Saturday, March 19, 2011

Just Say No to the Income Tax Increase!

I should begin by saying that public employees are not the cause of the financial crisis the country is currently in. The police, firefighters, teachers, sanitation workers and the unions who represent them have not caused the crisis. Greedy Wall Street speculators caused the crisis, but instead of being blamed and punished for wrecking the economy, the speculators are back at it again, making billions, while millions of Americans still cannot find jobs and many thousands have lost their homes.   
But if public employee unions did not cause the countrys financial crisis, Portsmouth’s  public employee unions contributed to our citys crisis by colluding with our corrupt city officials. In return for the political support of public employees, corrupt officials “negotiated” contracts with those employees that the city and the taxpayers could not afford. With our city auditor cooking the books and juggling accounts, and with the mayor regularly  increasing water rates, the city government hid the fact that it was operating at a deficit.  But it became clearer as the Great Recession deepened that the city  could not afford the contracts with its public employee unions, particularly the contracts  with the police and fire departments. Increasing water and sewer revenues were no longer enough to pay the piper, so now the Portsmouth city government, on behalf of the public employees unions and the police and fire departments in particular, is asking voters in the May primary to agree to a six-tenth of one percent increase in the city income tax.
The city is calling the proposed income tax increase a “Safety Levy” so that they can accuse those who vote against it of  jeopardizing the safety of the city’s residents. The city government is  resorting to scare tactics, hoping  Portsmouth residents  will be panicked into voting for the levy.  But a more accurate name for the proposed income tax increase  would be the Bailout Levy, for what the city government is trying to do is bail itself out of the financial mess it has got itself by providing contracts  that it couldn’t afford. Safety is not the issue, the fiscal irresponsibility of the city government is. The city has been  increasing water revenues for about ten years. Since the city can increase water  rates without voter approval, it did so repeatedly, using the Water Department like an addicted gambler might an ATM in the lobby of a Las Vegas casino. Only it is not the gambler who is depositing the money in the ATM: it is the taxpayer. According to Austin Leedom, Mayor Bauer raised water rates five times in the six years he was in office, and Mayor Kalb raised them five times in the five years he was in office. One of the first acts of Mayor-unelect David Malone was to to  increase water rates by 18%, which may  be the largest percentage increase in water rates in the history of the city.
The Bailout Levy
 As long as we have water,” Leedom wrote on the Sentinel website, “the City Officials, employees and their friends have an abundance of money.   Just raise the water fees, transfer the money collected into other funds such as Street Maintenance, Flood Defense, Parks and Recreations, Service, Police, Fire, Health, and so on.  The only trouble with this type of financing, transferring and spending improperly, is that it is illegal and someone may go to the prison for a long vacation.” The state auditor found Portsmouth’s financial report for 2009 deficient in ten different ways, including the following: “The Ohio Revised Code Section 5705.10 (H) states that money that is paid into a fund must be used only for the purpose for which such fund has been established. As a result, a negative fund balance indicates that money from one fund was used to cover expenses of another fund.”
The biggest water rat is City Auditor Trent Williams, whose official title should be City Enabler. Williams has used a bookkeeping system that could be called Borrowing from the Taxpayer to Pay the Rats. Following the path of the previous auditor, Tom Bihl, who was indicted for the misuse of public funds, Williams has taken  funds from the Water and Sewer Departments to help pay the  salaries and operation expenses of city government, which Austin Leedom claims violates state law.  Williams is borrowing from the Water and Sewer Departments to help pay his own salary and to help pay for the new city SUV that he drives. How in the world can a city auditor justify having a new city vehicle, especially during a Great Recession? I can’t imagine what he needs it for, except perhaps to drive around in the sewers of Portsmouth to meet with his prime constituency—those water rats!  Williams is not a workaholic, he’s a waterholic who can’t leave the stuff alone. His favorite watering hole  is not Dickens Pub but the Lawson Run Sewer.
Williams has deceived the public about the size of the deficit, and even denied that there was a deficit in the past two years. If the state auditors determine that there were deficits in 2009 and 2010, and if the 2011 budget also shows a deficit, which Williams has publicly admitted it will, then state law requires that a municipality with three consecutive deficits be put on Fiscal Emergency, which requires state surveillance and supervision.  Scioto County has already been declared in Fiscal Emergency, so it would not  be a surprise if Portsmouth, the county seat, is also. If the city is placed on  Fiscal Emergency, the poster child should be City Auditor Trent Williams, the best friend the water rats ever had.

The Hidden Costs

Governments at all levels, in Ohio and throughout the country, are in a financial crisis, and the costs connected with public employees are being scrutinized. The cost of Portsmouth’s public employees are larger than the public might be aware. On her informative blog on 7 Feb. 2011( click here: WeGotTroubleRightHereInRiverCity),   Jane Murray pointed out that it is not the salaries of city employees that are blowing holes in the city budget, it’s the benefits; in other words, it’s not the obvious but the hidden costs that is the straw that is breaking the taxpayer’s back. Murray used as her example an unnamed captain on the Portsmouth police force. His 2009 base salary was $33, 988, but when she added up the benefits and other hidden costs, the captain cost taxpayers over $90,000 for that one year. The captain may be well worth the $90,000 plus, but it is not just what an employee is worth but also what the city can afford to pay him that needs to be taken into account.
Murray could have used as an example somebody on the force making twice what the captain made,  but choosing the captain provided her with an approximation of the average of the force as a whole. Murray calculated that  the captain cost the taxpayers $92,670, at a minimum, but I will be even more conservative, ignoring some of the other minor expenses connected with him,  such as sick leave, funeral leave, education expenses, etc. By my conservative estimate, the captain cost the taxpayers  just a little over $90,000 in 2009. Using that conservative figure, I made the following pie chart to illustrate the breakdown in percentages of the cost of the captain to the city. His base salary, it should be noted, represented only about one  third of his complete cost to the taxpayers. His pension and health insurance combined made up about  another third. And the third third consists of overtime, vacation, etc. (A similar chart should be made for the full cost to the taxpayers of members of city council.)

  What one police captain cost the city of Portsmouth in 2009: $90,000+

Until Mayor Malone and the Portsmouth City Council begin to reduce the hidden costs of public employees to Portsmouth taxpayers, voters should not increase taxes by a dime. A case can be made that the city must increase taxes to help balance the budget,  but only if the city government also makes painful cuts in city expenses, which Mayor Un-elect Malone is not prepared to do. Passing the buck as usual, the city council asked Mayor Malone to submit a 2011 budget that reduces the cost of city government by 20%. By the Council’s calculation, that was the reduction needed to balance the budget. But Malone came up about 3% short of the figure, which translates into at the very least a $1.4 million dollar deficit. ((Malone is notoriously mathematically challenged, so we will have to wait and see if it is just $1.4 million. Those are  not the kind of figures he’s good at.)  Malone said he would  not furlough or discharge anybody in the police or fire department because of his “concern for public safety.” The city of Camden, New Jersey, which has among highest crime rates in the country, discharged half of its police force, but Dana Redd, was not recalled. Having since got a handle on Camden's budget, she recently rehired some of the police and fire personnel.
     Murray’s first act as mayor was to discharge not half the police force, but three department heads. Malone’s first act as mayor was to rehire the controversial Rick Duncan whom Murray fired for incompetence. She was concerned about the safety and well being of residents who repeatedly got sewage in their homes, and she fast-tracked a basement protection program in a matter of months.  Though he had been in government for more than 10 years, Duncan had done nothing to help these same residents. We might  ask, why did he circulate recall petitions when he reportedly had a high paying job at the USEC site in Piketon? Maybe it had to do with the fact that, according to a reliable source, nowhere in the private sector (nor in most other public sector entities) does an employer pay 24% toward an employee’s retirement and all the health insurance benefits. Not in this day and age. But that is exactly what Duncan had received. The city’s annual contribution to his pension is around $12,000. He contributes nothing. And he reportedly never paid any part of his insurance premium until 2009 when he began paying $50/month for a family plan.
  I don’t think Malone rehired Duncan because of  safety concerns. He rehired him for political reasons and at a cost to the taxpayers of more than $90,000.  Why did Malone do that? Because if  Malone has any chance of being  elected in the next mayoral campaign,   he  knows he cannot alienate public employees, especially members  of the police and fire departments. Malone cares more about staying on the public payroll than he does about public safety. Malone doesn’t want the police and fire unions campaigning against him. He would rather risk the city being put on Fiscal Emergency than jeopardize his chances of continuing as mayor of Portsmouth. He doesn’t want to go back to having his wife, who is also on the public payroll,  being his chief means of support. The problem is the losers of Portsmouth who gravitate to politics get elected with the help of the rich white trash who control the city. The losers then do everything to stay in office, including  becoming the lapdogs of the rich white trash. Instead of  negotiating with public employee unions, the politicians throw money at them. The money they throw is the public’s, of course,  not their own, which is why they throw so much of it.

Contrast of  City and University Contracts

As an officer of the Shawnee Education Association, I was involved in a number of negotiations between faculty and Shawnee State University. Unlike the city employees, the faculty had to negotiate with administrators whose jobs did not depend on whether or not the faculty liked or voted for them. The administrators were not voted into their jobs by the faculty. The faculty might have a representative on a search committee, and might even have a vote, along with half a dozen other committee members, but the recommendation  of a search committee about whom to hire was just that—a recommendation.  Decisions were always subject to the approval of the trustees. The trustees had the final say in everything, including hiring and firing. They were very tough to negotiate with, and much  bitterness developed between the two sides in negotiations, with frequent threats of strikes and on two occasions  bitter strikes. The trustees were often business and professional people who had succeeded and made their money not by being philanthropists and saints.  Nobody would have ever mistaken trustee and local business woman Kay Reynolds for Mother Teresa,
Contrast the situation at the university with the situation in city government. Too often the chief executive officer in city government, namely the mayor, is someone who, not to mince words, was a failure in the private sector. In Portsmouth,  politics is the last refuge of failures. Mayor  Bauer was a failure as a small businessman, Kalb was a failure as a grocery clerk, Trent Williams, who ran for mayor, was a failure as a music teacher; and  if Malone was not a failure, it was  because he never tried to succeed.  Malone early on apparently  decided working was not the path to success. He believed praying (or preying, as Wayne Allen might say) was the way to prosperity. He actually proposed such a preposterous theology!  If Malone deserves an honorary doctorate in anything, it is not in philosophy but in philandering. But he had the support of the crooks who run the city, who knew they could count on him to do nothing in public office that would interfere with their economic and political control of the city. He  might be an embarrassment because of his philandering, but the kept media prostitutes, like Frank Lewis, could be counted on to keep the public from knowing about him. But count on Lewis and the Daily Times to be critical of those who don’t play ball. On those infrequent occasions when honest and very able people are elected, the whole system is programmed, including the public employees unions, to drive them out of office, if not out of their mind.
So voters in the May primary should just  say no to the politicians, just  say no to the water rats, just say no to the unelected  mayor, just say no to the drone who is the city auditor; and above all just say no to the income tax levy, because it will probably perpetuate rather than put an end to Portsmouth’s  budget crisis, making the city even less safe for democracy than it already is.