And this ignorance of the problem by California Democrat politicians is perhaps what is most upsetting to me and the small community of pension reform advocates that fully understand the magnitude of the problem and what this means for the state’s future.

The lone voice in the legislature for reform continues to be Sen. John Moorlach (R-Costa Mesa) who has a significant background in public finance and accounting.

“What has me baffled is that this is causing me great anxiety, but it does not seem to have the same impact on my colleagues in Sacramento,” Moorlach said.

Inside sources say most if not all California Republican State Legislators in Sacramento understand the magnitude of the problem but there is not much to be gained politically by going out on the issue prior to a critical mass being reached for reform.

The true culprit for this code of silence in the Legislature is the state’s powerful public employee unions, their political threats, failed logic, and propaganda on the issue.

Dave Low, chairman of Californians for Retirement Security, says the pension reformers are a case of “crying like Chicken Little about how the sky is falling,” according to the Orange County Register report.

Low and the state’s public employee union bosses are playing a dangerous game here that will inevitably blow up in their face and result in major financial hardship, lost benefits, and jobs for their public employees at some point in the not so distant future.

Low won’t even acknowledge a problem with the escalating liabilities, and this is the same position taken by the California Democrat Legislature.

This is an unconscionable policy position to anyone who cares about the future of our state and illustrates why the California Democrat Party is no longer fit to lead California.

California Democrat politicians are too tied to their base which is the public employee unions, and are unable to make decisions that will benefit the state’s future and prevent financial catastrophe.

This whole facade is rapidly deteriorating and the problem will soon become so big that nobody will be able to ignore it.

The only question, is whether it will be too late to save the State of California and its local governments from financial disaster at this point, or whether we will first cross a point of no return that permanently saddles our public agencies and state taxpayers with trillions of dollars in debt that we cannot afford to pay.

About the Author: David Kersten is an expert in public policy research and analysis, particularly budget, tax, labor, and fiscal issues. He currently serves as the president of the Kersten Institute for Governance and Public Policy – a moderate non-partisan policy think tank and public policy consulting organization. The institute specializes in providing knowledge, evidence, and training to public agencies, elected officials, policy advocates, organization, and citizens who desire to enact public policy change.

CalChamber Opposes “Virtually Permanent” Prop 30 Tax

With the California Chamber of Commerce announcing yesterday that it will oppose the Proposition 30, income tax extension, the question arises if a campaign will come together to match the financial firepower that the teachers, medical professionals and other public employee unions bring to the table in support of the measure.

Officially, the word from the Chamber is that it is opposed to the extension but nothing has been announced about a potential campaign … yet.

Proponents of the 12-year income tax extension filed signatures recently to get the measure on the ballot.

CalChamber noted in the release announcing opposition to the initiative that it did not oppose Proposition 30 in 2012. The measure was supposed to be temporary to deal with a financial crisis.
However, CalChamber declared that the extension would make the tax “virtually permanent, even when the state’s budget is balanced.”

The Chamber’s announcement comes on the heels of word from the California Business Roundtable (CBRT) that the decision to organize a campaign in opposition to the Prop 30 extension will depend on actions taken by the legislature on business issues.

 

Rob Lapsley, President of the California Business Roundtable (CBRT)

Rob Lapsley, President of the California Business Roundtable (CBRT)

 

CBRT president, Rob Lapsley, told the Sacramento Business Journal that the Roundtable will watch if the legislature tackles health care and education reforms along with specific bills of interest to the business community such as the requirement to give employees a seven days notice before changing work shifts.
Lapsley emphasized that the Roundtable’s decision would also rest on how the Prop 30 extension may impact the state’s economic health.

One issue the CalChamber raised in opposition to the extension was the problem of revenue volatility tied to higher income taxes. The Chamber feared significant reduced revenue to the state during future recessions.

Keeping the higher income tax rates for income over $250,000 could also hurt small businesses that pay taxes through the business owners’ income. In a recent BizFed poll in Los Angeles County, a key finding was that “personal income taxes have the most impact on small business (of 100 employees or less).”

Will concern from the business community over the Prop 30 extension effort gel into a campaign to stop the initiative that will be backed by millions of dollars in union support?

About the Author: Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee. This article originally appeared in Fox & Hounds and appears here with permission.

Teachers Unions Give Middle Finger to the Middle Class

New documents show, yet again, teachers unions’ disdain for American workers.

If you Google NEA + middle class + Friedrichs, you will be barraged with a load of demagogic union bromides about how the Friedrichs case – which opposes mandatory dues payments to public employee unions (PEUs) as a condition of employment – will, if successful, destroy the middle class. “Friedrichs Is Missing Its Warning Label” and “American Dream a casualty of Friedrichs lawsuit” are typical pro-union manifestos sounding alarm bells about the purported horrors that would befall workers should Friedrichs pass muster in the U.S. Supreme Court next year.

But in reality it’s the unions themselves that are destroying the middle class. Here in California, due to exorbitant pensions and Cadillac healthcare perks to PEU members, San Bernardino, Vallejo and Stockton have already gone bankrupt. Very possibly your city could be next. And at the same time that municipalities are going under, “Taxifornia” is among the highest in the nation in state income tax, sales tax, gas tax, corporate tax and property tax. And for those among us who demand that we “soak the rich,” it will only speed up the California-to-Texas migration already in progress. At this point, the rich – defined as the top 1 percent of taxpayers – earn approximately 22 percent of the nation’s income, yet pay 38 percent of all federal income taxes. What about the top 25 percent of taxpayers? They earn almost 69 percent of the nation’s income, but pay 86 percent of all federal income taxes. In California, the wealthiest one percent paid over 50 percent of the state income tax in 2012. Virtually every other tax dollar is forked over by the middle class.

Now comes a report that Teachers Unions Spent Millions on Luxury Hotels, Overseas Travel, Car Services. Investigators from The 74, a news site headed by former newswoman-turned-education reformer Campbell Brown, dug up financial documents filed with the U.S. Labor Department by the American Federation of Teachers, National Education Association and United Federation of Teachers (UFT) which reveal that the union elite “show a penchant for five-star business expenses that are far removed from the $56,000-a-year average teacher’s salary in the U.S.” Between 2011 and 2014, the country’s largest teachers unions “spent more than $5.7 million booking rooms at the world’s poshest hotels and resorts, scoring flights to exotic overseas destinations and traveling back and forth in limos….” These luxuries are paid for by dues that teachers have forcibly removed from their paychecks in California and throughout much of the country. And as the wealthy flee to more tax-friendly states, it is predominantly the middle class – via taxes – that foots the bills for teachers’ salaries and, of course, their union dues.

Limos, cruises, exotic overseas destinations, car services, luxury hotels – all above the pay grade of the average teacher and average American worker – are de rigeur for the union elite. One union leader, blind to the bombastic hypocrisy, has no qualms about the extravagance. UFT President Michael Mulgrew said “We’re proud of every nickel we spend on our members and retirees.”

The teacher union elite clearly have a “Let them eat cake” attitude toward its rank-and-file, not to mention the rest of us. We can only hope that the Friedrichs case will be successful. If it is, the unions will have to become accountable to its members, many of whom do not appreciate the union elite’s profligate spending on their pampered selves. And, of course, the beleaguered taxpayers will get some relief also. Now that’s an “American Dream” worthy of us all.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Government Unions Move to Extend "Temporary" Income Tax Increases

A coalition of government employee unions has filed an initiative that would extend the temporary income tax hikes that were contained in Proposition 30 and approved by voters in 2012.

If this seems like, in the immortal words of Yogi Berra, “déjà vu all over again,” it’s not your imagination. This is just the tax raisers running their favorite play from “The Book of Dirty Tricks on Taxpayers.” First they persuade taxpayers to accept a tax by marketing it as temporary. Once taxpayers have become inured to paying it, the tax raisers move in to extend it or make it permanent.

Big spending politicians and their allied government employee unions count on taxpayers having short memories to make this scam work. For example, look at the 1.25% sales tax increase political elites pushed in 1991 to deal with a budget gap. A half-cent was supposed to be temporary but when it came time to expire the Legislature placed it on the ballot promoting it as necessary for “public safety.” Voters — by then used to paying the higher tax — swallowed the hook and we continue to pay the entire 1.25% increase initiated almost twenty-five years ago.

There is a saying in football that if a play works once, keep running it until the opposition shows they can stop it. In 2009, the Legislature achieved the two-thirds vote to impose two year increases in state sales and income taxes. Immediately they placed on the ballot, in a special election, an extension of these taxes for two additional years. Voters, still shocked by being hit with stiff tax increases, were having none of it and rejected the extension by almost two to one.

Realizing they had not waited long enough to allow taxpayers to become accustomed to higher taxes, government employee unions, working with Gov. Brown returned to the ballot in 2012 with another “temporary” increase in sales and income taxes in the form of Proposition 30. As the primary spokesman for the tax, the governor traveled the state repeating the mantra, “It’s for the schools, its temporary.” Voters were persuaded to approve another “temporary” tax increase. Now those who benefit the most from higher revenues – California has the highest-paid state and local public employees in all 50 states according to the Department of Labor – are back seeking to extend taxes, that were scheduled to expire in 2019, for another dozen years.

If the Proposition 30 extension, now being called the School Funding and Budget Stability Act, appears on the ballot, it has a good chance to pass. This is because the burden will fall on a minority, upper income taxpayers, and many voters will overlook that high taxes will cause some of our most successful residents to leave for more tax-friendly states, meaning that they will no longer pay any taxes to California.

The most important thing for voters to remember, however, is that if they agree to any temporary tax, it may as well be considered as permanent. As for the Proposition 30 temporary tax, it likely will join the ranks of other “temporary” taxes that seem never to disappear. Among those is the federal telephone tax established to pay for the Spanish American War, which remained in place for 108 years after the war ended.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

The Friedrichs Free Rider Fraud

The Supreme Court’s decision to hear the Friedrichs case has the unions in a tizzy.

On June 30th, the Supreme Court decided to hear Friedrichs v. California Teachers Association et al, a case that could seriously change the way the public employee unions (PEUs) do business. If the plaintiffs are victorious, teachers, nurses, sanitation workers, etc. would be able to work without the financial burden of paying union dues. The responses to the Court’s decision from the teachers unions and their friends have ranged from silly to contradictory to blatantly dishonest.

In a rare event, leaders of the NEA, AFT, CTA, AFSCME and SEIU released a joint statement explaining that worker freedom would be a catastrophe for the Republic. Clutching their hankies, they told us that, “big corporations and the wealthy few are rewriting the rules in their favor, knocking American families and our entire economy off-balance.” And then, with an obvious attempt at eliciting a gasp, “…the Supreme Court has chosen to take a case that threatens the fundamental promise of America.” (Perhaps the labor bosses misunderstood the wording of the preamble to the Constitution, “In order to form a more perfect union….” No, this was not an attempt to organize workers.) While the U.S. is not without its problems, removing forced unionism will hardly dent the “fundamental promise of America.”

The California Federation of Teachers, which typically is at the forefront of any class warfare sorties, didn’t disappoint. The union claims on its website that the activity of union foes “has resulted in a sharp decline in median wages for working people and the decline of the middle class alongside the increasing concentration of income and wealth in the hands of the one per cent.” But wait a minute – the unions are the most potent political force in the country today and have been for a while. According to Open Secrets, between 1989-2014, the much maligned one-percenter Koch Brothers ranked 59th in political donations behind 18 different unions. The National Education Association was #4 at $53,594,488 and the American Federation of Teachers was 12th at $36,713,325, while the Kochs spent a measly $18,083,948 during that time period. Also, as Mike Antonucci reports, the two national teachers unions, NEA and AFT, spend more on politics than AT&T, Goldman Sachs, Wal-Mart, Microsoft, General Electric, Chevron, Pfizer, Morgan Stanley, Lockheed Martin, FedEx, Boeing, Merrill Lynch, Exxon Mobil, Lehman Brothers, and the Walt Disney Corporation, combined.”

So the question to the unions becomes, “With your extraordinary political clout and assertion that working people’s wages and membership in the middle class are declining, just what good have you done?”

Apparently very little. In fact, the National Institute for Labor Relations Research reports that when disposable personal income – personal income minus taxes – is adjusted for differences in living costs, the seven states with the lowest incomes per capita (Alaska, California, Hawaii, Maine, Oregon, Vermont, and West Virginia) are forced-union states. “Of the nine states with the highest cost of living-adjusted disposable incomes in 2011, Iowa, Kansas, Nebraska, North Dakota, South Dakota, Texas, Virginia and Wyoming all have Right to Work laws.” Overall, the cost of living-adjusted disposable income per capita for Right to Work states in 2011 “was more than $36,800, or roughly $2200 higher than the average for forced-unionism states.”

But the most galling and downright fraudulent union allegations about Friedrichs concern the “free rider” issue. If the case is successful, public employees will have a choice whether or not they have to pay dues to a union as a condition of employment. (There are 25 states where workers now have this choice, but in the other 25 they are forced to pay to play.) The unions claim that since they are forced to represent all workers, that those who don’t pay their “fair share” are “freeloaders” or “free riders.” The unions would have a point if someone was sticking a gun to their collective heads and said, “Like it or not, you must represent all workers.” But as I wrote recently, the forced representation claim is a big fat lie. Heritage Foundation senior policy analyst James Sherk explains,

The National Labor Relations Act (NLRA) allows unions that demonstrate majority support to negotiate as exclusive representatives. If they do so they must negotiate fairly on behalf of all employees, including those who do not pay dues. However unions may disavow (or not obtain) exclusive representative status and negotiate only for their members. Nothing in the National Labor Relations Act forces exclusive representation on unwilling unions. (Emphasis added.)

Mike Antonucci adds,

The very first thing any new union wants is exclusivity. No other unions are allowed to negotiate on behalf of people in the bargaining unit. Unit members cannot hire their own agent, nor can they represent themselves. Making people pay for services they neither asked for nor want is a ‘privilege’ we reserve for government, not for private organizations. Unions are freeloading on those additional dues.

If there are still any doubters, George Meany, the first president of the AFL-CIO, whose rein began in 1955 and continued for 24 years, told Congress,

When a union has exclusive recognition with a federal activity or agency, that union is required to represent all workers in that unit, whether or not those workers are members of the union. We do not contest this requirement. We support it for federal service, just as we support it in private industry labor-management relations.

While the NLRA applies only to private employee unions, the same types of rules invariably govern PEUs. Passed in 1976, California’s Rodda Act allows for exclusive representation and it’s up to each school district and its local union whether or not they want to roll that way. However, it is clearly in the best interest of the union to be the only representative for teachers because it then gets to collect dues from every teacher in the district. It’s also easier on school boards as they only have to deal with one bargaining entity. So it is really a corrupt bargain; there is no law foisting exclusivity on any teachers union in the state.

So exclusive representation is good for the unions and simplifies life for the school boards, but very bad for teachers who want nothing to do with organized labor. It is also important to keep in mind that the Friedrichs case is not an attempt to “bust unions.” This silly mantra is a diversionary tactic; the case in no way suggests a desire to do away with unions. So when organized labor besieges us with histrionics about “the promise of America,” the dying middle class, free riders etc., please remind them (with a nod to President Obama), “If you like your union, you can keep your union.” In this case, it’s the truth.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Why Professional Government Doesn’t Stand a Chance

In 1981, President Ronald Reagan famously fired 11,000 air traffic controllers who went on strike. Looking back on it, one has to credit those controllers for having the courage to go on strike in the face of pay and working conditions they regarded as unacceptable.

In contrast, the police in New York City, who are unhappy that Mayor Bill de Blasio has not paid them the deference they demand, are on strike while at work! That is, they are reporting for duty, so as to get paid, but by making few arrests are refusing to engage in their duties. The police characterize their exercise in insubordination as an act of protest against the mayor. In fact, of course, it is an act of defiance against the people of New York City, who tax themselves to pay their police force for its services.

What is striking (no pun intended) about the New York City situation is the nature of the battle, with the mayor and the police commissioner on one side and the police on the other. Surely this can’t be right. The police, after all, are at work, where supervisors and managers ought to be found. Why is it that we have only the mayor and the commissioner on the side of a day’s work for a day’s pay? Is there no management in the police department with the responsibility and the authority to obtain work?

The answer is, of course, that there is management, but it is dispiritingly weak. It may even be participating in the debacle. It is, after all, a public-sector mantra that management must be weak. (In theory, weak management allows elected officials to be strong, but in practice no such result is obtained.)

Consider the Port Authority of New York and New Jersey. The legislatures of the two states, hardly known as champions of professionalism in government, recently astounded one and all by passing comprehensive reform legislation that would have installed professional management in lieu of political patronage at the bi-state agency. This unexpected and unwelcome intrusion into their political prerogatives served to unite Govs. Andrew Cuomo and Chris Christie, with the announcement that they would veto the legislation amounting to a defense of patronage and a stance against professionalization. The Cuomo-Christie alliance is altogether reminiscent of the political resistance in the 19th century, across party lines, to civil-service government when those reforms cut into political patronage.

Or consider the U.S. Postal Service, which has professional management in name but not in fact. Between Congress on the one hand and labor on the other, Postmaster General Patrick R. Donahue is all but powerless to manage the institution he supposedly heads. The Postal Service’s professional managers know exactly what to do to render the agency economically viable. But those measures are not politically viable. So the Postal Service’s top management must wait and hope that, one day, that which is required might be politically permissible.

We often pay lip service to professional and managerial values in the public sector, but we rarely permit those values to be applied. At one end of the spectrum, the politicians in charge do not regard managerial values as consistent with their political interests. At the other end, the labor unions that represent millions of government employees regard professional management as their mortal enemy.

So it is that we portray government’s management deficit as a political problem. But in truth it is a structural, institutional problem. Neither the politicians in charge of government nor the employees who would be subject to it have any interest in promoting professional management. As long as this remains the case, and it looks like it may remain the case in perpetuity, institutions of government will continue to operate without professional management. The public pays a huge price for this, but as yet neither politicians nor labor have been called upon to pay any price at all.

*   *   *

About the Author:  Richard Clay Wilson Jr. served in local government for 38 years, including 29 years as city manager of Santa Cruz, Calif. He is the author of “Rethinking Public Administration: the Case for Management.” This article originally appeared in Governing and is republished here with permission.

Public Sector Unions vs. Local Politics

It is no secret that the political strategy of America’s public employee unions, funding the campaigns of state legislators who uncritically pass compensation packages, work rules, and mandates favoring their members, now threatens the solvency of California, Illinois, Rhode Island, and many other states. A recent study by researchers at Boston College for the Wall Street Journal found that, in spite of cutbacks forced by the recession, the cumulative underfunding of retirement promises alone will cost taxpayers an estimated $800 billion.

Sadly, the damage inflicted by the state-level influence of public employee unions has not been limited to finance. Over recent decades a growing number of mandates and restrictions, passed by state legislatures at the behest of public employee unions, have turned the American tradition of local autonomy into little more than a nostalgic illusion. As far back as 1980, then-New York City mayor Ed Koch wrote an article for the policy journal Public Interest warning of the growing state encroachment on municipal decision making. It was aptly titled “The Mandate Millstone.”

In 2006, when the Connecticut Business and Industry Association interviewed the top administrative and financial officers from 21 communities across the state to find out how mandates legislated in Hartford were affecting towns and cities, they found that most felt effectively marginalized from local policymaking. Their responses were typified by one survey participant’s respond: “Mandates pre-empt local authority by replacing local goals with state priorities and preventing local government from determining the best way to meet their citizen’s needs and spend their local tax dollars.”

Three years ago, a taxpayer group that I belong to in the small town of Redding, Connecticut, Nonpartisan Action for a Better Redding, asked a group of residents with business or other financial experience to spend a year conducting a line-by-line audit of local expenditures. The goal was to find ways to reduce the town budget, which had been skyrocketing well in excess of the rate of inflation, by 10 percent without compromising the quality of services.

The target was achieved, at least on paper, by suggesting the adoption of such policies as having high school students take one of their five classes every semester online, pooling services with neighboring towns, using qualified volunteers to audit employment and benefits records, and hiring low-cost graduate students from local colleges as teacher aides – all implemented through the unforced attrition of current personnel.

Local officials and civic groups, however, were reluctant to act on our findings. In some instances, they argued, we had not really figured a way through Connecticut’s statutory minefield – at least, not to their way of thinking. But even in the majority of cases where our recommendations were admittedly legal, they still feared retaliation from public employee unions. About all the town fathers and mothers thought they could do to control the ever-escalating budget was have animal control share kennel space with a neighboring municipality and rearrange municipal business hours to save on heat.

During the year that our taxpayer group dissected the local budget, many of us made an effort to identify any cost-saving measures that might have been adopted in other parts of the country. There were not a large number, but the ones we did discover seemed so commonsensical – and if widely adopted, so worthwhile – that we described them in an opinion piece, which the Wall Street Journal published in late October. We also posted these cost saving measure to a website (www.SmartTowns.org). If Redding could not bring itself to enact promising budget reforms, we reasoned, surely there were other communities, perhaps less affluent ones in redder states, that would be grateful for the information.

Yet the responses to the op-ed, at least as indicated by online comments to the Journal and emails to our website, were disturbingly similar. “Ha, ha,” wrote one respondent. “This is truly one of the funniest and saddest articles I have read online in a while. Sad because [it] proves that there are lots of ways to keep government spending from spiraling out of control. Downright hilarious trying to imagine these proposals being considered.”

“Great ideas that will never be implemented,” wrote another, “for the simple reason public service unions will vigorously oppose each and every proposal, and target those politicians bold enough, should any exist, to even step forward with any.”

How does one explain such pervasive pessimism except to recognize that the influence of public employee unions over localities is as much psychological as it is financial? When, in 2000, the Minnesota legislature took the unusual step of asking its auditor to survey the impact of state mandates on towns and cities, municipal officials responded that their greatest problem was not any particular law, but the general enervating effect of “the state not treating local government as partners.”

Much of this sense of powerlessness at the grass roots stems from layers of rules and regulations aimed directly at padding public employment, inflating benefits, limiting the ability of municipalities to take advantage of cost-saving innovation, and restricting the use of both community volunteers and private contractors. Connecticut, for instance, has a statute that prevents towns from reducing their annual school budgets, even if the student population is clearly declining.

But equally demoralizing for towns, school districts, and counties has been the persistent unwillingness of state legislators to recognize and address the serious conflicts of interest that permit public employees to assert a disproportionate influence over local boards and civic institutions.

In affluent suburbs, for example, the union leadership has become remarkably adept at advancing its own interests by effectively bribing a segment of the community with taxpayer subsidies. Parents who sit on boards of education and finance have learned that accommodating the desires of unionized personnel means that a wide range of non-academic perks for the exclusive benefit of their children will be deemed sufficiently “educational” to justify sharing the cost with all property tax payers.

These include low-cost forms of day care, both before and after school, expensive and eclectic sports programs, holiday “socials,” low-cost summer camps run out of public school buildings, and a variety of school-day distractions for students, such as pottery and ballet lessons, cafeteria pasta bars, and media centers with state-of-the-art video equipment – all purchased with revenue from voters without children, voters with grown children, and those who educate their children privately or at home.

In cities, the conflict comes from state-funded subsidies to a variety of self-appointed civil rights organizations, which in turn are expected to have representatives of public employee unions on their boards.

Consider the fact that for years, polls of poor and minority parents have consistently demonstrated support for some form of school choice. Most recently, a 2011 survey by the journal Education Next and the Harvard Program on Education and Policy Governance found that 60 percent of Hispanic parents and 53 percent of African Americans favor publicly-funded vouchers for private schooling. The same poll found that 57 percent of both parent groups favor academic credit for courses delivered over the Internet.

Yet where are the marches and movements to implement such reforms – reforms that no Democrat-controlled legislature could deny if promoted under the banner of civil rights? Where are the cheerleaders from community organizations that do manage to appear, as they did in Chicago last summer, when unionized teachers decide to strike for more pay?

The answer was made clear to me some years ago when I helped to organize a school reform conference at Trinity College in Hartford. One of the attendees, a young mother who worked as the secretary to the director of a state-funded Hispanic group, came up to me excitedly and said she wanted to arrange for me to meet her boss to review some of the innovative policies discussed that day.

A few weeks passed and, not hearing back from the secretary, I decided to call her boss myself. He seemed quite knowledgeable about school issues, and for nearly an hour we had a spirited conversation about the relative advantages of charter schools versus school vouchers for poor Hispanic families. Unfortunately, he informed me at the end of the call, there were two representatives from the state teachers union on his board, and there was nothing he could do to advance either alternative without losing his job.

Fiscal reality is finally forcing some states to curtail the influence of public employee unions, at least when it comes to salaries, pensions, and post-retirement perks. But genuine reform will require politicians to give as much thought to liberating their own localities as they are to trimming worker benefits.

The real threat to the future of American democracy, Alexis de Tocqueville once warned, is not a heavy-handed tyrant but “a network of small complicated rules, minute and uniform, through which the most original minds and energetic characters cannot penetrate ….” And then he added philosophically that free people are brought to heel not when they are forced to act, but when they “are constantly restrained from acting.”

Lewis Andrews, PhD is the senior policy analyst at the Yankee Institute in Hartford, Connecticut, and the author of To Thine Own Self Be True (Doubleday). This article originally appeared in RealClearPolicy.com and is republished here with permission.

For What Are Taxpayers Thankful in 2014?

“In this season of Thanksgiving, please don’t blame taxpayers if they are distracted by the injuries being perpetrated against them by our political class.” These words were the preface of this column at the beginning of the holiday season in 2008 and, sadly, little has changed. In fact, in many ways taxpayers are worse off now than they were then.

Six years ago, California’s tax burden was ranked 6th nationally. Today we trail only New York as the worst state for taxpayers. We now rank first in state sales tax, first in marginal income tax rates, first in gasoline tax and, even with Proposition 13, we rank in the top third in per capita property taxes. Because Proposition 13 makes it harder for California to overtake New York as our nation’s number one taxpayer hell, one can expect new efforts by Sacramento politicians to undermine its protections in the new legislative session.

Some of our state leaders like to chirp happily about California’s declining unemployment rate, but only three states are worse off and our 7.3 percent rate is much higher than the national rate of 5.8 percent. Still, all these figures are suspect because they do not count the discouraged who have stopped looking for work entirely. And even those counted include many part-time workers for whom the best holiday gift would be finding fulltime employment.

Then there is the constantly growing, and largely ignored unfunded pension liability now estimated at several hundred billion. It stood at $6.3 billion just a decade ago. As more government workers retire, this debt will come due and will have to be addressed by either reduced public services or tax increases or both. The pressure for new revenue to support the retired workforce will provide an additional incentive to politicians to demolish Proposition 13’s taxpayer protections.

Nonetheless, while elected officials may be planning to put coal in taxpayers’ stockings as we approach Christmas, there are a few things for which we can all be grateful.

First is Proposition 13, which limits annual increases in property taxes and forces the tax raisers in the Legislature to get a two-thirds vote of their colleagues to raise state taxes. We at the Howard Jarvis Taxpayers Association hear daily from those who are thankful for Proposition 13 and credit its most famous feature — limiting annual property tax increases to no more than 2 percent — for allowing them to keep their homes.

While during the session just passed, those favoring new taxes dominated the Legislature, the November election has turned out some fiscally irresponsible lawmakers and replaced them with some who understand the detrimental impact of new taxes on individual taxpayers and the overall economy, and who are likely to reject new taxes. So taxpayers are grateful not only for Proposition 13 but for lawmakers who will defend their interests against great pressure for new taxes from special interests including public employee unions.

Taxpayers are also thankful for all individuals, regardless of party affiliation, who make the personal sacrifice to run for office and present their ideas to voters. A functioning free republic relies on individuals who are willing to step into the arena, even in those instances where their chances of prevailing are small.

Finally, complaints against government at all levels are an American birthright. But we are mindful that billions of souls around the world risk imprisonment or death for speaking out against their despotic governments or leaders. So, in keeping with the season, let us be thankful that we live in a country that, despite her faults, remains the last, best hope for mankind.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Union Grip on California's Government Still Stronger than Ever

Before anyone gets out the balloons and starts celebrating the Harris vs. Quinn decision too much, step back, sober up, and reflect on the scope of what happened, and where it puts us in this war. To use a WWII analogy, we just won the Battle of Britain. The Luftwaffe no longer dominates the skies over London. That’s significant. This is, perhaps, as Churchill once said, “the end of the beginning.” But from Al Alamein to Stalingrad to the Beaches of Normandy, our ultimate destiny still hangs in the balance.

To carry this metaphor further, California today might be compared to Nazi occupied Europe in 1941, where the possibility of liberation was years in the future, if ever. While across America the forces of freedom celebrate what is indeed a strategic victory, in California, an occupying army continues to build their own 21st century version of Fortress Europa.

To appreciate the undiminished political supremacy public employee unions still have in Sacramento, the State Senate Public Employment and Retirement Committee hearing on June 23 provides a good example. From an anonymous source, we have learned that in this hearing, opponents of seven labor-sponsored bills never had a chance of stopping even one of them. The recent addition of two new pro-union Committee members (President pro Tem Darrell Steinberg and incoming pro Tem Kevin De Leon) all but guaranteed the outcome in advance. These bills advance public employee union goals at the significant expense of local governments, their budgets and taxpayers statewide. Examples:

· AB 1611 (Bonta) would make schools file written notice with a union about changes it needs to make to an employee’s schedule, even for something as unpredictable as a flu outbreak. The costs of the state-mandated notification and negotiation requirements will come out of state education funds – money that could have gone to the classroom instead.

· AB 1824 (Rendon) would allow a retired employee to increase a designated beneficiary’s benefits – in violation of the California Public Employees’ Pension Reform Act of 2013. Now starts the gradual undoing of the Act.

· AB 1834 (Williams) would allow 14,000 graduate students working part-time as research assistants at the University of California and California State University to unionize. Students. Working part-time. Unionized. We’re trying to lower the tuition costs for higher education, not raise them even more.

· AB 1550 (Rendon) would add up to 60 more days to an already thorough and lengthy collective bargaining process in schools by effectively ending the right of school districts to implement their “last, best and final offer.” This will add significant costs and further undermine school districts’ abilities to efficiently operate their schools.

· AB 2126 (Bonta) would eliminate the law requiring unions and government agencies to request mediation or arbitration jointly, letting one side or the other file unilaterally, and then require the Public Relations Employee Board to appoint a mediator within five days. There aren’t enough mediators in the state to handle the anticipated increase in requests within that timeframe, which will lead to a backlog and delays and the hiring of private mediators at much higher rates in order to meet the arbitrary timeframe.

Comparing any political movement we don’t like to the bad guys in WWII is a cheap trick. Sorry. But the reality of unions infiltrating government and enabling its drift towards authoritarianism is not a frivolous comparison. Public sector unions run California. They control the outcome of all significant legislation. Their agenda is inherently oriented towards bigger, more expensive, more expansive government, with the interests of government workers inevitably prioritized over the interests of private citizens.

Moreover, government unions are the enablers of cronyism and corporatism. Nearly all of California’s major corporate interests cooperate as junior partners with these unions. And through their pension funds and through their insatiable need to spend beyond their means, California’s government unions partner with powerful and very opportunistic financial interests.

Most tragically, government unions create a privileged class of government workers, granting them levels of compensation and job security that are far beyond our capacity to provide all citizens, and far beyond the ability of taxpayers to subsidize. Within our ranks of public servants, these unions corrupt and embitter the impressionable with poisonous adversarial rhetoric, while protecting the inept and alienating the finest.

Government unions cannot be “bargained” with. Unlike private sector unions, there is no legitimate argument whatsoever for the existence of government unions. At the state and local level, especially in California, they are the primary force behind the erosion of our freedoms and the ebb of our prosperity. They must be eliminated.

Harris vs. Quinn has slowed the advance of government unions. Nothing more. Put away the balloons. Hunker down. There’s going to be a lot more blood, toil, tears and sweat before this is over.

*   *   *

Ed Ring is the executive director of the California Policy Center

Is California's Union-Controlled Legislature Waking up to Pension Problem?

Is it possible that the California Legislature is finally coming to grips with the public employee pension crisis? We certainly hope so.

For years, our political leadership has behaved more like ostriches with their heads buried in the sand regarding the many billions of dollars of “unfunded liabilities” in California’s pension funds. Unlike most retirement plans in the private sector, government workers get “defined benefit” plans that guarantee fixed payments to retirees, no matter how well the underlying investments have performed.

A good sign is that Assembly leaders now say they will take on the massive shortfall in the State Teachers Retirement System (CalSTRS) that provides retirement, disability and survivor benefits for California’s 868,493 teachers and their families. Speaker John Perez says he wants to find a way to begin paying down the $80 billion unfunded liability for teacher pensions and the Assembly will hold a hearing on the issue this month.

While CalPERS, the other major public employee pension system, is in a weak position, CalSTRS is close to falling into the abyss. However, neither of the systems is likely to ever go over the edge because taxpayers are obligated to maintain their solvency, no matter the cost. This means the sooner the unfunded liability is addressed, the less long-term cost to taxpayers.

Unfortunately, until now, Sacramento’s approach to these unfunded liabilities is probably why the phrase “kicking the can down the road” was coined. Even Governor Brown, who has espoused government frugality and responsibility — while increasing state spending — ignored the unfunded pension systems in his proposed state budget.

In fairness to Brown, two years ago, he proposed a fairly decent pension reform package. But by the time the Legislature got through with the governor’s plan, all that remained was some modest changes to address the worst of pension abuses including a few to prevent “pension spiking.”

Like alcoholics attending their first AA meeting, Speaker Perez and his colleagues deserve credit for taking the first step by acknowledging the problem and making a commitment to address it. Of course the Speaker may have been nudged along after seeing poll results, including one by PPIC that shows that over 80 percent of adults believe that the money spent on pensions is a problem for state and local government budgets. The poll further reveals that more than 70 percent would favor a change from a defined benefit — a guaranteed monthly payout at retirement — to a defined contribution system, similar to a 401(k) plan.

Perez suggests that it may be necessary to hike payments into the pension plan made by the state, school districts and individual teachers. While much of the costs would ultimately fall back on taxpayers — even if teachers pay more, they will, no doubt, be seeking even higher pay raises in compensation — the idea of shared sacrifice to solve a problem is a reasonable place to start the debate. And if pension reform were added to the mix, perhaps a win-win result can be obtained for both taxpayers, who will have a smaller long-term bill, and teachers, who would benefit from a more secure retirement system.

Taxpayers will be watching closely with the hope that we can soon applaud both the Speaker and his colleagues for substantive results, because if this problem is not tackled in earnest now, Californians and future generations of Californians will be facing very destructive consequences.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Public Employee Compensation Reform is Vital

Individuals who oppose comprehensive and fundamental reform of public employee compensation can only be considered to be in denial.

Almost every government agency in the country is going broke right now. Almost all are cutting back services and reducing staff. Government is diminishing at the state and local levels before our very eyes. Our streets aren’t being fixed. Parks and libraries are closed. Schools are cutting back programs. Inmates are being released from jails and prisons. Fire protection services are being diminished.

Those who say the problem is just the stock market or the state of the economy are wrong. To be sure, the stock market and larger economic forces have their influence. But the primary reason state and local governments are going broke is because the compensation packages that elected officials have negotiated with public employee unions are far too generous.

Critics of public employee compensation reform can decry advocates of fairer contracts for public employees until they are blue in the face, but this won’t change the essential reality: As a group, public employees work fewer hours in a week, fewer weeks in a year, and fewer years in a career, while receiving exceptional salaries and other benefits, and then retire at a younger age with incomparably better pensions than private-sector employees. That’s just the way it is. That’s why there are often hundreds of applicants for each position that opens up in the public sector.

Fortunately, reform is on the way. Last year, San Diego and San Jose enacted fundamental public employee pension reform in their cities – including for existing employees – with 66 percent and 69 percent of the vote respectively.

It is time for public employee compensation reform in the county of Santa Barbara, as well. No one questions – or should question – the value of the work that public employees do. Indeed, as I have consistently pointed out, it is precisely because the work that public employees do is so vital that it is essential there is reform of public employee compensation.

Perhaps the best approach would be an initiative signed by 12,500 county registered voters to place a measure on the June 2014 ballot that would: 1) prohibit COLAs for county employees for the next four years; 2) limit vacations; 3) limit sick leave; 4) limit holidays; 5) cap the actuarial assumption for the rate of investment earnings in the county retirement system pension fund at 6.25 percent; 6) require that county employees pay half the cost of their retirement premiums, including both funded and unfunded portions of retirement funds; and 7) require that county employees pay half the cost of their health benefits following retirement and before they are covered by Medicare.

There is no reason for public employees to continue to be a protected class in our society. It is time to reform public employee compensation now.

Lanny Ebenstein is president of the California Center for Public Policy.

Desperate Times Call for Desperate Union Rhetoric

After losing the Battle of Wisconsin, union members flee in droves and frantic union apologists resort to melodrama.

Since losing the recall election in Wisconsin two weeks ago, it seems that there has been more than the usual lying, distortion and hyperbole coming from union bosses and their fellow travelers. Perhaps the most egregious example comes from Timothy Noah, a senior editor at the New Republic. In Praise of Public Employee Unions is so amazingly and transparently bad that it should be a prime example in a book on persuasive writing – about how not to make an argument. His main point is that the new school superintendent in Dallas is making $300,000 a year and that’s just too darn much. Maybe he’s right, but he has to distort the facts to make his point. He writes that teachers in Dallas, represented by the American Federation of Teachers, “bump along with an average salary of about $56,000. That’s nearly 20 percent below the average household income in the U.S. ($67,530).”

Please notice he is comparing a single teacher’s salary to average household income, which is the sum total made by all people living in the same house. He also doesn’t acknowledge that a teacher works only 180 days per year (about 25 percent less than the average worker) leaving the teacher plenty of time to work a second or summer job to enhance his or her income. He also doesn’t factor in that teachers have more generous health and pension benefits than those who work in the private sector.

An in-depth study from AEI/Heritage, released late last year sums up the situation well, finding that:

Workers who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent. Teachers who change to non-teaching jobs, on the other hand, see their wages decrease by roughly 3 percent. This is the opposite of what one would expect if teachers were underpaid.

Most teachers accrue generous retiree health benefits as they work, but retiree health care is excluded from Bureau of Labor Statistics benefits data and thus frequently overlooked. While rarely offered in the private sector, retiree health coverage for teachers is worth roughly an additional 10 percent of wages.

Job security for teachers is considerably greater than in comparable professions. Using a model to calculate the welfare value of job security, we find that job security for typical teachers is worth about an extra 1 percent of wages, rising to 8.6 percent when considering that extra job security protects a premium paid in terms of salaries and benefits.

We conclude that public-school teacher salaries are comparable to those paid to similarly skilled private sector workers, but that more generous fringe benefits for public-school teachers, including greater job security, make total compensation 52 percent greater than fair market levels, equivalent to more than $120 billion overcharged to taxpayers each year.

In a final attempt to make his case, Noah careens into laughable hyperbole.

Being a teacher is back-breakingly difficult work. It is also extremely important work.

No, Mr. Noah, working in a coal mine is backbreaking. Tiling a roof is backbreaking. Teaching is certainly challenging and important work, but it is hardly backbreaking.

How do other public employees do compared to private sector workers? Via Reason, we learn that in Illinois, for example,

State workers from the metro-east averaged $61,372 last year.

How do these numbers stack up against pay for the rest of Illinois? According to the U.S. Census Bureau, per capita income for Illinois residents rang in at $28,782 in 2010. Median household income came to $55,735.

More hysteria from Steve Mikulan. In Unions: Our Last, Best and Final Hope, he is practically reduced to tears about labor union abandonment, especially by liberals. He writes,

…liberals – and even union members – seem to be abandoning and undermining labor. We only have to look at the dismal results of the Wisconsin recall election to see the evidence. There, National Public Radio and others report, exit polls revealed that 38 percent of union-household voters cast ballots to retain the state’s paranoiacally anti-labor governor, Scott Walker. Why this disconnect?

According to the Bureau of Labor Statistics, in 2011, while the private sector had a rapidly diminishing unionization rate of 6.9 percent, the public sector came in at a still healthy 37 percent. But whatever the numbers, Mikulan is right – the decline of unionization will continue as more and more workers realize that unions don’t have much to offer them. The 38 percent that voted for the “paranoiacally anti-labor governor” probably know that union hegemony wrecks economies – hence, no “disconnect.” Also, Mr. Mikulan, please keep in mind that in 27 of our 50 states and Washington D.C. workers have to pay a union if they want to be employed in many fields. If the unions are as beneficial as you say they are, why must they force workers to join them?

After the June 5th debacle, National Education Association Dennis Van Roekel took to TV and talk radio grousing about the loss.

These millionaire donors, empowered by the Supreme Court ruling on Citizens United, have made a mockery of democracy and nearly drowned out the voices of working families in Wisconsin.

Mockery of democracy? Drowning out voices? Mr. Van Roekel, your histrionics have been duly noted and you are dead wrong about Citizens United. As law professor Michael McConnell points out,

In a sense, Citizens United did have an important effect on the Wisconsin election. But the effect was almost exactly the opposite of what many pundits imply.

Labor unions poured money into the state to recall Mr. Walker. According to the Center for Public Integrity, the NEA (National Education Association), the nation’s largest teachers union, spent at least $1 million. Its smaller union rival, the AFT (American Federation of Teachers), spent an additional $350,000. Two other unions, the SEIU (Service Employees International Union, which has more than one million government workers) and Afscme (American Federation of State, County and Municipal Employees), spent another $2 million. Little or none of these independent expenditures endorsing a candidate would have been legal under federal law before (the Supreme Court decision on) Citizens United.

By contrast, the large spenders on behalf of Mr. Walker were mostly individuals. According to the Center for Public Integrity, these included Diane Hendricks, Wisconsin’s wealthiest businesswoman, who spent over half a million dollars on his behalf; Bob J. Perry, a Texas home builder, who spent almost half a million; and well-known political contributors such as casino operator Sheldon Adelson and former Amway CEO Dick DeVos, who kicked in a quarter-million dollars each. Businessman David Koch gave $1 million to the Republic Governors Association, which spent $4 million on the Wisconsin race.

These donations have nothing to do with Citizens United. Individuals have been free to make unlimited independent expenditures in support of candidates since the Supreme Court case of Buckley v. Valeo (1976).

Last, and certainly not least, there is Richard Kahlenberg, a senior fellow at The Century Foundation, who never misses an opportunity to blame every malaise known to mankind on poverty. So of course, he wants to make unionism a civil rights issue. He proclaims,

In order to address our society’s deepening class inequalities, it is time to extend antidiscrimination protections to workers of all races trying to join a union and become members of the middle-class.

This is a nonsensical statement. No one of any race suffers discrimination for joining a union. But then again, maybe Mr. Kahlenberg is on to something. Perhaps there is a civil rights angle to all this. I propose that we pass a national right-to-work law giving all workers a choice as to whether or not they join a union. By doing so, we’d learn how many workers would belong voluntarily. And if Wisconsin is any measure, the unions’ desperate rhetoric, lies, coercion, whining, etc. won’t do much good. Workers everywhere enjoying their new civil right – as they currently are in the Badger State – will flee their unions in droves.

About the author: Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

CTA in Bed with the Occupy Crowd? LOL!

The California Teachers Association is seeking cover in the Occupy Wall Street movement. The OWS crowd doesn’t understand that CTA and other public employee unions are a major part of the problem.

Last week, part of my post concerned itself with the March 5th “Occupy the Capitol” protest being promoted by the California Teachers Association. I wrote,

“Not only is CTA inviting the OWS rabble, they are calling for teachers to attend, even though it is a school day, thus costing taxpayers all over the state untold thousands in costs for subs and robbing children of a productive school day.”

Little did I know, March 5th was just the tip of the iceberg. The CTA website is now touting a “Week of Action” covering the first seven days of March. Many activities are planned and will be led by various “Occupy” groups that have sprung up like weeds. The result is a grand mishmash of radical organizations coming together to vent their spleen over various and sundry issues, and all links to their activities are available through the CTA website.

Right on the CTA homepage you can access the MarchFirst DayofAction Facebook page which whines about the evils of corporations and privatization.

Then there is March 1 National Day of Action for Education website which blasts,

“We call on all students, teachers, workers, and parents from all levels of education —pre-K-12 through higher education in public and private institutions— and all Occupy assemblies, labor unions, and organizations of oppressed communities, to mobilize on March 1st, 2012 across the country to tell those in power: The resources exist for high-quality education for all.” If we make the rich and the corporations pay we can reverse the budget cuts, tuition hikes, and attacks on job security, and fully fund public education and social services.”

This site, with its clenched fist logo, also has a list of supporting organizations. The roster consists of a motley collection of radical retreads — SDS and MEChA and latter day acolytes – By Any Means Necessary and Occupy groups from all over the country.

Occupy Education California has a list of accomplices on their home page – American Federation of Teachers, California Federation of Teachers, Berkeley Faculty Association, Codepink, La Raza, SDS, Socialist Organizer and Old Lesbians Organizing for Change.

There is even a meet-up page online, so that if you are an OWSer and think that you must “do something,” you can find an event here. (Amazingly, there is a group in Beverly Hills. So I guess after stuffing yourself at Trader Vics, you can go out and rail at the
rich.)

All these groups’ messages are a thinly veiled attack on capitalism and can be summarized as such:

Corporations and rich people bad.
Big government good. They take money from corporations and rich people and give it to us.

Clearly there is a 1960s flavor to all this – a pastiche of angry student groups and serious radicals, but with a new wrinkle, especially in CA – teachers unions and college faculty associations are involved. During the 60s, most unions of any kind wouldn’t be caught dead at protest rallies, but these are different times and different unions. The irony here is palpable. The teachers unions and other public employee unions, barely existent in the 60s, are claiming victimhood, but in reality are a big part of the problem.

One of the mantras of the Occupy crowd is that corporations should pay their fair share.

Do the OWSers know that the California Teachers Association and other teachers unions are corporations with a special 501(c)(5) tax status which means that they pay no tax? Yes, CTA is a corporation that brings in nearly $200 million a year and pays no taxes. Yet, CTA is promoting events that call for corporations to pay their fair share??!! (If anyone reading this blog has the misfortune to get caught up in an Occupy event, why not ask one of the protesters if they think it’s fair that CTA should pay nothing in taxes. Please post their response in the “comments” area below.)

Do the OWSers know that private corporations in the U.S. have a 35 percent tax rate which is the second highest corporate tax rate of all industrialized countries?

Do the OWSers know that many the leaders of the unions they are partnering with make in the neighborhood of $500,000 a year which makes them one percenters?

Do the OWSers understand that corporations are behind their beloved revolutionary accoutrements – smart phones, lap tops, social media websites, etc?

Do the OWSers understand that CA is in deep financial trouble in large part due to overly generous public employee union pension funds and that these funds invest in the stock market (a collection of corporations) to make up for the shortfall?

Do the OWSers and their new best friends in the teachers unions have a clue as to how many teachers have money tied up in 403(b)s? These tax sheltered annuities provide a way for teachers to invest in stocks (corporations) and defer any tax payments on capital gains until after they retire?

The anti-corporate hysteria has spread like wildfire, but corporations are not the problem. CTA and other public employee unions, with their privileged tax exempt status and endless demands on the private sector, are the real greed mongers. Yet CTA et al have the cojones to join forces with the OWSers. And the OWSers are either too uninformed or too brainwashed to realize the irony.

About the author: Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

NEA: We are One. We are everywhere. We are at war.

National Education Association declares war, but finding allies could be difficult.

It’s hardly a secret that the National Education Association is an organization that has had its political way for the past 35 or so years. However, voters are fed up with the union’s attempts to keep a failing public education system from being reformed and having massive debt foisted on them in the form of public employee pensions. In November, the populace voted flinty governors and no-nonsense legislators into state houses all over the country.

Clearly NEA, to maintain its hegemony, must now combat the reform fires that are spreading wildly from sea to shining sea. But according to teacher union watchdog Mike Antonucci, the megaunion is indeed going to war with not as much money as they once had. “… after some 27 years of increases, NEA membership is down in 43 states. The union faces a $14 million budget shortfall, and the demand for funds from its Ballot Measure/Legislative Crises Fund is certain to exceed its supply. Even the national UniServ grants, which help pay for NEA state affiliate employees, will be reduced this year.”

So, what will the war look like?

With whatever funds it can muster, NEA strategy is to stop legislation before it begins. Barring that, it will try get judges to overturn any legislation unfriendly to NEA. If they can’t get judges to do their bidding, they will then try to elect friendlier judges, as is happening in Wisconsin today.

But can they stop the tidal wave? As we see in two other Antonucci posts, threat maps and under-reported stories, the scope and intensity may indeed overwhelm NEA.

NEAs latest gambit is to rouse the troops and regain public support by taking to the streets and trying to tie their plight to the Civil Rights movement. They have set up a new website where they proclaim that We are one. We are everywhere. And yesterday, unions held rallies across the country in an attempt to channel Martin Luther King who died 43 years ago in Memphis while supporting striking sanitation workers.

But the rallies were very tame and not well attended – only 200 in Louisville and 300 in Cleveland, according to the AP. Even in King’s home town of Atlanta, only about a thousand demonstrators showed up.

Is it possible that private sector union members are waking up to the fact that maybe “We are not all one”? Maybe they realize that those in the NEA and other public employee unions are better paid and have more perks than they do – and that these extravagances are being paid for by taxpayers, which include those union members in the private sector.

Is it possible that many Americans realize that the NEA wouldn’t hold anything for MLK? This is the union that by being virulently anti-school choice is doing everything within its mighty power to keep African-American children stuck in failing schools across America. Even the union’s former allies in the mainstream media are now in increasing numbers coming down on the side of choice.

Is it possible that the NEA and other public employee unions have exposed themselves as bullies who are detrimental to the country at large?

Is it possible that fewer people are being fooled by their hollow and abusive rhetoric?

About the author: Larry Sand is the president of the non-profit California Teachers Empowerment Network – a non-partisan,non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

No Citizen Left Untaxed

NEA boss has it backwards when he claims that America cannot have a middle class without unions.

Dennis Van Roekel, president of the National Education Association, America’s largest union, claims, “In actions more fitting for comic book arch-villains, a new crop of state leaders have launched blistering attacks on working families disguised as budget and education reforms, and many have sought to strip workers’ rights to have a voice through their union.”

If he is correct and the middle class is being threatened, it is the public employee unions (PEUs) that are doing the threatening. Fewer than one in eight Americans are in unions but more than 50% of them are in PEUs. It’s hardly a secret that PEU pensions are in the process of sending various states and cities around the country into insolvency.

Where are the states supposed to get this money to pay for the budget busting pensions? The PEUs want to raise taxes. But on whom?

The corporations? Perhaps not. At 39%, we already have the highest corporate tax rate in the world.

“The rich?” Well, maybe not. It seems that the rich, defined as the top 1% of taxpayers, earn approximately 21% of the nation’s income, yet already pay almost 40% of all federal income taxes. What about the top 25% of taxpayers? They earn almost 68% of the nation’s income, but pay 86% of all federal income taxes. How much more can we realistically expect to tax “the rich?”

Who’s left? The middle class. To state the obvious, increasing the taxes on middle income earners is hardly the way to increase membership in the middle class.

So the real point is not that America can’t have a middle class without unions. It’s that America can’t afford PEUs, which very often put the very politicians in office with whom they then negotiate. Ultimately, the taxpayer, middle class or otherwise, is disenfranchised. This is just the problem that “the new crop of governors” like Chris Christie, Scott Walker, Mitch Daniels and John Kasich are dealing with by trying to limit the vast power of the greedy PEUs.

About the author: Larry Sand is the president of the non-profit California Teachers Empowerment Network – a non-partisan,non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.