From today’s Wall Street Journal Political Diary E-mail… Two California Items..
Facing Fiscal Reality
Two well-off communities in the San Francisco Bay area have come up with an imaginative way of cutting spending to cope with the increasing burden of public employee health and pension costs. They are dissolving their police forces and contracting their responsibilities out to the local sheriff’s department.
San Carlos, a city of 28,000 in San Mateo County, was the first to try the unorthodox approach last year. It’s been rated a success. The city’s police officers shifted over to become sheriff’s deputies, and felony arrests went up 92 percent in the first three months. Greg Rothaus, the former San Carlos police chief who is now a sheriff’s captain, says the response to emergency calls has been comparable to what they were under the old system. "It doesn’t just seem like it works here — we have objective data to show that it does," he told the San Francisco Chronicle.
That success prompted nearby Half Moon Bay, a seaside resort of 13,000 people, to vote last weekend to disband its police force and contract with the sheriff’s department. Half Moon Bay Mayor Naomi Patridge said the move will save the city $510,000 a year out of a $9.7 million budget and allow it to "stretch our dollars and provide us with the same level of protection we have always enjoyed." Under the new arrangement, Half Moon Bay will be served by six full-time deputies, a full-time record technician and three part-time parking and traffic control officers.
The change didn’t come easily. The City Council first tried to pinch the taxpayer by placing a sales tax increase on the ballot last fall. When that failed, it began thinking outside of the box. City Council members may move out of City Hall and into the building that will be vacated by the police department. Then City Hall could be leased to a new private tenant. The city might also contract with San Mateo County to set up a new planning department that would serve the entire coastal area.
This shows that government can adapt to save money. But that only happens when times are tough and old ways of doing business are unsustainable. As Winston Churchill once said, "government will always do the right thing, but first it must exhaust all other possibilities."
Jerry Brown’s Plan B
California Gov. Jerry Brown announced last week that budget talks with Republicans were officially dead. So, too, were his hopes of getting the state legislature to approve a June ballot measure extending the sales, vehicle and income tax hikes that the legislature passed two years ago and are set to expire this year.
Mr. Brown, a Democrat, has argued that extending the tax hikes would help close $12.5 billion of the state’s roughly $26 billion budget gap and stave off deeper cuts to human services and education. But it also would mitigate the need for more structural government reforms.
Mr. Brown needed the support of at least four Republicans to get the tax hikes on the June ballot. Five Republicans showed a willingness to negotiate in return for structural reforms, including a flatter income tax, harder spending cap and scaled back pensions for current employees. But in the end, Mr. Brown wouldn’t buck the public unions and agree to the GOP’s proposed reforms.
Mr. Brown is now trying to co-opt the issue of pension reform in order to galvanize public support for the tax hikes. Recently, he put out a list of common-sense pension reforms, none of which are very controversial or would make much of a dent in the state’s nearly $500 billion unfunded liability. For instance, he proposed limits on pension spiking, the practice where workers inflate the final year of compensation that determines their pension. However, former Republican Gov. Arnold Schwarzenegger negotiated many of these same limits with the state’s biggest unions last year.
Mr. Brown suggested a few more substantive reforms, but they remain vague. For example, he wants to cap pensions but he hasn’t suggested a specific limit. He also proposed switching new workers to a hybrid pension plan that includes a defined benefit and defined contribution portion. However, he hasn’t indicated whether the plan would be optional or what the level of defined benefits would be.
Dan Pellissier, the president of the group California Pension Reform, calls Mr. Brown’s proposals "the lowest-hanging fruit on the pension reform tree." His organization is spearheading a ballot initiative to freeze or roll back benefits for current employees, which is the only way to significantly reduce the state’s unfunded liability. Mr. Brown and Democrats, however, remain vehemently opposed to restructuring pension benefits.
The governor’s Plan B is to collect enough voter signatures to put the tax extension on the November ballot. He probably figures that voters will be more likely to support the extension if they believe they’re getting something in return. No doubt he’s right. But voters will likely want more bang than what Mr. Brown is offering for their buck.