It’s easy to find ourselves focused solely on fire service and government issues as we see them from our geographic location in the country. In other words, we assume that what’s happening with the fire service and government where we live is essentially what’s happening everywhere. That may not be true.
I decided to spend a month reviewing articles posted in newspapers and magazines and on popular websites that report on 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 seventhU.S.city to file for bankruptcy this year. According to several publications,Stocktonhas struggled during the economic downturn with rising pension costs, contractual obligations made to city employees and a drop in property tax revenues that occurred following the real estate downturn. The city has one of the highest foreclosure rates in the country.Stocktonofficials 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 making payroll obligations soon. There is also a claim that budget officials presented falsified budget documents 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.
Other actions
• 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 to pay those bills. Simply put, states have failed to keep up with the payments on their retirement bills, and the problem continues. By not making the annual required contributions into retirement funds, the funding gap continues to widen.
• The City Council inNorth Las Vegas,NV, recently voted to suspend collective bargaining agreements with unions. The council’s decision to do so is reportedly based on aNevadalaw that lets cities suspend union agreements during human-caused and natural disasters, as well as civil unrest. The mayor said the action was necessary to “rescue to 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 majorCaliforniacities recently approved cuts to government-provided employee retirement benefits. Voters inSan JoseandSan Diegoapproved cuts in benefits for city employees. In each city, the cuts will 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.”
•Illinoisis also reportedly modifying the retirement benefits of public employees and retirees. Legislation was recently passed that requires a large number of retired workers to pay for their health insurance in the future. Free health care benefits had been in place for state employees for many years.Illinoishad already reduced pension benefits for future public employees. Two other states,IowaandNew York, also enacted pension and benefits reforms in an effort to cut costs. This is in addition to high-profile steps previously been taken by other states.
Righting the “financial ship”
This is just a sampling of what is going on in the country regarding the financial status of government. Many states and cities have taken steps to right what they call their “financial ship” due to the cost of what is reported to be unsustainable current and future public pension and benefits obligations. In their efforts 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. If for some reason cities cannot make the changes they want, more may seek bankruptcy protection through the courts, which would open the door to push forward the desired changes.
If your area of the country is not experiencing this type of political activity yet, it may be coming your way soon. That should not catch us by surprise. Monitor the pulse of government where you live and work and stay involved in the decision-making process.
For more news and training on fire service politics, visit: http://www.firehouse.com/topics/politics-law.
