Wednesday, October 14, 2009

Looking Into The Crystal Ball

As my regular readers can attest to, I am heavily focused on Milwaukee County issues. This is for various reason, including, yes, personal reasons, since I am a Milwaukee County employee.

Given that, I have been following the 2010 budget process closely, and am growing ever more dismayed by the way I see things playing out.

First, some quick background:

County Executive Scott Walker, in his perpetual campaign to be the next governor, has made his budget proposal into a political statement. His single campaign platform of no tax increases (except for the ones that he accepts from the County Board every year) is evident throughout the budget. So is his shameless political pandering to his base and to his campaign contributors, like the land developers.

Walker has some grandiose and highly irresponsible plans in his budget, including things like a giant water park in the suburbs, while shutting down the public pools and community centers.
Besides cutting these valuable commodities and slashing transit services and diminishing the overall quality of the parks even further, Walker plans on paying for his extravagances on the backs of the workers and the poor.

Unfortunately for Walker, there is a little thing called the law that prevents him from arbitrarily dictating contract negotiations through the budget process or through the public. AFSCME has already filed lawsuits against Walker and some of the Board Supervisors for their bad faith bargaining, which will end up only costing the tax payers even more.

Trying to head off Walker's disastrous plan, the union and the county labor negotiators did a lot of eleventh hour bargaining to come up with a tentative agreement, which was quickly ratified by the unions and approved by both the Finance and Audit Committee and the Personnel Committee, even as a Walker veto was looming.

Unfortunately, not everyone on the County Board had the fortitude to stand up for their constituents, and the contract was tabled.

This brings up to today:

Later today, the County Board will have a special meeting as a whole. One of the subject to be discussed and voted on is the tentative agreement which they had tabled. I am predicting that they will vote the agreement down. The reason is another resolution that they will discuss and vote on, which is whether to furlough county workers, with an ever growing number of exclusions, for four days in November and December.

Seeing how the furlough passed the Finance and Audit Committee in a 7-0 vote, I do not see how this will not pass. Walker is practically drooling on himself to sign that into law the minute it hits his desk, although I would not be at all surprised to see him turn this into a photo op either.

By shooting down the contract, the Board will be painting themselves into a corner. The unions will immediately call for arbitration. Then, if they are smart, the unions will offer a proposal with a small raise, say 1.5%, retroactive back to the beginning of 2009. Walker, on the other hand, has painted himself into a corner as well, and cannot afford to back down and make a reasonable offer. The arbitrator will then rule for the union's proposal. It won't save any jobs, but at least those of us that will be victimized by Walker's political aspirations will get a small severance check from the back pay due to them.

This then will force the Walker and the Board to come up with the savings somewhere else. Walker has already broadcasted that he would lay off another 300+ workers on top of the 400 he wants to lay off in his budget proposal, mostly through privatization, even though that ends up costing more. If these cuts are done across the board, that would put massive cuts into vital and mandated services, opening the door for more state takeovers, such as they are currently doing with the economic support programs. If the cuts come more targeted to avoid vital services, that means that things like the parks or transit could be forever lost.

Another aspect of this is that it will cause a second exodus of county workers as they rush to retire before all the layoffs and furloughs can have any impact on their pensions. This will put further strain on budgets, as that given his past practice from 2004, it is clear that Walker doesn't like to think that far ahead, and won't have planned on this.

One of the other choices would involve cutting funding to long-time amenities like the zoo, the public museum and the such. I cannot imagine that this would be popular with area families.

Another choice would be to slash non-mandated services like transit and the parks.

None of these options would be good for the quality of life of Milwaukee County citizens or its visitors, and all of them would have various negative impacts on the economic health of the county and the region.

The only realistic way that these disasters would be avoided is if the state legislature and Governor Doyle take quick action to pass the sales tax bills for both transit and for the parks. But they don't seem to be too worried about Milwaukee at this time.

Odds are that the Board will be forced to go with a compromise solution in which they sacrifice a few hundred workers jobs , and privatize things like housekeeping, security and the such. However, I don't think they will privatize the Targeted Case Management and Community Support Programs as that has been shown to be less than cost effective.

I also do not see Walker getting his giant water park in the burbs, but that the County Board will go with the idea of fixing up the two indoor pools and keeping them all open, allowing more people the chance to take advantage of them.

I also don't think that Walker will get his economic development office. To be clearer, I think he will get something, but just not in the form he wants it to be, since that would be a clear recipe for further disaster. However, the need for someone effective, as opposed to one of his former campaign managers, is clearly necessary, since the County has experienced yearly short falls due to lack of land development and other revenue due to the failing business climate in Milwaukee County.

Given the fact that the rest of the state is still suffering the effects of Walker's type of economic policy, I can not imagine how Walker thinks people upstate would be keen on the idea of someone cutting the services they rely on, or someone unable to effectively do his job as county executive. But that is his problem, not mine.

Furthermore, knowing darn well that they are the ones that are going to be left holding the bag, I don't understand why the County Board is allowing themselves to be so easily duped and manipulated. It's as if they have as a hard time learning from the past as Walker does.

6 comments:

  1. Chris, while your self-interest is understandable, your sense of entitlement is absolutely stunning.

    It ought to be obvious to you that the County's fiscal problems are non-partisan. I don’t know how you can claim the four day furloughs are a campaign ploy by Scott Walker when Democrats such as Jim Doyle, Tom Barrett and Kathleen Falk have proposed furloughs and pay cuts. Doesn't that reality at some point sink in?

    The County has a revenue problem in 2009. Sales tax is down, investment revenue is down, program revenues are down, State aid is down. I’m not sure how any of that is Walker’s or the Board’s fault. Math is math. The only real area of flexibility it has, like every other government, is in personnel. The County should take prudent steps to finish the year without a deficit, which would have to be carried into 2011, requiring resources that cannot be used for pools or mental health.

    Four days off. Painful but sensible. And yet you oppose it. Do you even accept the reality of the County’s fiscal problem? Assuming you do, what would you do with the last two and a half months to fix the problem? Lay off younger union members just to keep 32 hours of pay?

    You can’t solely blame Walker for the 2009 budget, it's the Board's creation too. I would argue that had the County taken action earlier you may not be facing a furlough during the holiday season. Instead you fought it and here we are.

    You make fair points about negotiations and how the 2010 budget was presented. Regardless, had the TA been implemented, the County would face a worse shortfall next year. You would have saved a couple million, but from where else would the budget be balanced? Raising taxes 5% would produce about $13 million. Let’s say your contract saved another $5 million (that's charitable). That’s $18 million with about $72 million left to be filled.

    The sales tax. That would not totally fix the problem. The referendum said property taxes would go down because parks, ems and transit would be funded with the sales tax. You'd still have the cost to continue in the remaining departments funded through property tax – HHS, BHD, Sheriff, HOC, Courts, DA, etc. You would still have lower investment revenues, real estate transfer fee, state shared revenues, and existing sales tax in the general fund. Let’s be assume thee departments moved to the sales tax took half the problem with them. There’s still a hole of $36 million. If you want to argue the property tax levy should not be cut as promised by the referendum then I wish you luck.

    Remember, the referendum failed in a majority of the supervisory districts. The political will even from some of the more liberal members of the Board may just not be there. This is reality as it exists - accept it.

    Are you understanding this is a problem of basic math? Are you finally starting to understand the resources available to the County simply cannot maintain every service or every benefit you enjoy?

    Even with an increased sales tax, there is only so much money. If you are going to spend it on pools, then it is not available for mental health. If you’re going to spend it on employee benefits, you cannot spend it on transit.

    Privatization has pitfalls, and not every service should be privatized. But mathematically, it would have saved money. Once a contracted employee leaves County service, the County no longer has ongoing costs for that employee. Instead of funding a pension for people who no longer work for the County, it could put money into transit or mental health or not raise fees on customers.

    I simply don’t understand your inability to cope with reality. You appear to oppose telling taxpayers the long-term costs of your employment, as evidenced by your post on GASB 34. You advocate scoring a pay raise and back pay knowing the County has a funding problem and knowing full well it will cost more of your coworkers their jobs. Are you serious?

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  2. I readily admitted to the self-interest, but I also recognize the bigger picture.

    My biggest beef with the furloughs, and Walker's illegal proposal to balance the budget on the back of the workers is simply the fact that he and the Board allowed many of the upper management to have five-figure raises, thereby negating any cuts they would be exposed to. It is rather ingenuous.

    Your argument that the TA would have more cost than the course chosen is either intellectual dishonesty, or an honest lack of understanding on how this works. The unions bargained in good faith. Walker broke almost every labor law there is. Many Supervisors betrayed their positions, and their constituents by changing their votes.

    Now the cost will be guaranteed to be a lot more than it would have been otherwise. I don't see the unions capitulating when Walker and now the Board, has given them the upper hand.

    I'll give you time to look at the source of the deficit. The reasons you sight are among the least of the County's problems. There are bigger problems, with obvious solutions, but they are beyond the County's means of implementing on their own.

    For example, if health care costs are too high, is the worker's fault, or the health care provider's? Going after the worker is just a political stunt to distract from the real issue.

    I would also look into the privatization truths a little deeper, my anonymous friend. It almost never saves money. Even if the original proposal looks good, the private agency will invariably go over budget and the County will invariably pay, since it would be cheaper to pay the gouge than to defend it in court.

    I am much closer to the reality of the situation than you give me credit for. I know things that I haven't posted yet, and may not for a while yet. But a sharp and open and honest mind will see what is for what, and not take the popular and easy, but dead wrong, answer.

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  3. You are not much closer to the reality of the situation because your response bares little resemblance to reality.

    Yes, arbitration and or a lawsuit are going to cost the county. But, had your TA been adopted it would have come at a cost of millions to restore all the positions your union is slated to lose in the recommended budget. Did you factor that in? Doubtful.

    Health Care is part of the problem in 2010, and structurally, but not in 2009. The County is running a surplus on its budget for health care this year - meaning mathematically it cannot be part of this year's problem. I also find it hard to believe that Walker gave top managers raises in the summer of 2008 knowing that furloughs were coming a year and a half later in 2009. That's conspiracy theorizing at its finest.

    As for health care spending, you admit there isn't much the County can do about it. In fact employee health care isn't the main problem - retiree health care is. What is your non-political stunt, painless-to-the-employee solution? Pass a 2010 budget based on the assumption that universal health care or the public option will be implemented? Are you seriously that foolish?

    I'd love to hear what you think the County's other "real" problems are. Maybe while describing them you can tell me where Obama's long form birth certificate and the secret documents taken from WTC #5 went?

    Privatization does not "invariably" fail. It often works, it just has to be implemented properly. I've been part of a number of successful privatization initiatives. Remember, using public employees means paying for them long after they're done providing service to the public. The County now has more retirees than employees, and the Public Policy Forum has made it clear the County has to shed employees to pay retirement costs. Do you take pension costs in the future into account when comparing? Doubtful.

    I see little evidence that you actually understand the structural issues facing the County, or that you have any solutions for those problems that are reality-based. I seem to remember you claiming your Milwaukeecountyfirst blog would have some kind of comprehensive solution, but so far all you've talked about is the sales tax, which has problems you fail to address.

    If you're at all serious I'd love for you to actually tell me what you'd do about the County's health care spending. I won't hold my breath.

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  4. Actually, if you bothered to investigate, you would have seen that the TA had addressed the issue of the retiree benefits by increasing their share of the burden, especially for those that have moved away and are outside of the preferred provider networks.

    That fact alone makes your bluster all the more unimpressive.

    The sales tax would alleviate the issue of transit, parks, recreation and EMS, while giving property tax relief. Of course, that is given that the state legislature does as the people expressed they did, but that would require a watchdog to ensure that it happens properly. That need is not met by the rants of a talk radio show host or the hypocritical showboating that seems to be the County Executive's only forte.

    The cost of four hundred employees will be a lot less than the cost that we will be incurring now, both from legal costs, back pays, and the exodus of retirees that will put a further strain on a miserable budget.

    You may not feel that our proposals are enough. That's fine. But at least we are trying to come up with feasible, doable and legal ways of addressing the issue. Walker's fantasy budget, which is unattainable, only offers a false promise and sure bitterness when the population realizes they've been had by a snake oil salesman.

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  5. You haven't addressed the issues at all.

    Paying more for your retirement while employed does nothing to alleviate the County's cost for your pension payouts once you're retired. The taxpayers are still paying you for as long as 40 years after you've stopped providing the service. That is not the case with a privatized service. You cannot refute that.

    Last I heard restoring all the DC 48 positions in 2010 would cost nearly $8 million. I find it hard to believe the savings your TA would have achieved plus whatever the County is about to incur would add up to more than that. An exodus of retirees will cost a lot in sick payouts but those liabilities are coming regardless.

    You still don't get it on the sales tax. The departments left on the property tax would still have a huge cost to continue. Falling investment, real estate transfer, sales tax, state aids, a rising pension contribution, etc. add up to another gap. Restoring all your positions adds to the gap.

    How do you address that gap? Pass a resolution favoring the public option? I support the public option too but I wouldn't bank on it.

    I'm sorry I don't listen to talk radio and I don't know for whom I am going to vote in the governor's race next year. I'm simply doing basic math.

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  6. You misread what I wrote. The retirees are going to be paying more to help alleviate the cost to the county. Given the largesse that they were awarded by the Ament administration, that is the least they can do.

    There are other solutions to help close the gap that we at MCF are currently discussing and hope to come out with in the next week, that does not rely on the state or the feds for a solution.

    The TA, had it passed, would have saved the County about $3M in 2009 and about $5M in 2010 through the pay freeze and higher payments for health insurance.

    Now that the TA has been rejected, it will actually add money to this year's deficit, which will be bouncing in 2011. But what of 2011? The insurance rates are going to keep going up at a rate much higher than anything else, including inflation. Do you propose just laying off more workers?

    Continuing lay offs punish people for something that they are not responsible for, and puts the County at risk for more class action lawsuits and state take overs due to noncompliance. Also, state law requires certain things be done by the public sector. To privatize that, it would require a change in state laws. That change would be harder to get through than the sales tax.

    And in this entire exchange, there is also labor laws, like M.E.R.A. that come into play. This entire situation was handled poorly, IMHO, by the unions, the Board, and most of all, Walker.

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