CA Business Climate Just Gets Worse

You’ve read it here many times. But I was surprised that the Los Angeles Times ran an op-ed about California’s Khmer Rouge attitude toward businesses. It ran in the opinion section, which otherwise never heard of a tax it didn’t want to increase or a regulation it didn’t want to enact.

The op-ed is by Wendell Cox and Stephen Malanga and is excerpted from City Journal, whose articles we sometimes reprint. Our editor-in-chief, Steven Greenhut, also writes for the publication.

Cox and Malanga write:

Last year, the medical technology firm Numira Biosciences packed its bags and left Irvine for Salt Lake City. When asked about the firm’s departure, its chief executive praised Utah’s quality of life but also blamed California’s business environment for the move. “The tipping point was when someone from the Orange County tax [assessor] wanted to see our facility to tax every piece of equipment I had,” Michael Beeuwsaert told the Orange County Register.

Mind you, that was Orange County, commonly derided as the most conservative are of California, except for rural areas. The authors continue:

In surveys, executives regularly express the view that California has one of the country’s most toxic business environments, and they say it is one of the least likely places they would open or expand a company. Many firms headquartered here say they have forsaken expansion in the state….

Using a statistical method, they found that the California economy boomed in the 1990s, creating copious new jobs, but crashed in the 2000s. It really was a “lost decade.” They don’t point it out, but this “lost decade” occurred under the hideous governorship of high-tax, high-regulation, jobs-”terminator” Gov. Arnold Schwarzenegger, whose policies continue to grind this state into the dust.

Lost Decade

Cox and Malanga continue:

A study by City Journal using the National Establishment Time Series Database, which has tracked national job creation and migration from 1992 through 2008 (the latest data available), suggests that California’s economy started showing signs of sclerosis a decade ago. So even after a national recovery takes place, the Golden State may keep struggling –unless Sacramento moves to improve the business climate.

Of course, the opposite is happening. Although Gov. Jerry Brown vetoed a couple of anti-business bills this year, he signed scores more of them. And he’s as obsessed as the Democratic Legislature — and the Times’ editorial page and its four top columnists — with gouging even more tax money from already tax-shocked Californians.

The authors write:

Economists usually see business start-ups as the most important long-term source of job growth, and California has long had a reputation for nurturing new companies. Indeed, from 1992 to 2000, California added 777,000 more jobs from start-ups than it lost to closures. But this dynamism vanished in the 2000s. Between 2000 and 2008, California lost 262,000 more jobs from closures than it gained from start-ups.

Between 2000 and 2008, some 80,000 more jobs left California for other states than came here from other states. The leading destination of the job migration was Texas, with Oregon and North Carolina running second and third. California managed to add jobs only through the expansion of existing businesses, and even that was at a considerably lower rate than a decade earlier….

While there are many reasons for these troubling trends, the state cannot ignore the role its policies have played in the economic decline. For seven consecutive years, executives polled by Chief Executive magazine have ranked California as having the worst business environment in the country. In a 2011 survey of its members by CalRecovery, a California coalition of businesses and industries based in the state, 84 percent of about 400 executives and owners who responded said that if they weren’t already here, they wouldn’t consider starting up in the state, while 64 percent said that the main reason they stayed in California was that it was tough to relocate their particular kind of business. In a recent op-ed, Andrew Puzder, chief executive of Carpinteria-based CKE Restaurants, which manages 3,000 eateries around the country, called California “the most business-unfriendly state we operate in.

Los Angeles and San Francisco long beckoned as gleaming jewels of jobs production. No more. Now they’re jobs-killing sloughs of despond:

Another dark sign has been that economic growth in California’s major cities stalled after 2000. Los Angeles and the San Francisco Bay Area had been the engines of California’s economic growth for at least a century. But between 2000 and 2008, California’s two big metropolitan areas produced fewer than 70,000 new jobs — a nearly 95 percent drop from the 1990s and a mere 6 percent of job creation in the state. This was a collapse of historic proportions.

Green Jobs

Of course, there are positive signs, aren’t there? Thanks to AB 32, the Global Warming Solutions Act of 2006 and other far-sighted legislation, California must be leading the globe in “green jobs.” That’s what we were told, weren’t we? The actual text of AB 32 promised:

By exercising a global leadership role, California will also position its economy, technology centers, financial institutions, and businesses to benefit from national and international efforts to reduce emissions of greenhouse gases.

Then-Gov. Arnold Schwarzenegger and the Democratic Legislature that passed AB 32 didn’t lie to us, did they?

Yep.

Cox and Malanga found:

California is even losing the battle for green manufacturing jobs. Earlier this year, Bing Energy, a fuel-cell maker, announced that it would relocate from Chino in San Bernardino County to Tallahassee, Fla., where it expected to hire nearly 250 workers. “I just can’t imagine any corporation in their right mind would decide to set up in California today,” Dean Minardi, Bing’s chief financial officer, said.

If you see any sunrise on the horizon for the Golden State, write it in the comments section. I just don’t see any.

If you talk to Democratic legislators, they’re obsessed with making happy the government unions that fund their campaigns. The legislators actually believe the way to get out of the recession is to increase taxes to pay for more union teachers and administrators, which then will produce smarter kids, who then will lead us to the radiant future of prosperity. And the legislators believe that even more regulations will make California such a paradise that jobs will sprout here like kudzu.

Republicans legislators remain obsessed with preserving redevelopment to help their local crony-capitalist buddies, while ripping off local small-business owners and homeowners.

Well, enjoy the weather.

(John Seiler, an editorial writer with The Orange County Register for 19 years, is a reporter and analyst for CalWatchDog, where this article first appeared.)

Disrupting Class: Why California’s teachers’ unions will eventually go the way of Betamax

Slowly but surely, “disruptive technology” is penetrating the nation’s ossified public education system. The effects may be liberating for students, but they would be devastating for teachers’ unions. In his extraordinary book, Special Interest, Stanford political scientist and Hoover Institution senior fellow Terry Moe describes a succession of union victories—for tenure, strike rights, and seniority protection; against accountability, charter schools, and vouchers for disadvantaged families. But Moe argues that those victories won’t last. Union power will be marginalized, in part, by online learning. Emerging technology-based education, Moe writes, is the “long-term trend . . . and the unions cannot stop it from happening.”

Economic imperatives are pushing education policymakers to accelerate this trend. Due to California’s dire fiscal situation, the University of California system is looking to online learning as a way to cut costs. In a report released late last year, UC’s “Commission on the Future” proposed “a pilot program to explore the quality and feasibility issues regarding fully online courses for UC degree credit.” While online classes and degrees are nothing new, UC’s chapter of the American Federation of Teachers, sensing a major upheaval in the works, decided to launch a preemptive strike. Its website, full of fighting words, challenges the claims of better and less expensive education online. The union’s real concern, of course, is a significant loss of membership: UC-AFT represents all non-tenured lecturers, as well as librarians, across the system’s 10 campuses. “[W]e are looking to . . . protect our members from potential adverse effects of UC’s rapid adoption of online instruction,” the website announced.

For the moment anyway, the union appears to have succeeded. UC officials and UC-AFT tentatively agreed to a new deal that includes a provision stipulating that no campus could institute a course or program resulting in a “change to a term or condition of employment” of any lecturer without UC-AFT’s consent. In other words, the union is determined to keep all of its dues-paying members on the payroll whether they’re needed or not—and whether students can afford them or not. Tuition at the University of California this year is $12,182, not including room, board, and sundry campus fees. That’s more than triple the amount undergraduates paid ten years ago. The UC Regents are considering a plan that could double tuition again in the next five years. Saving money for California’s beleaguered parents and taxpayers with quality online classes is of no interest to UC-AFT. They fiercely protect their turf at any cost.

But the greater ramifications of digital learning—and the greater threat to union preeminence—will be seen at the K-12 level. Rocketship Education, a charter school network, is using a “hybrid” or “blended” model (a combination of computers and flesh-and-blood teachers) at five campuses in San Jose. Rocketship launched in 2007 and serves a predominantly low-income and minority student population. It plans to open 23 more campuses by 2017. Rocketship schools achieved an overall score of 868 on California’s academic performance index in 2010, placing the chain among the top-ten performers in Santa Clara County and the fastest improvers in the state.

The undeniable superstar of online learning is Salman Khan, a former Silicon Valley investment banker who got his start by posting a few tutorial math videos for his struggling cousins on YouTube. The videos quickly went viral and soon attracted the attention of Microsoft’s Bill Gates, who called Khan his “favorite teacher.” Khan Academy now offers more than 2,600 videos and serves more than 1 million students globally. Locally, Khan has gained a foothold in the Silicon Valley community of Los Altos, where schools have begun to use his online materials in their math programs. The students have shown noticeable progress in less than a year. Starting as a pilot program last year, Khan’s videos are now used in all Los Altos schools.

The blended-learning approach has attracted a great deal of interest from foundations and think tanks. Its appeal is obvious: students would potentially achieve more with the help of technology and fewer classroom teachers. No wonder the unions are terrified. The National Education Association proclaims on its website “an absolute prohibition against the granting of charters for the purpose of home-schooling, including online charter schools that seek home-schooling over the Internet.” Lance Izumi, an education policy analyst with the Pacific Research Institute, notes how the unions have tried to erect contractual barriers against technology: “The California Federation of Teachers, in model contract language, says: ‘No employee shall be displaced because of distance learning or other educational technology.’” But a superior education for far less money will eventually overwhelm and decimate the unions, and for some, that will come not a moment too soon: the late Steve Jobs, for one, insisted that teachers’ unions were the “worst thing that ever happened to education.”

Of course, any innovation requires a judicious dose of skepticism. But just as the horseshoe business became significantly less relevant with the advent of the automobile, education will undergo a similar transformation. It’s a fair bet that teachers’ unions ultimately will go the way of the eight-track cassette player, Betamax, and the floppy disk.

(Larry Sand, a retired teacher, is president of the California Teachers Empowerment Network. This article first appeared in City Journal.)

1 Year and Counting for the “Underdog” Obama

If Obama is to win re-election one year from today, he’ll need to prove a “historic” candidate in less esoteric and more statistically significant ways than propelled him to victory for his first term. He’ll have to defy the historic trends for presidential elections as they presently stand. As the Washington Times notes:

At 43 percent approval in a Gallup poll conducted Oct. 28-30, Mr. Obama recently referred to himself as an “underdog” — with good reason. Of all the presidents since World War II whose job-approval scores were lower than 50 percent one year before Election Day, only one went on to win a second term.

That was President Nixon, whose job approval stood at 49 percent in November 1971. He rebounded to defeat Democrat George McGovern in a landslide in 1972.

Obama’s approval rating is much lower than Nixon’s and, hopefully, the GOP candidate will prove more formidable than McGovern.

Unemployment is another statistical guide.

No president since Franklin D. Roosevelt has won a second term when the unemployment rate was higher than 7.2 percent. Reagan won in 1984 with a jobless rate at 7.2 percent.

Obama, of course, is no Reagan and present unemployment hovers at 9%.

So, Obama has his work cut out for him. But he does have a few advantages going for him.

He is still a formidable fundraiser, having amassed more than $150 million for his campaign and the Democratic National Committee this year.

Also, his re-election operation is more robust than any of the GOP camps, which are waging a long and costly primary battle. Mr. Obama’s campaign is able to build on a 50-state network from 2008, an email list of more than 9 million potential supporters and an experienced staff with unequaled savvy in digital marketing and social networking.

In early polling of head-to-head matchups with potential GOP candidates, Mr. Obama comes out on top in nearly every instance. One poll in the battleground state of Florida this week showed former Massachusetts Gov. Mitt Romney tied with Mr. Obama.

And the Times contemplates the possibility of a third party candidate siphoning votes from the Republican nominee – but I don’t foresee such a option in the tea leaves.

As I’ve noted previously, Obama is not being blamed by the American people for the state of the country. The buck, it seems, has not stopped with the president. It must be a priority for the GOP candidate to lay blame were it belongs and tie the economy as an albatross around the president’s neck. Where the media has deflected blame from Obama, the GOP must nail it to his campaign bus. A Republican cannot win if Obama is not recognized as the culprit responsible for America’s woes and deserving of its righteous anger.

(Justin Paulette is an attorney specializing in international and constitutional law. This article was first posted on Ashbrook.)

Court Case Shows Republican Hypocrisy

We all know that California’s Democratic Party is running the state into the fiscal ground, given how beholden its members are to public-sector unions and how devoted they are to expanding government and raising taxes. The state needs some political competition, but a major court case reminds us why the state Republican Party is a useless vessel that’s incapable of broadening its base and changing the state’s political trajectory.

On Thursday, the California Supreme Court began oral arguments in a lawsuit brought by defenders of the state’s redevelopment agencies (RDAs), which are seeking to overturn recent laws that essentially shut down those agencies. Gov. Jerry Brown isn’t often right, but he was on target when he proposed shutting down these central planning agencies that primarily dispense corporate welfare to big businesses and drive small property owners off their land so that big-box stores can prosper.

Brown’s plan wasn’t perfect. It allowed the agencies to buy their way back into existence as many of them have since done. The law wasn’t passed entirely for the right reasons. Brown and legislative Democrats had typically supported RDAs, but were looking for quick ways to close the state’s gaping budget hole. As Bloomberg reported, “The governor and supporters of the law said the redevelopment agencies have become little more than slush funds for private developers, and they want the tax money generated by new developments to be diverted from the agencies to local schools, law enforcement agencies and other services.”

When your political enemies give you a gift, you ought to take it. Instead of taking it, California Republicans actively opposed the governor’s plan and shamelessly sided with the people who run roughshod over everything the GOP is supposed to stand for. Forget all the talk about property rights, limited government, free markets and family values.

GOP Votes to Protect

“Almost like in ‘Alice in Wonderland’ where up is down, and down is up, this past year Democratic Legislators voted to abolish redevelopment and most Republicans fought tooth and nail to protect 425 redevelopment agencies from being abolished!”explained Jon Fleischman, California GOP vice chairman and publisher of the GOP-oriented Flashreport. Fleischman noted that over two crucial votes, only six Assembly Republicans voted to abolish RDAs and only one Senate Republican voted to do so. This indeed is shameful.

In fact, one of the GOP’s leaders, Sen. Bob Huff of Diamond Bar, received the League of California Cities’ Legislator of the Year award for his efforts to save redevelopment agencies. His wife, by the way, works for a developer who is one of the state’s biggest redevelopment beneficiaries. This is the type of thing that makes me want to join the unbathed wretches occupying city parks.

In the thick of the debate, I recall talking to multiple Republican legislators and most of them were defiant defenders of redevelopment. They said that it worked in their city. They championed the economic benefits of redevelopment. It became clear that with the exception of Chris Norby of Fullerton, Beth and Ted Gaines of Roseville and a couple of others, Republicans don’t even understand the nature of free markets.

Started in the 1950s to combat urban blight, redevelopment has become a tool by which localities maximize tax revenue within their boundaries. In the redevelopment process, local bureaucrats identify areas that they want to see improved. The agency declares these areas blighted based on a wide-ranging set of criteria. Basically, if officials want to redevelop an area, the well-paid consultants will always find blight.

Then within that area, property rights magically disappear. City officials call the shots. They can, and often do, use eminent domain to clear away properties and hand them over to politically well-connected developers who promise to build tax-generating projects. Even when cities don’t use eminent domain, the threat of its use is enough to cause small business owners and even homeowners to flee. Then the agencies run up debt to fund the projects. In Sacramento recently, a restaurant developer received millions of dollars in subsidies to build a mermaid bar — mermaid-costumed women swim around in a giant fish tank — that caters to lobbyists. How’s that for a core government service?

Bogus Claims

Of course, most of the claims by redevelopment’s advocates and beneficiaries of new jobs are bogus. The nonpartisan and highly respected state Legislative Analyst’s Office found, “While redevelopment leads to economic development within project areas, there is no reliable evidence that it attracts businesses to the state or increases overall regional economic development.” LAO debunked the absurd job-creation claims made by the California Redevelopment Association.

Mostly, redevelopment shifts jobs around a region as localities fight with one another to lure the businesses in a mad rush for tax revenue. They have to find some way to fund those lush city manager salaries and police pensions. This may be pro-business in a way, but it’s the sort of anti-market, bailout, subsidy-driven philosophy that is angering Tea Partiers and Occupiers alike.

The state Supreme Court case centers on Proposition 22, the November 2010 statewide ballot initiative that banned fiscal raids on redevelopment funds. That’s why the governor’s approach was to shut down the agencies in their entirety and then allow some of them to come back into existence. As the state argued, “RDAs are creatures of statutes — and their existence is not guaranteed in the state Constitution — so the Legislature was free to dissolve them.”

Republicans should be standing with the small property owners and business people — often working-class people and minorities — who want to pursue their dreams and not be bullied by these urban-renewal agencies. They should be standing up for fiscal responsibility and against debt and subsidies. Instead, they have stood up for the Armani-suit-wearing developers and bean-counting bureaucrats who treat private property like pieces on a monopoly board. It’s shameful and a reminder of why the GOP is dying in California.

(Steven Greenhut is CalWatchdog’s editor in chief. Greenhut was deputy editor and columnist for The Orange County Register for 11 years. He is author of the new book, “Plunder! How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.” This article was first published on CalWatchdog.)

Occupy Protests and Political Backlash

The Occupy Wall Street protests, especially in Oakland, and the news it has generated, brings up memories of former United States Senator from California, S. I. Hayakawa. The former English professor and president of the then named San Francisco State College achieved world-wide attention for standing up to protests at the school during the raucous 1960s. His stance led him to eventually win a U. S. Senate seat when he upset sitting senator John Tunney in the 1976 election.

In a feature article on the senator, People magazine described the event that gained Hayakawa fame.

Newly elevated to the presidency of riot-besieged San Francisco State College, the diminutive (5’6″, 150-pound) academic clambered to the top of a radical-held sound truck, ordered the dissidents to “get the hell out of here,” and yanked the wires from their loudspeakers. Photographs of that incident, with Hayakawa wearing an incongruous tam-o’-shanter, were flashed to the world. He was enshrined forever as a man who dared stand up to the anarchy that seemed to be engulfing the nation.

While no individual stands up as a symbol of resisting the Occupy movement as Hayakawa did to the protests of the 1960s, candidates who support the Occupy movement could be the focus of negative attacks.

Already in what is viewed as a hotly contested Massachusetts senate race, Elizabeth Warren, the Harvard professor taking on incumbent Scott Brown, is targeted by the conservative PAC Crossroads GPS in an ad that says Warren sides with Occupy Wall Street protestors “who attack police, do drugs, and trash public parks. They support radical redistribution of wealth and violence.”

Yesterday, in Oakland, Occupy protestors drowned out a press conference of five city council members, increasing tension in the city. The images from Oakland continue to make national news.

California and its electorate is certainly not the same as it was when Hayakawa made his stand and turned it into a political victory for himself a few years later.

However, the images and arguments over the Occupy protestors are sure to find their way into coming political campaigns and make or break a few political careers.

(Joel Fox is President of the Small Business Action Committee and Editor of Fox & Hounds, where this article was first published.)

LAUSD Blows Billions on Construction

At a hearing last week, officials from the Los Angeles Unified School District appeared proud of the massive spending on new school construction and renovations. The officials appeared before a joint hearing of the Senate and Assembly education committees, although only three of the 21 committee members attended.

The LAUSD was asked to update the committees on the new construction and renovation and updating projects for the district. Mark Hovatter, in charge of contracts for LAUSD facilities department, presented a report prepared by the Los Angeles County Economic Development Corporation. “Founded in 1981, the LAEDC was created by the Los Angeles County Board of Supervisors to implement LA County’s economic development program through land development, project financing and marketing activities,” the LAEDC website states.

Hovatter said that LAUSD has been doing exactly that — acquiring land, building new schools and “modernizing” since the late 1990s.

Hovatter appeared excited to report to legislators that 132 new schools have been built by the district. “I get invited to speak a lot. It’s something we are very proud of,” he said.

Of the more than $19 billion in construction and improvements for the LAUSD, financed through five bonds, Hovatter said that 331,000 jobs were created over a 15-year period. “There are 24,000 modernization projects right now,” he added, touting the numerous construction jobs financed by the district. “But we still need modernization projects. It’s exciting to see a new school and drive through a transformed neighborhood.”

Hire Everybody!

“It’s evidently that simple,” said Lance Izumi, Koret Senior Fellow and senior director of education studies at the Pacific Research Institute, CalWatchdog’s parent think tank. “Why don’t we run a giant general bond and hire the 2 million unemployed Californians? Why limit yourself to hiring just a few construction workers? Hire everybody!”

Izumi was critical of the LAUSD spending because of significant declining enrollment, and reckless spending despite California’s historic economic crisis. Izumi said the LAUSD’s wasteful spending on construction projects included the $578 million Robert F. Kennedy High School, “the most expensive government-run school in this nation’s history.” LAUSD voluntarily increased costs by agreeing to employ only union labor through Project Labor Agreements, despite evidence from throughout California that such agreements contribute to higher construction costs.

Not one legislator questioned Hovatter about the RFK High School costs, the $337 million Edward Roybal Learning Center or the $232 million Visual and Performing Arts High School, totaling $1.2 billion in new construction for the LAUSD.

Project Labor Agreements

Labor union construction jobs done through Project Labor Agreements increasing school construction costs by 15 percent, according to Kevin Dayton, Associated Building Contractors’ government affairs director. “It’s what I call the corruption variable,” Dayton said. “California taxpayers would love to know how much money is going to Los Angeles Unified School District.”

Dayton explained that the State Allocation Board allocates one half of approved school bonds to the LAUSD — even though only about 12 percent of California school kids attend LAUSD schools. All of California’s taxpayers are subsidizing the Los Angeles area schools. “Taxpayers don’t want to be giving that school district money until they clean up.”

Dayton explained that, in inflation-adjusted dollars, the ABC found that the presence of a Project Labor Agreement is associated with costs that are $28.90 to $32.49 per square foot higher than with non-union contractors.

The ABC also found that unions in Los Angeles County force contractors to pay journeyman wages and benefits to non-union apprentices under under PLAs. And the unions use the PLAs to force non-union workers to deposit 12 percent of their wages into the International Brotherhood Electrical Workers credit union. “Workers should not be forced to have their paychecks deposited into a specific bank. They may object to that bank because of how it invests its deposits or how it uses their personal information,” Dayton said.

Mega-School District

LAUSD has 885 schools, 668,000 students, 37,000 teachers and 40,000 “other” personnel, such as counselors, nurses, janitors and administrative staff. The school district is the second largest school district in the nation and covers most of Los Angeles County’s 31 cities, and more than 700 square miles.

However, finding an actual budget for the monster district was like trying Whac-A-Mole at the county fair. The LAUSD currently reports, in press releases, $7 billion in total district spending, only slightly down from a $7.1 billion budget last year.

But that figure is suspect. The district claims per-pupil spending of $10,000. But a 2010 report by Adam Schaeffer of the Cato Institute’s Center for Education Freedom, found it was actually $29,780 when capital spending, such as from local and state bond measures passed by voters, is calculated into the actual per-pupil cost.

The school district reports, “We have so many reasons to give thanks in this District. Test scores are up. Attendance is rising. The graduation rate is improving.”

In 2011, the LAUSD school board voted to lay off 1,900 teachers, nurses and counselors. The cuts were less than an earlier proposal, which would have terminated more than 5,000 teachers, 2,000 cafeteria workers, office clerks, bus drivers and other administrative staff. LAUSD threatened repeatedly that if those cuts were made, class sizes would have increased in grades K-8.

Isumi says the class-size threat is not credible. Class size averages in South Korea stand at 66, but test scores and graduation rates are much higher, according to Izumi. “Hybrid blended learning models are part of daily learning settings. You don’t need as many teachers,” Izumi said. “It’s more about teaching techniques and really good, qualified teachers. California needs to eliminate state regulations that prevent online learning to make it more accessible for all kids. And it’s cheaper, too.”

A Lot We Can Learn

Dayton said that LAUSD has not commissioned an independent study since 2000, about how Project Labor Agreements affect construction costs. When the LAUSD first required contractors to sign a PLA in 1999, it agreed that the PLA “shall expire at the end of one year unless the District and/or Council demonstrate that expected economic savings to the District have materialized at a level sufficient to justify continuing the Agreement.”

But that has not happened, said Dayton.

Dayton said that a Price Waterhouse Coopers report was “unable to conclusively determine whether the PLA has to date had either a net positive or net negative economic impact…” But the LAUSD still requires contractors to sign a PLA to work on construction funded by its bond measures, dramatically increasing costs.

Assemblywoman Julia Brownley, D-Santa Monica, contratulated Hovatter. “It is extraordinary,” she said. “LAUSD has done a tremendous amount of building and modernization. There’s a lot we can learn from this program.”

(Katy Grimes is CalWatchdog’s news reporter. Grimes is a longtime political analyst, writer and journalist. This article was first posted on CalWatchdog.)

Let Taxpayers Be Heard

Although there were no statewide issues on the ballot last Tuesday, many Californians had the opportunity to vote on local measures, many of which sought approval for various taxes, fees or bonds. By our count, of the more than 50 tax increases on the ballot, about 75 percent passed. It may surprise some, but we at HJTA are not overly alarmed when local citizens choose to raise their own taxes as long as they are given the opportunity to cast an informed vote. And here is where the problem lies.

Most campaigns for tax measures receive strong support from those who will directly benefit. For example, whenever a school district places a bond on the ballot, it is not unusual for the construction companies who expect to contract for the work the bonds will pay for, to fund expensive campaigns to guarantee their approval. It is also commonplace for bond brokers, who will receive commissions on the bond sales, to supply consultants to advise the district on the best way to gain voter approval. Most local tax increases also receive the political and financial support of government employee unions, who clearly are a principal beneficiary of an increase in revenue.

What this means is that those wanting greater access to taxpayers’ wallets dominate the debate while individual taxpayers are often left feeling that any response is an exercise in futility. While tax promoters will see to it that slick arguments endorsing a measure appear in the ballot book all voters receive, all too often taxpayers leave it up to someone else to present a counter argument and the result is that no one responds. But it doesn’t have to be that way.

Illustrating the point is the e-mail message I received, the day after the election, from a local taxpayer advocate reporting the success of a low budge/no budget campaign in defeating a per-parcel property tax increase.

Among the keys to victory were writing a ballot argument against the tax, sending letters to local papers where they could be printed in the “Letters” section, and sending e-mails to friends and neighbors alerting them to the effort to increase their property taxes. Even though the taxpayer activists lacked the funds to send out mailers, print flyers or yard signs, they were able to convince 56.3 percent of their fellow citizens to vote “no.” Imagine what they could have accomplished with just a few hundred dollars.

Yes, average taxpayers can take on city hall, or any other local government entity, and win. All it takes is the will and using a few basic tools, most of which are free. Key to any of these efforts is as simple as preparing a good ballot argument. For those who believe that voters should hear more than just one side when it comes to tax increases, I invite you to visit www.hjta.org and look under “Taxpayers Action Tools” for more tips on defeating local tax measures.

(Jon Coupal is president of the Howard Jarvis Taxpayers Association -– California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights. This article was first posted on Howard Jarvis Taxpayers Association.)

The Long Stall: CA’s jobs engine broke down well before the financial crisis

Everybody knows that California’s economy has struggled mightily since the 2008 financial crisis and subsequent recession. The state’s current unemployment rate, 12.1 percent, is a full 3 percentage points above the national rate. Liberal pundits and politicians tend to blame this dismal performance entirely on the Great Recession; as Jerry Brown put it while campaigning (successfully) for governor last year, “I’ve seen recessions. They come, they go. California always comes back.”

But a study commissioned by City Journal using the National Establishment Time Series database, which has tracked job creation and migration from 1992 through 2008 (so far) in a way that government statistics can’t, reveals the disturbing truth. California’s economy during the second half of that period—2000 through 2008—was far less vibrant and diverse than it had been during the first. Well before the crisis struck, then, the Golden State was setting itself up for a big fall.

One of the starkest signs of California’s malaise during the first decade of the twenty-first century was its changing job dynamics. Even before the downturn, California had stopped attracting new business investment, whether from within the state or from without.

Economists usually see business start-ups as the most important long-term source of job growth, and California has long had a reputation for nurturing new companies—most famously, in Silicon Valley. As Chart 1 shows, however, this dynamism utterly vanished in the 2000s. From 1992 to 2000, California saw a net gain of 776,500 jobs from start-ups and closures; that is, the state added that many more jobs from start-ups than it lost to closures. But during the first eight years of the new millennium, California had a net loss of 262,200 jobs from start-ups and closures. The difference between the two periods is an astounding 1 million net jobs.

Between 2000 and 2008, California also suffered net job losses of 79,600 to the migration of businesses among states—worse than the net 73,800 jobs that it lost from 1992 through 2000. The leading destination was Texas, with Oregon and North Carolina running second and third (see Chart 2). California managed to add jobs only through the expansion of existing businesses, and even that was at a considerably lower rate than before.

Another dark sign, largely unnoticed at the time: California’s major cities became invalids in the 2000s. Los Angeles and the San Francisco Bay Area had been the engines of California’s economic growth for at least a century. Since World War II, the L.A. metropolitan area, which includes Orange County, has added more people than all but two states (apart from California): Florida and Texas. The Bay Area, which includes the San Francisco and the San Jose metro areas, has been the core of American job growth in information technology and financial services, with San Jose’s Silicon Valley serving as the world’s incubator of information-age technology. During the 1992–2000 period, the L.A. and San Francisco Bay areas added more than 1.1 million new jobs—about half the entire state total. But between 2000 and 2008, as Chart 3 indicates, California’s two big metro areas produced fewer than 70,000 new jobs—a nearly 95 percent drop and a mere 6 percent of job creation in the state. This was a collapse of historic proportions.

Not only did California in the 2000s suffer anemic job growth; the new jobs paid substantially less than before. Chart 4 reveals the sad reversal. From 2000 to 2008, California had a net job loss of more than 270,000 in industries with an average wage higher than the private-sector state average. That marked a turnaround of nearly 1.2 million net jobs from the 1992–2000 period, when 908,900 net jobs were created in above-average-wage industries. Further, during the earlier period, more than 707,000 net jobs were created in the very highest-wage industries—those paying over 150 percent of the private-sector average.

Chart 5, which indicates job growth or decline in selected industries, again suggests that a lopsided amount of California’s economic growth in the 2000s was in below-average-wage fields. It included nearly 590,000 net jobs in “administration and support”—clerical and janitorial jobs, for example, as well as positions in temporary-help services, travel agencies, telemarketing and telephone call centers, and so on. The largest losses in the state during the 2000s were in manufacturing, which traditionally provided above-average wages. After adding a net 64,900 manufacturing jobs from 1992 to 2000, California hemorrhaged a net 403,800 from 2000 to 2008. But information jobs also went into negative territory, while professional, scientific, and technical-services employment experienced far lower growth than in the previous decade.

The chart also shows that California’s growth in the 2000s, such as it was, took place disproportionately in sectors that rode the housing bubble. In fact, 35 percent of the net new jobs in the state were created in construction and real estate. All those jobs have vaporized since 2008, according to Bureau of Labor Statistics data. They are unlikely to come back any time soon.

These are troubling numbers. Fewer jobs and lower wages do not a robust economy make. A continuation of this trend, even if California’s recession-battered condition improves, would result in a far more unequal economy, shrunken tax revenues, and a likely increase in state public assistance—all at a time when officials are struggling with massive deficits.

 

 

 

A final indicator of California’s growing economic weakness during the 2000–2008 period is that the average size of firms headquartered in the state shrank dramatically. As Chart 6 shows, California had a huge increase over the 1992–2000 period in the number of jobs added by companies employing just a single person or between two and nine people, even as larger firms cut hundreds of thousands of jobs. Many of the single-employee companies may simply be struggling consultancies: if they were doing better, they’d likely have to start hiring at least a few people. While start-ups are indeed crucial to economic growth, small companies are especially vulnerable to economic downturns and often feel the brunt of taxes and regulations more acutely than larger firms do. The awful job numbers for the bigger companies—including a net loss of nearly 450,000 positions for firms with 500 or more employees—suggest the toxicity of California’s business climate. After all, bigger firms have the resources to settle and expand in other locales; in the 2000s, they clearly wanted nothing to do with the Golden State.

What is behind California’s shocking decline—its snuffed-out start-ups, unproductive big cities, poorer jobs, and tinier, weaker, or fleeing companies—during the 2000–2008 period? Steven Malanga’s “Cali to Business: Get Out!” identifies the major villains: suffocating regulations, inflated business taxes and fees, a lawsuit-friendly legal environment, and a political class uninterested in business concerns, if not downright hostile to them. One could add to this list the state’s extraordinarily high cost of living, with housing prices particularly onerous, having skyrocketed in the major metropolitan areas before the downturn—thanks, the research suggests, to overzealous land-use regulation.

One thing is for sure: California will never regain its previous prosperity if it leaves these problems unaddressed. Its profound economic woes aren’t just the result of the Great Recession.

Wendell Cox is the principal of Demographia, a public policy consultancy. This article was first posted in City Journal. City Journal thanks the Hertog/Simon Fund for Policy Analysis for its generous support of this issue’s California jobs package.

General Strikeout: Occupy Oakland

Throughout the day and night of November 2, “Occupy Oakland” mobilized to shut down the fifth-largest port in the United States (briefly), storm downtown banks (until managers locked the doors), and confront police (leading to 80 arrests). The day’s events, which attracted endorsements from the local nurses’, service employees’, and teachers’ unions, stemmed from Occupy Oakland’s call for a “general strike.” But contrary to the media’s flattering and hyperbolic portrayals, last Wednesday’s demonstration was nothing of the kind.

Some historical perspective is in order. The term “general strike” has a specific meaning: it signifies a work stoppage in all unionized industries and temporary suspension of operations in the businesses they serve. This was not the case in Oakland: the event merely drew some residents and a host of union members. Some 200 city employees—about 5 percent of the municipal payroll—declined to show up for work. According to CBS News, about 360 of 2,000 Oakland schoolteachers stayed out of school for the occasion. Some students also declared themselves “on strike.” The crowd in the streets Wednesday grew to an estimated 7,000 people, who closed the entrance to the Port of Oakland on Middle Harbor Road for about two and a half hours. But apart from a few blocks downtown and near the harbor, banks and stores remained open, schools remained in session, and life went on.

Destruction in the city was mainly visited on banks, including a Wells Fargo branch that closed early after occupiers made an afternoon attempt to storm it, and where windows were later broken. A Bank of America branch, a Chase branch, and a Citibank branch were also affected on the street corner amusingly referred to by the Oakland Tribune as “Oakland’s financial district at 20th and Webster Streets.” Occupiers demolished or defaced automatic-teller machines in the area. A Whole Foods Market locked its doors and later had its windows broken by masked “anarchists.” A Men’s Wearhouse store closed for the day and posted a sign in its window professing to “stand with the 99 percent.” Demonstrators smashed the store’s windows anyway.

Undercutting the pretensions of Occupy Oakland’s “general strike” was the response from Local 10 of the International Longshore and Warehouse Union. On Thursday morning, truck drivers faced off with about a dozen protesters who blocked four lanes of traffic with a fence and some dumpsters. The occupiers backed down when Local 10 president Richard Mead “appealed to [demonstrators’] sense of fairness after they were told the dockworkers would not receive their full day’s pay if they couldn’t get to work,” according to the Tribune. If the longshoremen, a powerful and symbolic union constituency on the West Coast, refused to leave their jobs, then whatever happened last week could hardly be characterized as a general strike.

By targeting the Port of Oakland and destroying storefronts and ATMs—acts intended to prevent port workers from earning a living and ordinary residents from going about their daily routines—Occupy Oakland’s more militant participants revealed some of the obscure precedents and exotic psychology that shapes their movement.

Occupy Oakland’s radicals come in two varieties. First, a small, aging, fanatical neo-Trotskyist group has tried for 40 years to seize control of the ILWU. The now-moribund Communist Party USA dominated the union from its founding in 1937 until recent decades. Unlike the original Trotskyist movement of the 1930s—which nurtured eventual neoconservatives, such as Irving Kristol—the latter-day remnant are sycophants of the Soviet-style dictatorships in Castro’s Cuba and Hugo Chávez’s Venezuela. Trotsky, whatever his faults, at least had the virtue of fighting Stalin—whom he compared to such small-time tyrants as Porfirio Díaz in Mexico. For the sectarian clique struggling to replace the old Stalinist crowd—and for whom a local leader like Mead is a competitor in running the West Coast waterfront union—Trotskyism stands merely for extremism.

Second, the black-masked vandals calling themselves “anarchists” have an even less well-known but more significant inspiration: nihilism, the ideology of nineteenth-century Russian revolutionary polemicist Sergei Nechayev. The nihilist outlook was summarized in a phrase attributed to a later Russian literary figure, Vasily Rozanov: “The show is over. The audience gets up to leave their seats. Time to collect their coats and go home. They turn around. No more coats, no more home.” For the current crowd inside the ILWU, as well as the “anarchists,” the real enemies are neither the port employers nor the banks, but the people with “coats and homes” who hold jobs, save some money, and wish to shop at Whole Foods free from the noise of agitators with bullhorns.

At the same time, as the New York Times observed but didn’t seem to understand, the neo-Trotskyists and the “anarchists” diverge in their goals. They share an interest in fomenting disorder, but the neo-Trotskyists also have a specific political goal: they want control of a union. The Times noted, “Some members of the group that had closed the port reprimanded those who smashed windows, threw rocks, ignited a 15-foot-high bonfire of garbage and covered downtown storefronts with graffiti.” Clearly, some among those whom the media describe as “leaderless protesters” want to become leaders in the worst way.

But neo-Trotskyism and graffiti-painting “anarchism” simply lack the gravitas of their predecessors. Unlike the phonies in Oakland and elsewhere, authentic anarchists and anarcho-syndicalists understood that a genuine anarchist movement represented a principle of organization: voluntary and anti-statist, but nonetheless thoroughly structured. (They often referred to themselves as “libertarian.”) Today’s anarchists revel in chaos, not the social philosophy of the Russian Peter Kropotkin or the Russian-American Emma Goldman.

Without doubt, the most absurd aspect of Occupy Oakland has been the vacillation of the city’s mayor, Jean Quan, her adviser Dan Siegel, and vice mayor Ignacio De La Fuente. Quan and Siegel were radical activists in the 1960s, and De La Fuente is an international representative of the Glass, Molders, Pottery, Plastics, and Allied Workers International Union, AFL-CIO. The aged leftists in the dockworkers’ union consider Quan, Siegel, and De La Fuente compromised—or “co-opted,” to use the sixties phrase—and the black-masked anarchists neither know nor care about the “movement” exploits of today’s Democratic politicians almost half a century ago. Quan and her allies have appealed pathetically for dialogue and negotiation with the Occupy members. “Reports that tires are burning and barricades set up on 16th,” Quan wrote on a Twitter post. “Protestors need to call my office now.” The mayor briefly mobilized police from surrounding jurisdictions to curb the excesses of the “strikers,” then returned to a posture of confusion and dismay.

Occupy Oakland—like Occupy Wall Street and its precursors in London and Athens—represents a crowd outburst, not a revolutionary uprising. The Occupy movement reflects the consciousness of those who feel “cheated” by the system rather than an agenda for social or political reform. It’s true that such incoherent outbursts sometimes evolve, after the passage of years, into substantial social movements. But all the evidence points to the uproar in Oakland on November 2 as a dead end, rather than a new beginning, in the history of the radical left and its labor allies.

(Stephen Schwartz is a widely published journalist and author who worked from 1989 to 1999 as a staff writer at the San Francisco Chronicle. This article was first published in City Journal.)

San Francisco’s Pension Crisis

A day before Halloween, glorious San Francisco weather brought hundreds of participants to “Pet Pride Day” at Golden Gate Park. As drums pounded and electrified folk tunes blared, children and parents, many in costume, paraded before a reviewing stand with their pets: dogs, cats, birds, a prize-winning hawk, chinchillas, rats, snakes, and even a puppy perched on a pony. Between a tent providing low-cost rabies injections and another offering “doggie makeovers” stood Jeff Adachi, the city’s public defender, shaking hands with passersby. As a lone campaign aide waved a bright blue ADACHI FOR MAYOR sign behind him, the candidate, a long shot in a crowded field of 16 mayoral aspirants, asked voters what was on their minds.

While several mentioned the push to let dogs run off-leash in more city parks—San Francisco supposedly has more dogs than children—others peppered Adachi with questions about bread-and-butter issues. Why was it was so tough to turn a property into condos? Why were the city’s schools so bad? Why were the ranks of the homeless growing? What was the environmental impact of lining parks’ soccer fields with ground-up tires? Why did the police ignore open-air drug dealing in the Tenderloin? Did Adachi support the Central Subway Transit Project extending a branch of the city’s subway to Chinatown—a boondoggle whose cost has spiraled out of control?

What almost no one mentioned, however, was the issue that prompted Adachi to run for mayor in the first place: pension reform. Adachi’s demand that city employees start paying more into their own pensions has not only defined him as a public figure but made him anathema to San Francisco’s political establishment—that is, the mayor, the Board of Supervisors (San Francisco is both a city and a county, so its board serves as city council), and the powerful public-sector unions.

“Pension reform is a tough issue,” Adachi tells me as we travel to the site of his next campaign appearance, a farmer’s market. “Unlike many other campaign issues, it’s hard to explain. It’s not ‘Save the Redwoods.’” Still, Adachi is largely responsible for having turned the issue of pension reform from a conservative talking point into a mainstream cause in liberal San Francisco. He is running as a “pragmatic progressive”—in fact, one of the most liberal candidates in the race. He argues that the underfunded pension obligations undertaken by irresponsible mayors risk not only bankrupting the city but also “crowding out” essential city services upon which middle-class citizens depend.

In San Francisco, a popular vacation destination, signs of that “crowding out” abound. The streets are filled with potholes that the city can’t afford to fix. Though the city earns much of its income from tourism, since 2010 it has imposed stiff fines for parking on the street during holidays, much to the concern of local businesses. For the second summer in a row, San Francisco has been unable to offer summer school to some 10,000 public school students because of a $1 million budget cut in the program. School budget cuts cause particular concern, since the city’s poorly rated school system is often cited as a major cause (along with a stagnant economy and high unemployment) of the flight of middle-class residents with children. Last year, the city’s parks budget was cut in half, while spending on services for seniors and those with AIDS was reduced by 30 percent. San Francisco taxpayers now spend one out of every six tax dollars on city employee benefits, Adachi says.

Though Adachi has been the city’s public defender for nine years, his devotion to pension reform makes him feel like a “consummate outsider.” “I’m the guy in the sci-fi movie who keeps yelling, ‘They’re coming, they’re coming,’” he jokes. But Adachi’s warnings about the city’s precarious finances and the “unsustainable” costs of unfunded pension liabilities have helped change the nature of the debate, analysts say. In late October, Governor Jerry Brown unveiled a 12-point proposal to limit the size of future pension liabilities. And thanks to Adachi, two competing pension-reform proposals will appear on Tuesday’s ballot: the one he drafted, Proposition D, which would save the city $1.7 billion in the next decade, he says; and Proposition C, a compromise measure supported by the current mayor, Ed Lee, the public-employee unions, and the rest of the city establishment. That might save as much as $1.4 billion over the same period, pension experts say.

“Win or lose,” says Corey D. Cook, an associate professor of political science at the University of San Francisco, “as a progressive candidate, Adachi can take credit for helping shift the ground of this debate. Pension reform is now very much in the air.” According to Cook’s latest polling for both the mayoral contest and the dueling pension-reform proposals, the odds seem to favor Lee, the first Chinese-American mayor in the history of a city whose population is about 30 percent Chinese. Widely regarded as a consensus candidate, Lee was appointed by then-mayor Gavin Newsom after he became California’s lieutenant governor ten months ago. Lee promised not to run for a new term, but he changed his mind and (having decided not to accept public money) has raised far more money for his campaign than any of the other candidates.

For this year’s election, San Francisco is inaugurating a complicated voting system that allows voters to rank their top three choices among the candidates. Oakland used this “ranked-choice” or “instant-runoff” system last year and got puzzling results, with the eventual victor, Jean Quan, not receiving the most first-place votes in the initial tally. In a column in the San Francisco Chronicle, kingmaker and former mayor Willie Brown (who, like most of the city’s political establishment, has endorsed Lee) says that the system has “thrown the whole town for a loop.” With 16 candidates “clamoring for attention” in a “town so disconnected,” Brown bets that half of the city’s 450,000 registered voters “give up in frustration.”

By any standard, Adachi, 52, is an unusual candidate. The great-grandson of Japanese immigrants who came to San Francisco in 1890, he was raised in Sacramento, where he attended public school. His parents and grandparents were interned for four years during World War II by the U.S. government at a camp in Arkansas. Given 24 hours to pack and leave their homes, his parents were not bitter, Adachi told me: “They never talked about it until I began asking questions.” That injustice undoubtedly helped shape his determination to defend the poor and vulnerable. In 2002, he ran for public defender—the San Francisco PD is the only elected one in California—against the city’s powerful political machine. Though outspent four to one, he scored an upset victory. But that wasn’t enough for a man who boasts about what the San Francisco Chronicle calls his “masochistic work ethic.” Adachi’s own friends describe him in similar terms: “relentless,” “super-intense,” a “micromanager,” a “dog with a bone.” Adachi lives comfortably, but by San Francisco standards not lavishly, in a $1.5 million house in upscale St. Francis Wood. His wife, Mutsuko, is a stay-at-home mom; their 11-year-old daughter attends private school. Somehow, Adachi found time to write two novels, and he lifts weights at 5 every morning.

Lean and fit, Adachi seems perpetually in motion. His foot never stops tapping as he tells me how pension reform became his cause. His interest began in 2009, when a civil grand jury report concluded that the cost to taxpayers of city-worker pensions would grow from $175 million to $700 million by 2018, crowding out welfare and other services. (That’s not even counting the unfunded pension liability—“bureaucratese for ‘the debt we’ll saddle our children with,’” Adachi says—which currently exceeds $3 billion.) More than a third of San Francisco’s nearly 30,000 city employees earned over $100,000, the report said, but many made little or no contribution toward their pensions.

Adachi succeeded in getting a pension-reform measure on the November 2010 ballot. Opposed furiously by most of the city’s unions, Proposition B went down to defeat, 57 percent to 43 percent. Adachi refused to give up. He revised the measure (weakening some key provisions, pension reformers complain), organized another petition drive, and put his watered-down Prop. D on this year’s ballot. Like the ill-fated Prop. B, the new measure would postpone the impending pension crunch by stopping pension “spiking,” limiting retirement benefits to 75 percent of salaries, and requiring city employees to contribute a greater percentage of their salaries to their pensions. Workers earning less than $50,000 would not be required to pay more than 7.5 percent, while those making over $200,000 could contribute as much as 16 percent in years when the pension fund was earning less than anticipated. Adachi’s plan would also prohibit pensions from topping $140,000 annually. (Former police chief Heather Fong, who retired two years ago at 53, got an annual pension of $264,000.)

To counter Adachi’s new plan, Mayor Lee and his union allies draftedProposition C, which, like Adachi’s plan, would require city employees to contribute 7.5 percent of their salaries to their pensions. And like Proposition D, it would also require them to pay more if the fund was performing poorly—but only up to 13.5 percent of their salaries. Steven Greenhut, an expert on the pension crisis who writes a weekly column in the San Francisco Examiner (and who contributes regularly to City Journal), calls Prop C. a “half-measure . . . designed mainly to take votes from Adachi’s real measure.” To Adachi’s dismay, Lee not only gave the police and firefighters’ unions a 4 percent compensation hike to offset the 3 percent increase in the pension contributions that they would have to make if Prop. C passed; the mayor also cut a deal with those unions to exempt them from Adachi’s Prop. D in case it passed. (Lee declined to be interviewed.) According to figures from the city controller’s office, uniformed police earned average annual wages and benefits last year of $166,607 per officer. Firefighters fared even better, earning an average total compensation of $178,732.

Adding insult to injury, the city’s controller, a Lee ally, skewed what was supposed to be an independent assessment of the rival measures to minimize the expected savings from Adachi’s Prop. D. Greenhut says that the controller used a ten-year timeframe to analyze the projected savings from Prop. D, rather than the customary 25-year timeframe, though the savings would increase dramatically in the later years because the reforms would apply mainly to new hires. It was such shenanigans that prompted Adachi to enter the race for mayor, which he did only hours before the filing deadline in August. “He had no money, no staff, no organization, nothing,” says Ryan Chan, Adachi’s 23-year-old campaign manager, who volunteered to help and wound up managing the fly-by-night operation. Adachi is thick-skinned: accused of being anti-union, a closet Tea Party Republican, and a Republican in progressive’s clothing, he ignores critics and plows ahead.

Still, the pension-reform proposals have thoughtful critics. Max Neiman, senior resident scholar at the Institute for Government Studies at UC Berkeley, recently suggested that the legality of both Propositions C and D would be challenged in court if passed. Both measures, argued Daniel Borenstein, a columnist for the Contra Costa Times, would place a disproportionate burden on the majority of city workers. These rank-and-file employees, he pointed out, would essentially subsidize the much better organized police and firefighters, who have far more lucrative plans and constitute 11,000 of the city’s 34,000 public-service employees. “There’s no reason that general workers, represented by a less-influential union, should have their rates dragged up by the spiraling cost of generous police and firefighter pensions,” Borensteinwrote. As Heather Knight observed in the Chronicle, the average pension for a retiree from the fire department was $108,552; from the police department, $95,016; from all other city agencies, $41,136.

Corey Cook thinks that prospects are poor for Adachi’s measure. “Mayor Lee’s proposition really took the air of the drive for deeper reform,” he says. “And one must ask whether having a consensus among the mayor, the unions, and the Board of Supervisors on the need for some reform isn’t better than the additional savings that Jeff Adachi’s measure would bring.” But Melissa Griffin, a reporter for theSan Francisco Examiner who has covered the mayoral race and the pension contest and anchored three of the mayoral debates, sees little indication that the gravity of the pension crisis has sunk in with city voters. Questions at the debates focused mostly on the shortage of affordable middle-class housing and the flight of middle-income families from San Francisco. “Folks appear to be more worried about their own ability to stay in San Francisco and less about services for the indigent,” Griffin wrote in the Examiner. “The theme this year is ‘Charity Begins at Home.’”

David Crane, a former adviser to Governor Arnold Schwarzenegger who has pressed for pension reform at the state level, thinks that neither Adachi’s nor Lee’s proposition goes far enough. “Neither revision covers existing public-sector workers, just future employees,” he says. Crane thinks that the municipal-pension crisis is far more severe than Americans realize: “Cities are broke; they have no cushion.” And when those cities are forced to make good on their pension promises, “services will cease and people will move. For cities, this is the Number One challenge.”

(Judith Miller is a contributing editor of City Journal, an adjunct fellow at the Manhattan Institute, and a FOX News contributor. This article was first published in City Journal.)