City Journal Winter 2016

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Chris Reed
Public Enemy Number One « Back to Story

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Are the city employees going to ever be put back into Social Security along with the voodoo 401K pension? Public employee hating rhetoric abounds among the keyboard economists and bleeting sheep proponents of the Carl DeMaio "sell the municipal functions to the lowest bidder with the highest political patronage."
Step increases are NOT automatic and only occur in the first few years of employment.
Thanks for bringing all these salient issues together in one article. Policies that keep government unions powerful will bankrupt the city and the state. Ultimately they will fail, either by citizen's rising up to demand change or via bankruptcy.
Why not say it again? Public unions and the Democratic party entered into a devils bargain under which Democrats give the unions what they want in exchange for money, money money. Look at the leading donors to Democrats, heck leading donors period and you will find public unions.

It is a corrupt scheme under which Democrats have figured out a way to funnel taxpayer funds to party coffers. Why not campaign finance reform for everyone else, as long as the taxpayer money spigot is kept on?

And that's really what it's all about - public unions fund Democrats, Democrats give the unions what they want. The taxpayers? Some of them actually give to Republicans why care about them?

The side benefit of this corrupt scheme is that the more public employees there are the more votes for Democrats. It's something the Democrats understand full well, and it's why Democrats protect gov't jobs - what was the Stimulus other than subsidies for states so they lay off as few public employees as possible?

So when we read about union/Democratic opposition to what's happening in San Diego, we should understand that it is all about money and power - and the corrupt bargain made between public unions and the party of government - the Democrats. For Democrats the rest of us can go scratch out a living in the private sector as best as we can, while we support this enormous burden.

As for fleeing California, for Democrats, this is a good thing, since it consolidates power in those who are left i.e. them.

And it's how a prosperous state which is the envy of everyone becomes a basket case, the envy of none. And a road map to power for Democrats - import votes, buy votes through public unions, enact burdensome regulations and, notwithstanding prop 13, tax everything in sight until Republicans get fed up and leave.

Democrats also control most of the means of communication so you don't hear much about how bad it is. That being the case, there isn't much hope for California - shortly to be the first state to look like a third world country - poor, rich, the bureaucracy and nothing else. Sad, given the enormous oil reserves right off the coast, which is untouchable.

As for the public unions - they will eventually finish killing the goose that gave them the golden egg.
OK, why are police exempted? 3% at 50 retirement (defined benefit to be sure) is pretty expensive and helping to bankrupt the state as it is.
If California doesn't throw off the union parasites, it will become a third world country, with a stratified layer of very rich, an administrative/professional class in the middle, and an underclass of low income servants and government dependants.

It would be sad that such beautiful state would have to sold back to Mexico to shed the debt born of unfettered public sector greed.

Run them out of your state, folks, as I am trying to pull their fangs out of my state, Illinois.
DeMaio should be proud and wise Californians should back such a sensible measure.
ALL unions have outlived their usefulness. They are destroying the very means of job creation. In league with the federal power grab, socialism and out right theft, the country is now on its knees, and these bstrds don't care.
If public pay and benefits are not dramatically reduced, employee pensions will devour almost all public service money. Current services will become inadequate to maintain political stability.
Another clear example of how unions corrupt the Democrat party, and how they care only about their own power and greed.

Democrats, beholden to the corrupt unions, will continue speeding toward the financial cliff in order to hold on to power. Touble is, the rest of us are in the back seat.
Public sector unions are the scourge of California. Every single Californian should be treated equally. We should all have to rely on 401K's and social security for our retirement. We should all have to rely on Medicare and supplemental Medicare insurance for our retirement health benefits. We should all have to rate to retire at the same age.

Public sector employees get pensions far beyond what 401K's and social security provide the rest of us. Public sector employees get to keep their working life medical benefits until the day they die for their entire families which is obscenely in excess of what the rest of us get from Medicare. Public sector employees can retire at 55 while the rest of us have to wait until at least 62 and the vast majority at 65.
We need to end the tyranny of public sector employees over the budget of California and the individual municipalities in California just as quickly as we can.
Fine article. Wish I was a San Diego voter so I could vote for DeMaio. It's the only way to fiscal reform in the once Golden State.
A little more. It's not that the numbers cited below are not important; it's just that they're hard to interpret without more context and history. As we all know, numbers taken out of context can be made to mean anything.

One final thing. If the numbers on assistance are accurate, then this is a huge cultural shift. When I was growing up, it was considered shameful to be on public assistance (this was in a working class neighborhood). The few households known to rely on it got off of assistance as quickly as possible.

The loss of trust is complicated and many-sided.
I grew up in San Diego, and I went to a high school just outside the city--a poor one--where we could take Latin and foreign languages and music and chemistry and physics and had extensive sports and physical fitness programs. We also had virtually free summer school--every summer. The school playgrounds and athletic fields were open to the community on the weekends. That world ended with Prop 13. So did the general feeling that those schools belonged to all of us and were for all of our children. In general, we trusted each other to cooperate on this. That trust ended with Prop 13. There are lots of complicated causes involved here, but it is trust that has been lost, and trust that needs to be regained--over time.
Breaking Bad: California vs. the Other States
by Richard Rider, Chairman, San Diego Tax Fighters
Version 1.809 Revised: 20 April, 2012 Updated version online at:
Email: Phone: 858-530-3027 Facebook blog page:

Here’s a depressing but documented comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse (twice a month, I update crucial data on this fact sheet):

REVISED: California has the 2nd worst state income tax in the nation. 9.3% tax bracket starts at $48,029 for people filing as individuals. 10.3% tax starts at $1,000,000. Governor Brown is putting on the ballot a prop to change the “millionaires’ tax” to 13.3%, starting at $500,000 – including capital gains. If approved, CA will be by far #1 in income tax rates. We will be 21% higher than the 2nd highest state (Hawaii), 34% higher than the third highest state (Oregon), and a heck of a lot higher than all the rest – including six states with zero income tax.

Highest state sales tax rate in the nation. 7.25% (as of 1 July, 2011 – does not include local sales taxes). Table #15

California corporate income tax rate (8.84%) is the highest west of the Mississippi (our economic competitors) except for Alaska. Table #8 – we are 8th highest nationwide.

CA has the 2nd highest gas tax (averaging 67.0 cents/gallon) in the nation (January, 2012). National average is 48.8 cents. (also CA has the nation’s highest diesel tax – 75.9 cents/gallon. Nat’l average 54.0 cents)

California is ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But CA property taxes per owner-occupied home were the 10th highest in the nation in 2009. and

CA has now instituted the highest “cap and trade” tax in the nation – indeed, the ONLY such U.S. tax. One study estimates the annual cost at $3,857 per household by 2020. Even proponents concede that it will have zero impact on global warming.

UPDATE: California’s 2012 “Tax Freedom Day” (the day the average taxpayer stops working for government and starts working for himself) is the 11th worst date in the nation – up from 28th worst in 1994, but down from 4th worst in 2009. CA “improved” primarily because of our state’s soaring unemployment rate – the new tax dodge!

UPDATE: CA has the 3rd highest state unemployment rate. (March, 2012) – 11.0%. National unemployment rate 8.2%. National unemployment rate not including CA is only 7.8%, making the CA unemployment rate 40.7% higher than the average of the other 49 states.

CA needlessly licenses more occupations than any state – 177. Second worst state is Connecticut at 155. The average for the states is 92.

California’s 2012 Business Tax Climate ranks 3rd worst in the nation – behind New Jersey and New York state.

For the 2007-08 school year, the Los Angeles Unified School District spent $29,780 per student. The district also has the country’s second lowest graduation rate of 40.6%.

CA public school teachers the highest paid in the nation. CA students rank 48th in math achievement, 49th in reading. page 36

1 in 5 in Los Angeles County receiving public aid.,0,4377048.story

California has 12% of the nation’s population, but 36% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA.

California prison guards highest paid in the nation.

For every dollar California pays to D.C., we get back 78 cents. We rank 7th worst.

California is the worst ranked state for tax administration – another anti-business factor.

California now has the 2nd lowest bond rating of any state – Basket case Illinois just beat us out for the lowest spot. We didn’t improve our rating – Illinois just got worse.

California has the 6th highest (worst) state per capita debt. Not counted is local government debt.
The American Tort Reform Association ranks CA the worst state “judicial hellhole” – extremely anti-business.

CA tickets are incredibly high. Red-light camera ticket $480. Next highest state is $250. Most are around $100.

California is tied with 3 other states (Hawaii, Texas[!] and Florida) for having by far the least competitive property & casualty insurance markets.

California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Oregon at $150. A few others under $100, with most at zero.

America’s top 500 CEO’s rank California “the worst state in which to do business” for the 7th straight year (May, 2011). (It’s worth reading the short article, and especially the part about California.)

California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is the lowest in the nation. How low? Nationwide, the average community college tuition is about three times higher than California CC’s. Chart 5 on page 8
This ridiculously low tuition devalues education to students – resulting in a 30+% drop rate for class completion. In addition, 2/3 of California CC students pay no net tuition at all – either filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition.

On top of that, California offers thousands of absolutely free adult continuing education classes – a sop to the upper middle class. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense.

Protests about increased UC student fees too often ignore one crucial point -- all poor and many middle class students don't pay the “fees” (our state’s euphemism for tuition). There are no fees for California families with under $80K income. Moreover, Pell Grants and federal tuition tax credits covered the total 2009-10 fee increases for nearly 3/4 of all undergraduates with household incomes below $180K. and

California residential electricity costs an average of 32.4% more than the national average (far higher in San Diego County). For industrial use, CA electricity is 70.8% higher than the national average (May, 2011).

‎A 2011 survey of home water bills for the 20 largest U.S. cities found that for 200 gallons a day usage, San Diego was the highest cost. At 400 gal/day, San Diego was third highest.

From 2007 through 2010, 10,763 industrial facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation's population, CA got 1.6% of the built or expanded industrial facilities. California Manufacturers and Technology Association podcast

California is now ranked as the 2nd worst state to retire in. Only basket-case Illinois is worse. We “beat” NY, RI and NJ.

Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The cumulative net annual income lost from this 8 year out-migration comes to about $26 billion. Net departures slowed in 2008 only because people couldn’t sell their homes. But in 2010 the loss resumed -- we lost 154,000 net people to domestic out-migration. Again, note that this is NET loss. and and
These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their pensions provide more bang for the buck. Too often these departing seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions. And once they move out of California, our state can no longer tax their California-paid pensions.

As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral. This “race to the bottom” must stop NOW.

NOTE: To see the latest version of this “Breaking Bad” column, go to my blog at, or my more active Facebook This fact sheet Word file is available free upon request.
Here again we hear from critics blaming California's decline on Prop 13 - obviously because Prop 13 starved government.

Or did it? First hint -- you'll NEVER hear such critics use NUMBERS to demonstrate the shortfall in revenue.

And for good reason.

Because when it comes to gathering sufficient property taxes, Prop 13 is no problem at all – except for profligate spenders. Look at the history of my San Diego County – a history which pretty much reflects the history of property taxes in the urban/suburban counties that hold over 90% of California's population.

According to the SD County Tax Assessor, in 1977 – the year BEFORE Prop 13 took effect – our countywide property tax revenue was about $639 million. In the 2009-2010 fiscal year, our county assessor reported revenues of $4.596 BILLION. For every property tax dollar collected in 1977, the county in 2010 collected $7.20.

During that time frame, our county population has grown about 85%, and inflation has gone up about 260%. Hence property tax revenues today are substantially higher than the bloated PRE-Prop 13 year, even after adjusting for inflation and population growth.

For 2008, California was ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But CA property taxes per home were the 10th highest in the nation that year. and

To see how CA ranks against the other states on various taxes and other economic factors, go to: and read the latest updated version of my fact sheet “Breaking Bad – CA vs. the other states.”


It turns out that, under Prop 13, property tax revenue is FAR more stable than our other forms of tax revenue. Income tax revenue is plunging, and sales tax revenue is dropping.

But property tax revenue seldom goes down AT ALL. Since the year Prop 13 passed, San Diego County property tax revenue has ALWAYS gone up – every year – until the 2009-10 fiscal year.

The SD County Assessor reported that real estate property tax revenue for the fiscal year ending June 30, 2010 is down – but only 1.0%. This in the 4th year of California’s real estate meltdown. The year before, real estate property tax revenue was actually up 4.1%. Not one person in a thousand knows this – the press has not (yet) covered these amazing facts.

Revenue is up because Prop 13 has the little-known added benefit of smoothing out real estate property tax revenue from year to year. Most properties this year (generally those purchased prior to 2003) had their property tax go up 2%. Add to that the resales, property improvements and new structures (which establish new tax assessment levels), and the revenue stayed rather constant in the teeth of our economic downturn.

Consider what happens without Prop 13 protection: In the real estate boom years from 1998 through 2005, property taxes would have SOARED. (Even WITH the Prop 13 limitations, San Diego County property tax revenue collection during this period STILL rose 111%.) But then in the last four years, dropping property values would have caused a dramatic plummet in property tax revenues – revenues that governments would now be hooked on – just like we see with our volatile sales taxes, and especially with our erratic income tax revenues.
schoolboy: "Or what what brought the state to our present ruin [Prop 13].. plenty of sober folks say the latter..."

Not at all. Prop 13 kept Sacramento from taxing us all out of our homes. But it didn't keep Sacramento from spending like a drunken sailor.

That's what ruined the state.

At least, the drunken sailor quit when he ran out of money.
It points up an interesting question: who runs the State - the legislature or the unions?
The pension problem begins and ends with 3% at 30 for public safety retirees. Taking the defined benefit away from all except public safety is putting the burden of a fix on the wrong group. Police need to contribute at least half of their retirement and the benefit needs to be returned to pre 1985 levels with typically 1 1/2% at 60.
Union beneficiaries in San Diego, as in some many US cities, just got used to the gravy train—who wouldn’t? Weaning unions off the plentiful perks of the past (hopefully) will not be easy, but I don't think they have any valid arguments left. In fact, once they had consolidated power some years ago they only then had to use rhetoric and threats to maintain it. Simply put, the US is hopefully in transition from too many employees of all levels being paid more to work less, back to a more sane and equitable scenario of being paid less to do more. In fact, I believe that there has been an increase in productivity since '08, and that this helps explain why so many businesses have been hesitant to add new employees. While I feel for those out of work, those at work are benefiting substantially from their increased ability to produce more at a higher quality than most had imagined they could. From the organization's perspective, why would they burn up great amounts of time, money, benefits, and resources training new hires when they can offer trusted employees overtime, which of course is a bargain compared to the alternative. Given that CA, for far too long, has been an excellent example of the worst sort of government corruption, it is heartening to see some no-nonsense thinking return to the Golden State. The US in general must return to being a culture that values hard work, knowledge, thinking skills, and citizenship—in part this means living within one’s means, saving, and not expecting more than one’s fair share. Unfortunately, until our ‘leaders’ adopt a similar attitude, I believe there is little hope for the nation at large.
A few amazing things are happening:

1. Carl DeMaio must have hueveos grandes to take on the powerful voting bloc that is organized labor (mostly public) in San Diego. Add to that the traditionally strong gay vote in the City of San Diego that is generally solidly Democratic, and Carl has his work cut out for him in this election. Very non-political of him to take on two powerful groups and make a stand on the cost of public services, and public employees. With out fixing these two costs there will be no money to do any grand vision for San Diego.

2. The Republican Party backing an openly gay candidate is another amazing feat. A very non-WASP position. The Republican party evolving?

3. And finally taking the issue of pension reform out of the hands of elected officials; a bold move, and a damning one of those elected who allowed the public employee pay and pension problem to grow and now explode.
Grossly oversimplified account. San Diego has been of course a disaster of corruption and of poor management. Its specific problems with public employee compensation and retirement are in great part a consequence of that poor management by elected officials. DeMaio's proposition is a giant grab bag of reasonable and vicious ideas. DeMaio is one more symptom of the loss of trust in California; his success will only exacerbate the failure of politics in California. Howard Jarvis began the process that resulted in the state of public education in California today. DeMaio will, if he succeeds, be the beginning of a similar process of decline and division and increasing loss of trust.
When will the union members recognize that it is the unions that are responsible for the majority of the financial problems in California resulting in job loss, both union jobs and private sector, as the deficit rises and businesses flee the state? Just because they were able to coerce some politicians into allowing unsustainable wages and benefits a decade ago, doesn't make it right. Now that it is evident that the current situation isn't even close to sustainable, they ignore reality and continue to bully their union backed elected officials into submission and acceptance of the `status quo' as `workable' with their PAC $$. All the while, their membership continues to shrink as
we layoff public sector employees in order to pay for retirees. Parks are closing, classroom size is increasing and college admissions are in steep decline while tuition is skyrocketing. All the while the Union fats are playing the `status quo' fiddle while California burns. So sad...
WOW !!! This guy is absolutely right, but he better wear a Bullet Proof Vest.
Collective Bargaining should be outlawed.

Public Sector Unions are CANCER on Society ! being Howard Jarvis a good thing? Or what what brought the state to our present ruin.. plenty of sober folks say the latter...