An Oakland Column You Probably won’t like

Oakland is a mess; not Oakland the city, although parts of it certainly are messed up, but Oakland’s city government.  Oakland is far from unique in this  respect.  In these days of economic crisis (no, the recession is NOT over yet), and with California’s state government in a self-induced state of paralysis, many California cities are messed up, and Oakland isn’t the worst.  That honor belongs to Vallejo, which is entering its second year of bankruptcy, payback for a spending binge in the ’90s fueled by real estate speculation.   Other Bay Area cities also share Oakland’s plight, notably Richmond and San Francisco.

All these cities are faced with enormous looming budget deficits, and not for the first time.  Unlike the federal government, however, Oakland and its fellow California cities can’t simply print more money to cover their debt.  Nor can they invoke Keynesian economics and say that  running a deficit is OK.  No, there only three ways for Oakland to get out of its predicament:  1)  raise taxes -and/or fees – not a popular option, 2) cut services — also not a popular option, or 3) join Vallejo in bankruptcy and then proceed to rewrite its contracts with city labor unions — again, not popular, especially with said employee unions.

How did Oakland get into this fix and who’s to blame for it?  OK, OK, I know pinning blame on someone won’t solve the problem, but in this case understanding the bad decisions involved is part of keeping them from happening again.  Of course, not all of this problem is  Oakland’s fault.  The state government’s deficit and paralysis have led to it cutting back state contributions to local governments and shifting state responsibilities onto cities and counties.  Even more importantly, cities are highly dependent on revenue from sales and property taxes.  The recession, and its underlying housing bubble collapse, have led to major drops in both these revenue sources.  Unfortunately, in the 1990s, when sales and property tax revenues were booming during the internet bubble, the Oakland city council made a series of (in retrospect) irresponsible contracts with city unions, including notably the police and fire department unions.  Not only did these contracts involve major pay raises and benefit improvements, they committed the city to providing retirement benefits long into the future.   Even more irresponsibly, the city renewed these contracts even after the market collapsed in 2000.

Was this dumb?  Absolutely!!  Then why did it happen?  The answer lies in Oakland politics.  Oakland’s police and fire dept. unions have traditionally been strong political forces.  They share this attribute with the police and fire unions in other cities, notably Richmond and Vallejo [notice a pattern here?].  The police and fire unions endorse candidates for mayor and city council.  They also make major  contributions (both in money and volunteers) to the election campaigns for those offices.  Not surprisingly, the candidates they support often get elected.  Also not surprisingly, once they’re elected, these unions expect, and usually receive “payback”.  We’re not talking  graft here [at least, not that I know of].  This is not about suitcases full of small bills left at dark corners in the dead of night.  The payback happens in the full light of city council meetings and the somewhat dimmer light of labor negotiations and council closed sessions.

If you, as a council candidate, received a major amount of campaign help from the police and fire unions, you’ll have your office door open to their representatives.  You’ll also be thinking (either consciously or unconsciously) “If I cross these guys, they’ll be campaigning for my opponent next election, and I’ll lose. …  I better not cross these guys.”  Even if you weren’t thinking that when their representatives walked in your office door, you’d undoubtedly be thinking it by the time they walked back out.   With the police and fire unions helping to elect many council members (a majority?  I don’t know), it’s no big surprise that the council would approve contracts favorable to these unions.  Were the unions irresponsible to propose contracts that weren’t sustainable in the long-term?  I think so.  Were the council members irresponsible for agreeing to those unsustainable terms?  Well, Duh.  But you know who was the most irresponsible   in this whole process?  Us, the voters of Oakland.  We weren’t paying attention to what the city council was doing, and we weren’t paying attention to how city council election campaigns were being funded.  Where were the crowds of citizens at city council meetings in the 1990s when the police and fire contracts were approved?  Where were the crowds when, even after the bubble collapsed in 2000, the city council renewed those contracts?  (Also, where were the newspapers and reporters who are now lambasting Mayor Dellums  and trying  to pin all the blame on him?  Does he deserve part of the  blame?  Sure; but when he took office, the seeds of the problem had already been sown and were already growing fast.)

Oakland’s voters also have to take ownership of approving two incredibly dumb city ballot measures — Kids First and Kids First II.  Now, of course nobody wants  to vote against helping kids, but these two measures, and especially the second one, committed portions of the city budget to funding children’s services by non-city groups.   These were not bad groups, and  I’m sure that  the money has done good  things, but so do libraries, parks, senior centers, and, yes, police and fire departments. 

The result of all this short-sightedness and, yes, stupidity, is that now the city is in a serious financial bind.  Revenue has dropped and expenses continue to grow.  Perhaps most importantly, under past city contracts, the city is still required to help fund retirement benefits for police and firemen that have already retired, and those benefits  can’t be modified in future contracts.  They’re locked in as “entitlements”.

So, what do  we do now?  Well, if the  voters are willing, the city will have to enact new taxes to cover some of the current deficit and avoid major layoffs of police.  On the union side, they, and  particularly the police, will have to be willing to agree to major give-backs, especially as regards to retirement benefits and how they’re paid for.  Somehow, it’s also going to be necessary to bring the already-retired union workers back to the table to discuss what the city is required to do for them. 

Ultimately, the one threat the city may have available as leverage, one that it would be understandably loath to even talk about (as it were, the “nuclear option”), is declaring bankruptcy, with the prospect that an appointed administrator might be empowered to abrogate contracts and even retirement benefit payments as part of an overall package.  Looking north at Vallejo, it’s pretty clear that its bankruptcy has tarnished that city’s image severely, and it’s still not clear if Vallejo city’s officials are willing to make the tough calls needed on reducing city union employees’ pay and benefits.

In the long run, what may really be needed is something  similar to, but more far-reaching than, the  federal Hatch Act, which limits federal employee’s participation in partisan election campaigns.  Oakland needs to have a measure that says that if you’re getting paid out of city coffers, you can’t be influencing the  electoral process that picks your bosses.  The potential for corruption, malfeasance, and, at the very least, conflict of interest, is far too great.  At the very least, Oakland voters need to be far more careful in thinking about and deciding which candidates for mayor and city council they vote for.  Maybe an endorsement from the city’s unions, and particularly the police union, shouldn’t be looked upon as a plus??

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2 Responses to An Oakland Column You Probably won’t like

  1. Stu: You’ve given a thoughtful and honest account of some of the reasons that created the current budget problems, but I was surprised by your Hatch Act solution. There are other choices that might actually work better. One would be for elected officials to quit meddling in the employee relations, labor relations management function. This would give management the authority to bargain hard at the table and would tell labor it may not end-run the collective bargaining process. A second policy option would be to set pension and benefit standards that are transparent and subjected to a long term cost benefit analysis to disclose the fiscal impact of a deal.

    Gary Hunt
    ghunt94526@gmail.com

  2. stuflash says:

    Thanks Gary. Restricting political activity could be constitutionally problematic, especially with the current Supreme Court majority, but I’m not sure it’s realistic to think of keeping members of the governing board out of the labor negotiations. After all, they have to untimately approve the contract, which they won’t do if they don’t like it.

    I like your idea of putting a transparent view of the long-term cost of benefits into the process. I’d say that if the transparent view includes an analysis of long-term costs, is made easy to understand, AND is put out to the public well before the final contract is up for approval, at least the public would have a chance to scream about possible “sweetheart deals”.

    The public reaction to the OPOA’s absurd insistance on no benefit cuts and no layoffs for police shows that the public (and even council members) will reject special interest deals if they’re clear and blatant enough.

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