Sunday, October 21, 2012

Proposal 1 - Yes!
We need an adult in the room.

Proposal 1 can be described as the "adult in the room" proposal. Voting "Yes" keeps a strong Emergency Financial Manager law in place.

Public service unions oppose Proposal 1 on the same basis they push Proposals 2 and 4: Maintaining their advantaged economic position.

Proposal 1 is about changes to an existing Emergency Manager law passed after Rick Snyder was elected governor. The old law did not allow an Emergency Manager to recommend that the state amend a local government’s collective bargaining agreements. That mainly affects pensions and health insurance in insolvent local jurisdictions, like Detroit. The new law must be kept for that provision alone. Pontiac provides an example:
Pontiac is one city where the new law appears to have worked. The EM there is Lou Schimmel, who has served as emergency financial manager for another city under the old law and also served as a court-appointed receiver for one city. Among the necessary changes in Pontiac that were made possible by PA 4 [the new, stronger law]?

* Pontiac contracted out its police force to Oakland County and saved $2 million annually while increasing enforcement personnel in the city;

* Pontiac contracted fire duties to Waterford Township and expects to save more than $3 million a year; and

* The city consolidated 87 city health care plans to one; saving $5 million annually while still offering very generous benefits at a cost of $20,000 per employee.
Any supporter of regional cooperation must logically support a stronger Emergency Manager law.

Employee benefits are a major expense in most local government units. But don't take my word for it, let's visit the problems faced by Lansing Mayor Virg Bernero:
Lansing taxpayers will foot the bill for more than $16 million in fringe benefits – including retirement and health care – for Lansing police officers in the next year, according to budget documents obtained by MLive.com.

That's nearly $3 million more than they'll pay in salaries for officers in the same time frame.
Responsible local governments will never need an Emergency Manager. Corrupt and/or irresponsible local governments have demonstrated they desperately need a strong Emergency Manager law: A law that gives them the tools needed to prevent fiscal collapse.

You will recall a "Public Safety" millage was passed in Lansing in 2011; targeted for police, fire and roads. Without it, Lansing residents were told public safety would suffer and policemen and firemen would face layoffs. Turns out most of that money will go for "Pension Safety." Even Virg Bernero gets it:
Out-of-control pension costs are seriously undermining our ability to continue providing essential city services and threaten our ability to keep police officers and firefighters on the job protecting our residents. We must take action sooner rather than later to control these costs or we will be in a very serious predicament very quickly.

...Bernero has said more than two-thirds of the new revenues generated by a voter-approved millage have been dedicated to health care and pension costs.

Without concessions from the unions, the city would have to use all the millage funds to cover the increased retirement and health care costs, and supplement that with money from the city's general fund, the administration said in the release.

The millage is expected to generate about $7.6 million annually.
This issue boils down to whether Lansing keeps a promise on police pensions or is forced to continuously downgrade public safety. In the private sector, this choice is known as bankruptcy vs. reinvention.

I'm not happy when a promise isn't kept, but I understand that if keeping it is not sustainable, everyone will end up with nothing.

Stein's law applies: "Something that can't go on forever will stop." The question is whether it will stop because adult decisions are made, or because it collapses in chaos. Bernero is suggesting an adult decision. The unions, like those in Detroit, prefer their perks to keeping police on the beat. Bernero:
"We can't force changes if we have a contract in place. We have to honor the contract, and I don't want to have to lay off anymore officers."

"We're saying in a time like this, put (funds) into a Police Officer Preservation Fund because our challenges are getting worse from year to year," Bernero added. "I don't want to have lay off anymore officers. If I had one rallying cry it's no more layoffs."
Lansing has been realistic, relatively, in addressing this issue, though battles with the unions continue. Union parasites may prefer keeping the promise alive until their host collapses. I do not.

The current Emergency Manager law should be retained by voting "Yes" on Proposal 1.

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