To access the remainder of this piece of premium content, you must be registered with Firehouse. Already have an account? Login
Register in seconds by connecting with your preferred Social Network.
Complete the registration form.
It’s easy to assume that what happens with the fire service and government where we live is what’s happening everywhere. That may not be true.
I just spent a month reviewing articles in newspapers and magazines and on websites about issues facing local, state and federal governments. Although the articles are not always written without bias, they do provide a perspective of what’s going on nationwide. The following are some high-profile examples I found.
Cities in bankruptcy
• At the end of June 2012, Stockton, CA, became the nation’s largest city to seek bankruptcy protection. According to the Associated Press, the City Council voted to adopt a bankruptcy budget due to a significant budget shortfall. The new budget suspends payments for debts and legal claims, reduces payments for retiree medical benefits and cuts other pay and benefits for employees.
Stockton, with approximately 300,000 people, is the seventh U.S. city to file for bankruptcy this year. According to several publications, Stockton has struggled with rising pension costs, contractual obligations made to employees and a drop in property tax revenues. Stockton officials contend they had no alternative but to file for bankruptcy after mandated mediations with creditors failed.
• San Bernardino, CA, a city of about 210,000, also filed for bankruptcy. The city has reported cash-flow issues that may prevent it from meeting payroll obligations. There is also a claim that falsified budget documents were given to the City Council for 13 of the last 16 years. Because this could have caused flawed financial decisions on the part of the City Council, this is a very serious accusation.
• Several publications report states continue to struggle with a significant gap between promised public employee retirement benefits and the funds they have placed into pension systems. By not making the annual required contributions into retirement funds, the funding gap continues to widen.
• The City Council in North Las Vegas, NV, voted to suspend collective bargaining agreements with unions. The council’s decision is reportedly based on a Nevada law that lets cities suspend union agreements during human-caused and natural disasters and civil unrest. The mayor said the action was necessary to “rescue the city from financial ruin.” The director of research at the National League of Cities said he has not heard of another city using a law designed for physical emergencies for a financial emergency.
• Voters in two more major California cities – San Diego and San Jose – recently approved cuts to government-provided retirement benefits. In each city, the cuts affect retirement benefits for current and future employees. According to a government source, “The message is that if elected officials and public employee unions do not deal with this issue, voters will take things into their own hands.”
• Illinois is reportedly modifying retirement benefits of public employees and retirees. Recent legislation requires a large number of retirees to pay for health insurance in the future. Free health care benefits had been in place for state employees for many years. Illinois had already reduced pension benefits for future public employees. Two other states, Iowa and New York, also enacted pension and benefits reforms in an effort to cut costs.
Righting the “financial ship”
Many states and cities have taken steps to right what they call their “financial ship” due to what is reported to be unsustainable current and future public pension and benefits obligations. To accomplish this, they are modifying agreements and contracts made with employees. In some cases, the changes apply only to new hires, but in others they impact current employees and even current retirees. More governments may seek bankruptcy protection through the courts, which would open the door to push forward the desired changes.